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McGrain-gillesvueghs@Gmail - Com (1) 2
McGrain-gillesvueghs@Gmail - Com (1) 2
This case discusses the opportunity to launch a branded grain product into the Indian market. This is an
entry-level case, suitable for candidates relatively new to case interviews.
Problem definition
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McGrain is a co-operative of 5,000 farmers in rural India. As a co-operative, the farmers come together to
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sell their grains to retailers and wholesalers. They are the third largest grain seller co-operative in India
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and sell 10 million tonnes of grains annually. They have operations in four regions in India and a head
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office in Mumbai.
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McGrain mainly sells three types of grains: rice, wheat, and maize. The grains are collected from farmers
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in the co-operative and then sorted, packed, and stored at facilities across the region. McGrain then sells
its grain to large retailers and wholesalers across the country and abroad. Customers make the payment
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to the McGrain co-operative, which then is forwarded to the bank accounts of the individual farmers.
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McGrain’s management has observed that their market is changing rapidly in India. “Mom and pop”
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stores have given way to supermarkets, and consumers are rapidly adopting branded products. A
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‘branded grain product’ is a packet of grain - such as rice, wheat or maize - that can be recognized by a
specific brand name and attractive brand design on the packaging. Historically, McGrain’s products have
been delivered un-branded, in plain packaging.
McGrain is considering launching a branded grain product into the Indian market, and has asked
you to advise on whether they should do so.
Additional information
If asked, please share that this change would not require McGrain to grow and cultivate new forms of
grain; only the brand and packaging itself would change.
Possible answer
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b. Market growth rate
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c. Industry profit margins
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3. Can McGrain succeed in this market? Do they have, or can they acquire, the required capabilities?
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a. Capital requirements
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b. Operational expertise
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What would you need to know to estimate the size of the branded grains market?
Additional information
A market sizing is not expected at this stage. The candidate simply needs to suggest the data points
they’d collect if they were to go about sizing the market
Possible answer
We’d need to follow several steps in such a calculation, each of which would require key data points.
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First, we’d establish the size of the target population as # of target households. This could be established by:
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• Total population
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• # of individuals per household, to convert population to household #
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• Geographic or income data to segment target household # from total household # (e.g., perhaps
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certain regions don’t purchase grain products routinely and instead favour packaged goods)
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Second, we’d look to source data on average annual consumption of grains per target household. This would
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Third, we’d need to identify the proportion of grains purchased that are branded goods, perhaps by looking at
customer survey data. From this we’d identify the tonnes of branded grains purchased per year.
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Lastly, we’d need the price per tonne of branded grains, which we’d multiply by tonnes of branded grains
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We’ve uncovered some basic data points about this market which are shown in this exhibit [share Exhibit
1]. You also discover that supermarkets exclusively sell branded goods, whereas grain sold through
“mom and pop” stores is unbranded.
Based on this, how big do you think the market for branded grains is? What else does this
information tell you about the potential opportunity?
Possible answer
• Half of the target market are buying grains from supermarkets where they are consuming other
branded FMCG products; therefore, the market size would comprise 5 million households
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The market size for supermarket-bought grains is 10 million tonnes per year, which is a very
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large market
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Customers are price sensitive so creating branded grains does not mean McGrain can charge a
large premium
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Given the size of the potential opportunity, McGrain wants to explore the investment required if it were to
launch a branded grain product.
Thinking creatively, what would McGrain need to invest in to ensure their branded grain product
is successful?
Possible answer
It’s a considerable leap for McGrain to move from selling non-branded grains to retailers to launching
their own brand. Areas they’d need to invest in include:
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• Customer education (to educate them on advantages of branded products e.g., in-store
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tastings/demos)
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Product packaging (to ensure superior packaging, appropriate branding on the packaging, etc.)
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• Product marketing (marketing on mass media to inform the customer about the branded product
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launch)
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• Retailer relationships (build a close relationship with supermarkets to ensure products are
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McGrain management have shared sales data from last year with us [share Exhibit 2]. Upon launching
a branded offering, they foresee that in the first 2 years activities such as product design, packaging
and marketing will increase their cost per tonne of grain by $11.
Based on this information, which grain type could McGrain most easily offer as branded product
without reducing profit?
Additional information
• If necessary, remind the candidate that the maximum 10% price premium on branded goods
should be taken into account
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• If asked, share that the price of grain is stable and no major changes are expected
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Possible answer
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Let's take X as the price of the grains today. We expect branded products to command a price premium of
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10%. At the same time, we expect our cost per tonne of grain to increase by $11 for branded products.
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10%*X = $11
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X = $110.
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We’d require a current price point of at least $110 to break-even on a branded offering.
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Last year we did not sell any rice at or above this price point, which rules this product category out. For
wheat, only a small proportion (10%) could be sold profitably as a branded product.
However, two-thirds of our maize sales were sold at $120/tonne or higher, and this price point would
enable us to profitably sell a branded product. Unless conditions in the market or McGrain’s production
plan have changed dramatically since last year, the client should therefore start by offering branded maize.
A small proportion of wheat could also be sold profitably as a branded product.
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Possible answer
We were asked whether McGrain should launch a branded grain product in the Indian market. I recommend
that McGrain does launch such a product, starting with maize, for the following two reasons:
• A significant portion of Indian consumers are adopting branded FMCG products, so there is a market
need which is expected to grow
• The additional branding cost of $11 and price premium of 10% create a small additional profit margin
above a certain price point. This is most clearly an opportunity in the case of maize, which on average
commands a higher price point than other grains
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As a next step, McGrain should assess its ability to invest capital into this project and consult farmers to
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gain buy-in for the idea, given the client’s co-operative structure.
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If we had more time, I would like to explore the possibility of selling branded grains in mom and pop shops to
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understand the potential for an even greater market size.
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