GODREJ & BOYCE MFG. CO. LTD.

Project on Potential of Tea/Coffee Vending Machines

Vipan Kumar
6/28/2010

This report provides survey results from respondents regarding the vending machines. Specifically, this research identifies the various things related to vending machines like market share analysis, satisfaction level of the customers and their preference for the vending machines

Acknowledgement
This report incorporates the contribution of many people and without their support this work would not have come in completion. So I would like to extend my immense indebtness to all of them who have guided and motivated me throughout my project. I sincerely thank to all of them for their valuable contribution without which this project report would have not reached its goals.

I am indeed grateful to Mr. Lok Pati Mishra, for his valuable support & guidance throughout the research project. I would also like to thank Mr.Vikram Walia who gave me this opportunity to undertake the training in Godrejs Prima department.

Last, but not the least, I would like to express my faith in the Almighty who has given me strength at every phase of life to stand and excel.

Table of contents

Introduction Executive summary Objective SWOT Analysis Methodology Questionnaire Findings and Analysis Recommendations/Suggestions Limitations of the Project Conclusion Bibliography

5 6 6 11 12 13 14 19 21 22 23

Project Topic Potential of Tea/coffee Vending Machines in Chandigarh, Mohali & IT Park Region
Submitted By: Vipan Kumar IGSM Greater Noida 1/5/2010 30/6/2010 Contact No. 09654739396
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A STUDY ON THE POTENTIAL OF VENDING MACHINES AT GODREJ & BOYCE MANUFACTURING CO. LIMITED

Introduction
Godrej Group is one of the largest conglomerates based in Mumbai, India, involved in various industries that include appliances, precision equipment, machine tools, furniture, healthcare, interior solutions, office equipment, food-processing, security, materials handling and industrial storage solutions, construction and information technology. Its products include security Systems and Safes, Typewriters and Word processors, Rocket Launchers, Refrigerators and Furniture, Outsourcing Services, Machine Tools and Process Equipment, Cosmetics and Detergents, Engineering Workstations, Medical Diagnostics and Aerospace Equipment, Edible Oils and Chemical, Mosquito Repellents, Car perfumes, Chicken and Agri-products, Material Handling Equipments Like FORKLIFT Trucks, Stackers, Tyre handlers, Sweeping machines, access equipments etc. The Group is headed by Mr. Adi Godrej & Mr. Jamshyd Godrej. Traditionally, Vikhroli, a suburb to the Northeast of Mumbai has been Godrej's manufacturing base, but increasingly the group have moved significant production facilities away from Mumbai. The Godrej group also owns vast land in Vikhroli, occupying 3500 acres (14 sq km) of land on both sides of the Vikhroli section of the LBS marg. That makes the Godrej group the biggest private land owner in Mumbai by far . Such vast land can, in theory, be used to create at least 1500 acres of residential floor space, which, at very modest rates (Rs.10000/sq ft), can be sold for USD 16 billion . Thus, the Godrej group is sitting on an invisible cash pile that is envy of other Indian conglomerates.

Godrej, with a reputation for quality and trust built over a period of 100 years has set new standards in the world of vending machines with its innovative designs and passion for quality. Godrej Prima vending machines are designed to give the most reliable vending experience and aim at providing comfort and enhanced efficiency by maintaining a true hygienic environment. The varieties available in their newly launched Vending machines are: Tea, Coffee, Espresso, Cappuccino, Simple Coffee, Mocha, Hot Chocolate, Tomato soup.

Vending Machine:
A machine that dispenses small articles such as food, drinks, or cigarettes when a Coin, bill, or token is inserted.

Executive Summary

This report provides survey results from 50 respondents regarding the vending machines. Specifically, this research identifies the various things related to vending machines like market share analysis, satisfaction level of the customers and their preference for the vending machines The results indicate that companies post recession, are more cost conscious than before. It was also found that companies prefer vending machines rather than hand made Tea/coffee. Results also indicate the preference of the customers towards the various flavours like Ginger tea, Cardamom tea, Masala Tea, Cappuccino, Hot Chocolate, Espresso, Simple Coffee, Tomato Soup, Vegetable Soup etc.From here we can know our which brands are more liked by the customers This report also contains the information about how the companies rate the taste of their present vending machine

Objective
To find out the potential of tea/coffee Vending Machines. To find out the market share of various players in the industry. To find whether companies are cost conscious. To know the satisfaction level of the customers from their present vendor.

Godrej Vending Machines

It Offers: TEA, COFFEE, LEMON TEA, CAPPUCCINO, WHITENER, TOMATO SOUP, TEA W/O SUGAR (TEA BAG), CLASSIC COFFEE

Two canister vending Machine (2 CVM)

Dimensions

Height 642 mm Width 230 mm Depth 420 mm

Weight Power Supply Beverage Varient

16 KG 230 V /50 Hz /15 A 2 Options Settable (Tea / Coffee)

Option of 2 ingredients options they give Staggered dispensing option for tea bag Dispensing rate - 5 cups/min (90 ml each) Water source - on line / bubble top on m/c

Four Canister Vending Machine

Dimensions

Height 632 mm Width 300 mm Depth 473 mm

Weight Power Supply Beverage Varient

19.4 KG 230 V /50 Hz /15 A 8 Options Settable (Tea / Coffee)

Option of 4 ingredients options they give Staggered dispensing option for tea bag Dispensing rate - 5 cups/min (90 ml each) Water source - on line / bubble top on m/c /Pump

Data Sheet
The data sheet below is the database of the companies where I personally visited .It contains the name of the company, contact person, Contact no., no. of persons in the company, current vending m/c they are using & the number of cups

S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Account's name Hindustan Times PTC News Wonder Systems Connect Spray House Tynor orthotics Vodafone Competent Softage Net Solutions Aakash Institute Altruist Technologies Spanco More Next Gen venturi Altas cospo Heron Health Hyundai Ericsson Hero Mindmine Infosys Technologies Gold Finch Mobile sol. Infomatrix software (P) Ltd. Global Voice IIFT Rimwea Career foum Ltd. Great West Alliace Weat Highlande (P) Ltd. Visa Pro Consultants Sahara India Paivar Reliance Capital Ltd. Srei PNB Paidas Amtek Energy Power (P) Ltd Sushil Fianance Services New Horizon

Contact person Mr. Gautam M. Kiti Singh Kulvinder singh Vikas Bhandari Rajenda Kumar Rohit Shama Anil Kumar Paan Singh Rajesh Kumar Pawan Kochar Shilpa Sunil Sandeyar Pardeep Kumar Parmod kothari Aman Bir Lakshmi Narayan Manohar singh Harpreet Singh Sukhdev Bhayana Ramanpreet Singh Manmohan singh Miss Gunjan SS Sodhi Ashish Nagrath Shivam Gupta Namrata Sunny Rampaul Ashutosh Arora Narendra Sharma Sukhdev Singh Ambar Supta Pallavi Sucheta Arun Sharma

Contact No. 9888340671 9878665524 9814012597 9877012630 0172-3029860 9216908121 9815679844 9876079844 9888030013 9874657373 0172-4333800 9814178787 9653227384 0172-6620006 9988736086 0172-39349222 0172-4690100 0172-6605000 0172-4603100 9855555998

No. of persons 250 35-40 50 500 45 70 600 300 56 37 15 109 15 25 35 50 50 30 400 50 1000 25

Current M/C Ultimate No M/C No M/C CCD Lipton Lipton Ultimate Ultimate Nescafe No M/C Lipton Lipton Nescafe No M/C No M/C Sindhi Sipra Lipton Ultimate Lipton No M/C Sindhi No M/C No M/C No M/C No M/C Nescafe No M/C No M/C Nescafe No M/C Nescafe No M/C No M/C

No.of Cups 750 50 110 1110 100 170 1700 600 150 100 50 300 40 100 75 125 160 60 900 180 4000 100 35 30 30 50 75 60 30 45 60 50 160 20 29

9872947778 9815411990 9888999178 0172-5049245 0172-4619191 9915999633 0172-4003739 0172-2645380 9855225332 0172-3017201 0172-2605899 0172-4202111 9464424702

15 10 9 17 20 20 10 10 20 12 50-60 10 12

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36 37 38 39 40 41 42 43 44 45 46 47 48 49

Austrich Hastings Sahsi Buttar Morph Academy Angel Matrix Reliance comm. (P) Ltd VLCC Institute Alpha IT world Kuoni Academy ESM India Antares Competent Synergies Ltd. SLR Infotech Netmax Technologies Firebox Animation Studio

Geet deep singh Ashish Gaur Ajay Sharma Neha Manpreet Singh Gargi Kapoor Deepak Anmol Seema Rahul Chauhan Baljit Singh Raj Kumar Harminder Chawla Navdeep Mangal

9317510082 9417726869 0172-5018004 0172-6535111 9317572200 9317006823 0172-3018001 0172-4347110 9023492466 0172-3291305 0172-5002888 1072-2615059 9888070008 0172-4607660

20 10 18 20 50 10 20 10 12 10 15 30 30 16

No M/C No M/C No M/C No M/C Nescafe No M/C No M/C No M/C No M/C No M/C Ultimate No M/C No M/C No M/C

40 34 40 50 200 60 45 34 35 30 34 65 60 50

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SWOT Analysis
Strengths
High quality and safe food products at affordable prices. Strong and well differentiated brands with leading market shares. Strong equity with consumers as a Company with high quality brands. Ongoing product innovation and renovation, to convert consumer insights. Well diversified product portfolio. Efficient supply chain. Customized solutions. Branded Products. Distribution structure that allows wide reach and coverage in the target markets. Hygienic & safe solutions. Integrated and advanced Information Systems.

Weakness
Complex supply chain configuration. Ability to pass through cost increases in price point Stock Keeping Units.

Opportunities
Potential for expansion in the smaller towns and other geographies. Development of modern retail formats. Potential for growth through increased penetration. Growing trend for `Out of Home' consumption. Growing per capita income.

Threat
Competitive environment with diverse players. People attraction and retention. Rising prices of commodities and fuels.

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Research Methodology
A very semantic methodology is proposed for the project which shall cover the aspects of primary and secondary data analysis. The research work being done here is exploratory in nature. The key features of the methodology are:Primary Data Sources: One-to one interaction with 50 people is sought to get their purview on the various question being asked to them. Secondary Data Sources: To keep pace with the existing manta I seek to consult various existing data also in the related areas so that a comprehensive study is formulated. The sources to be used include books, journals, researches, internet and even academicians in the related areas. The required information about Godrej will be taken from their website so that accurate information will be gathered which helps in strengthening of the project.

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Vending
Godrej provides direct vending solutions to deliver quality products & services. In this regard your valuable information & time is required to help us provide you better vending solution. Kindly help us to fill this form. Company (Name & Address) Contact person Designation Phone / Mobile No. E-mail Address Total no. of employees / Sitting staff do you have. How many vending m/c do you have., for how long you are using it. Is the vending m/c rental or purchased, If rental, what is the rent per month.. What is the average consumption of beverages in your office Tea Coffee Soup Others Flavours you use (Tick)Tea Coffee Soups Plain Cappuccino Tomato Ginger Hot Chocolate Vegetable Cardamom Espresso Others Masala Simple How Tea & Coffee are served (Tick) On Table Self service Both No. of pantry boys do you have.. How do you rate taste & quality of your present tea/coffee/soup. Please tick Just OK Good Very good Fantastic Tea Coffee Soup

1. 2. 3. 4.

5.

6. 7. 8.

9. Who is your present vendor/dealer? .. 10. Are you satisfied with your dealers services Yes No If no kindly specify the reason

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Composition of 2CVM & 4 CVM vending machines prevailing in the market

As evident from the graph drawn above, 4 CVM machines occupy the major pie. This also shows that companies just not offer only tea & coffee but other flavours also.

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Tea / Coffee Served to the employees

We can see from this chart that majority of the companies are serving the tea/coffee to their employees on the table. This thing concludes that most of the companies are cost conscious & provides tea/coffee 2-3 times a day. After that they charge a price for it.

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Market Share Analysis of Vending Machine

From this chart we can say that Nescafe is still the market leader in vending solutions followed by HULs Lipton. Godrejs market share is quite less as compared to Nescafe & Lipton, the reason can be that Godrej has only recently entered in Vending Business, but it is growing at a fast rate. The share of others like Tata, Georgia & other local brands like Ultimate, Sipra, and Sindhi etc constitute 22% of the market share.

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Level of Satisfaction with Dealers services

Though quite a good number of customers are satisfied with the services of their present vendor but still there are customers who are not satisfied with the service. So we should focus on these customers & strive to give them best services so as to make them our loyal customers.

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Feedback from the Market

As we can see from the graph that still large share of market for vending M/Cs is untapped. 50% of the corporates surveyed are interested in installing the vending m/c in their respective premises. So the future is bright for the vending business.

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Recommendations / Suggestions
Godrej have competition in coffee and tea, with Nestle, HUL,Georgia, Cafe Coffee Day. Tata is another player which has recently entered this Vending Business. There will of course be a number of players entering this segment soon. But the key factor really is technology and the service mechanism. What we offer our clients is a service solution where we give them a machine and also maintain it. The machines must be programmed to provide data that can be very critical for the companies we deal with as the machine can tell us which product is moving faster and what the consumption pattern is like. So we are in that sense providing comprehensive solutions to our clients. In order to have a loyal customer base we have to make our brands relevant to our consumers in their lives. Where, when, how, with whom they drink all of these aspects matter. We should communicate our brands in the right way and make our products available at an arms reach. The challenge facing the tea and coffee industry is how we make them a relevant beverage for the rapidly going-out-of-home segment. Tea and coffee as a beverage continues to dominate the in-home consumption, with a penetration of nearly 90 per cent. However, due to lifestyle changes more and more people are spending time out of home and is not exactly seen as a beverage on the move. This is the main area that we should address by developing both superior formats and value. In India, 90 per cent of all hot beverages are consumed at home. Out-of-home consumption in India is very low, which means there is a lot of potential for this market to grow. Godrej, thus, should intend to make all efforts to encourage out-of-home-consumption by offering good quality tea and coffee at affordable prices. To increase this out-of-home-consumption of tea and coffee the company should have plans up its sleeve, which would include 'customizing' tea and making it acceptable to all regions alike. Hence, for North Indians it should offer masala chai with lots of elaichi and milk, while Mumbaiites may be able to even get cutting chai (a product available in the city alone) comprising a small amount, about two sips, of tea. If people in eastern India like flavoured tea, less milk and light tea leaves, Godrej can customize it to match their tastes. Similarly, for cosmopolitan cities like Mumbai and New Delhi, Hul should plan to install single tea-vending machines, which would offer varieties such as masala, cardamom and so on. As a growth strategy, Godrej should plan to populate smaller towns with his vending machines. Speaking about the market dynamics of the different segments, "The price per cup (Rs 3-4) is not a major issue at public places and hotel installations. The daily volume is also high in these places." 20

The most critical aspect is the after sales service as vending machines operate 24 hours. "In the case of hotels the machines have to be up and running 24X7 and the premix delivery is also crucial. The real challenge is catering to the hotels in small towns. Reaching the installations in small towns fast is a challenge, and keeping it running 24X7 is a challenge, and thus Godrej must meets this challenge with its nationwide service network and also by providing substitute machines in case of breakdown. Another important thing which I think can really work in favour of Godrej vending is that the beverage circuit parts are made up of food grade material.Godrej is the first one in the industry which is providing food grade material in its machines. So Godrej should focus more on this feature for selling vending machines These are some of the recommendations which I think would really make a positive mark on the current scenario of the Vending machine business prevailing in the Indian Economy.

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Limitations of the Project

The main limitations of the study are: The numbers of respondents are limited. As the sample size is less so the responses can be biased. Results may vary from person to person as perception of each individual is different from one another. Sometimes information provided by respondents may be unavailable due to personal problems. Information provided by respondents may be inaccurate. The research had to be completed within a small span of time. This has limited the researcher from choosing a satisfactory number of samples.

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Learning
The business is confident of growing its Tea & Coffee business through innovation coupled with an aggressive marketing and rural distribution drive.Out-of-home has been identified as an important channel to drive growth. The current initiatives have helped to establish a strong presence in this segment. Distribution width has been increased with the coverage of Hot Tea Shops and an increased number of vending machines. The domestic coffee business achieved excellent growth in volumes and profits. Expresso, an innovative coffee pre- mix, which delivers a creamy, frothy coffee cup, has also been launched. In order to strengthen its share in the premium segment of the roasted and ground coffee market, a new product, Hot Chocolate, was launched. This product contains 90% premium coffee and 10% chicory, and delivers a superior cup. The pace of innovation was maintained in distribution- related cold chain activity. This resulted in substantial reduction in supply chain costs. Mobile vending continues to receive meticulous attention as it will provide the impetus for further growth in the future. The Business will continue to focus on accelerated growth of the impulse segment, through more focused brands and deliver affordable products through appropriate innovation. This will provide the platform for a stronger performance in the years ahead.

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Bibliography

Books
Marketing Management by Phillip Kotler

Websites
www.google.co.in www.godrej.com www.scribd.com www.managementparadise.com

Magazines
Business World

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