How Uvaraja Hariramakrishnan or Raja, as he is well known, made his brand Pattu a household name.
In the sprawling 4500 sq.m office of Sabi Foods at Bangholme resides one of the most successful stories of Indian retail business in Australia. The man behind Sabi Foods, Uvaraja Hariramkrishnan or Raja, as he is popularly known, has not only succeeded in tapping a niche market but also ensured that brand Pattu has become a household name for every Indian in Australia.
Sabi Foods carries more than 3000 lines ranging from raw ingredients, oils, spices to processed frozen foods which are supplied to every part of Australia — from Darwin to Alice Springs to Perth, Tasmania, Brisbane, Adelaide, Sydney etc. Since February this year, supermarket chain Coles carries about 16 of its lines forming a strong category in the spices and lentils section. Today Sabi Foods has a slice of 25 percent of the marketshare in Australia’s grocery industry with a clear advantage over other Indian retailers, leveraging on what its clients call a deep understanding of the sector.
How Sabi Foods came about in Australia can be traced back to the late 1990s when Raja, then a student of MBA in Melbourne, completed his studies and went back to India to do something in his country. That vision changed when he got married and met his in-laws in Singapore who anchored him into the spice trade. “They wanted to do something in Australia too,” recalls Raja, who was then 25. Being the intellectual entrepreneur, he travelled here in 1998 and conducted a three-month market survey and research – to create something bigger and better.
After his research, Raja saw an opportunity. He found that they could distribute to the Indian shops through his in-laws’ company in Malaysia which was already manufacturing spices. So in 1999, he started trading. To have a basket he also started importing a few things from India and also opened a small retail in front of their wholesale division set up in Dandenong over a small 500 sq.m space. “Like everybody else we were distributing to the market.”
“The growth was very good initially although 1991 was a bad year as we were just coming out of recession; the dollar was at 59 cents when we started,” reflects Raja. “But come 2003-04, the Indian students’ influx was happening and we were enjoying the benefits of it. It was good timing and we capitalised it well.”
But being a small market with high overhead expenses, Raja realised he could not survive with just the few products. So he thought of something else – to create his brand. “Everybody has a label but there is a difference between label and brand. The way we saw it then was: branding is our way for tomorrow.”
Raja changed his roles overnight. From an importer he became a marketing person. He sat down with experts in India to get started. Using external help such as business coaches and seminars, he gave shape to his ideas. “That was a big change of role in my business. We worked on packaging, quality control, division, spread of the categories and everything to make it happen. We also did everything right and focused on the brand. We clearly identified we had to create a brand not a product.” With a good set of team and focus, his efforts paid off. It set him different from the rest.
However Raja admits he still has competition in individual categories such as, say, sweets. “The challenge is when I do a local brand, the quality has to be lot superior than the competitor. If I am at par, people don’t see me as any good. The beauty is in people noticing it. So it is very hard for us to keep up with because big players such as Haldiram are masters in what they are doing. I have almost succeeded in getting the quality a lot better in most of the categories. That is something I am proud of. I have good manufacturers as suppliers who could help us in the start.”
With a quality team in Mumbai, which is the hub for business, Raja had representatives to go to any manufacturers to source products. “We are still small but we have a food technologist and if there is a problem he is there to address the problem so that quality is maintained. So these are the little things that we took care of. Our quality was always superior in most of the products. That’s how we became a brand not just because we were competitive but because the quality was better and consistency was there.”
But he plugged more into his strategic gaps by changing his vision to set yet another benchmark. From branding he wanted every Indian household in the country to have one Pattu brand. “I believe much of that has come true to an extent but we are still working hard.”
Raja realises that to be recognised he has to be better. But that comes with a bit of price in the current volatile environment. “We have to sacrifice our margins to be competitive. Yes we have to take a hit on margins to make sure that we are still there along with the quality.”
He cites an example of the Tur dal, one of the most highly consumed products in the lentils category. “I purchase a good amount of stock directly from a manufacturer. Compared to anybody else but I would pay 300 dollars more than what they could get from, say, a broker. So while some may say our products are expensive, that is because our quality is good. Most of the time we pay more money to get that quality. 300 dollars is 30 cent but we are only 10 to 15 cent expensive in the market. So in truth we are not as expensive as we have to be. That is what I mean by competitive but our quality is far superior. I can challenge this: you can take my packet and you won’t find one little drop of skin on my Tur dal. I can give it to you in writing.”
Unfortunately he says some products such as the black whole urad dal is procured from Australia and it is the only country he has no control over. “When you buy from overseas you have control. We can’t import with skin or whole seeds. We get hit with local products in the market and that is the current challenge we are facing.”
For the past one-two years, with the economy slowing down, the dollar dropping and less influx of students, the whole business community has suffered a hit. Earlier demand was growing in the same pace as supply but now there is supply glut in the market.
“The competition has become desperation to a lot of people. Desperation is a hard one to fight with. People do not know how to change themselves to the current dollar. The retailers are not yet ready to change to the dollar. So the economy is having its own impact because we as a community have spread into many industries right now. Ten years back we were not in every segment of the country. So now when the economy gets hit we (Indian business) also get hit as an economy.”
Raja cites the case of a Canberra retailer who shut shop with a due of 55,000 dollars. “Of course this is one extreme case but the other extreme is that people are trying to run businesses without any idea on how to run it and demanding discounts for the goods provided. If you made money, you didn’t share your profits with me, so where does the question of discount arise? One can ask for time or work on a plan and we are happy to cooperate but this habit of seeking discount has become a menace. It doesn’t make sense,” he rues.
His other worry is the change in climatic conditions around the world which is causing shortage in agricultural produce. “Sourcing the product is becoming a lot of challenge for us. We have to think about trees being cut etc. For instance, the past six months saw a scarcity in the supply of black urad dals.”
No I am not going to be the next Kishore Biyani of Australia,” laughs Raja. “We are dealing with a small population unless the population dramatically changes, that won’t happen.”
The past one-two years has been a lot of learning curve because of the changing nature of the dollar, he admits. “But again, that is potential for a better tomorrow because we could remove all the weeds from the market which is important for the entire business. Our distribution is lot stronger. So I see it as an opportunity.”
Raja has planned a lot of things for the next five years, one of which is to become stronger. But before that he wants to address the problem for the next financial year, get the cash flow right for the business “because people lack the understanding of doing business now and as a community we have to help each other. The biggest problem I have with retail now is that when the business goes down a little for whatever reason they reduce the price on the retail which is wrong. You don’t make money by reducing the price but everybody does that. Self-confidence is a problem we have. This spoils the market. When the dollar is going down we have to push the margins up, when the volume is going up you have to push the margins up. It is bitter truth. If you want me to be there next year to service you please pay the price now.”
Businesswise we are going to change our strategy and become a strong distributor of food, says Raja. “This means that we will be service oriented and make sure customers get service products, consistently and readily. That’s a growth I am seeing. That’s a place where I can stay one step ahead. We have done our branding. Now we wanted to expand into a service-oriented company with food.”
Raja is a savvy businessman. His career has flourished after he completed his mechanical engineering and studied MBA in Australia. “Engineering always helps,” he smiles. From starting a business in a 500 sq.m warehouse in Dandenong with three staff to making a nation-wide presence, brand Pattu is now something one cannot ignore.
“When I started I knew nothing about food products, never cooked in my life and I didn’t know the difference between a Tur dal and Chana dal. They were all yellow. I had to learn myself… I still remember those days.”
Raja’s message to his team is: “I am my own competitor. If we do our job right it is easy.”
His motto is work for tomorrow not for today. “I am very clear about that. Today has already been taken care of. Secondly, if you focus on anything it can happen.” True that.
By Indira Laisram