Today: Passion fruit
RS Kamath's simple but powerful idea of adding slivers of fruit to the traditional kulfi has made his 'Natural' chain a multi-crore business. Nuzhat Aziz tells us more...Special: Small ideas, Big changesindia Updated: Jul 16, 2008 02:31 IST
In Raghunandan Srinivas Kamath's life, two unfortunate incidents eventually added up to something so fortunate that it has defined his life. The first one was his failure to pass class seven in Mangalore, because of which his father pulled him out of school and brought him to Mumbai. The second was his falling out with his brother and their business venture in Mumbai, Gokul's, a chain of restaurants serving ice cream, fast food and juices.
It was 1984, and he knew he had to quickly stand on his own feet. For that he knew he had to come up with something really novel. He quickly decided he would specialise. Because of his stint with Gokul's, which sold ice cream, he knew what that involved, so that's what he decided he would make and sell.
He saw that the market already had two players making industrial ice cream, Vadilal and Kwality, so he decided to make ice cream the traditional way and keep it completely natural, devoid of artificial flavours and preservatives.
"The market was already there for industrial ice cream, which had loyalists in the city," said Kamath, 54, who cannot speak English and converses only haltingly in Hindi. "I wanted to move away from the artificial."
Then he added a small twist to this. He decided he would add bits of fresh fruit to the traditional, natural ice cream. The formula was, in effect, kulfi + fruit. "My father was a dealer in fresh seasonal fruits," Kamath explained. "He taught me all about the nuances of the fruit trade - how to check whether the fruit is ripe and where to get the best quality fruits."
The brand Natural was born
In 1984, with Rs 3 lakh to his name, Kamath opened his first outlet - a tiny place in Juhu. He had put this sum together, partly from the money he got from his brothers when he parted ways with them and loans from friends.
Since this was the first time he was setting up an enterprise on his own, he wanted to wade in cautiously. "I was not sure how receptive the city would be to my idea," he explained. "So I hired just three people, and insisted that my wife, whom I had just married, join me in the business. I did not spend too much doing up the interiors; I kept my outlet simple. I had faith that my products would speak for me."
Because he had not invested very heavily in hiring lots of staff or in doing up his outlet, he was not under pressure to earn very high returns immediately.
So armed with the basic skill of making ice cream the traditional Indian way, Kamath started his business. "There are three easy steps," he explained. "Boil milk in a kadai, make rabri and then cool it," he said.
But he added a twist. It struck him that whenever Indians wanted to embellish a seasonal fruit, they often poured milk on it. Why not do the opposite, by embellishing his traditional milky ice cream with fruit? So he added slivers of whichever fruit the customer asked for. "Since I knew about fruit, it was easy for me to choose the best ones," he said.
A few months after the outlet opened, Kamath introduced 15 new fruit flavours. Sitafal (custard apple) was an instant hit. "The first Sunday after this, I sold 300 scoops," he recalled. He got this traction with no advertising. "We became popular purely by word of mouth," he said.
Once the basic idea of combining traditional ice cream with fruit proved successful, Kamath decided he would not settle for anything except the best seasonal fruit. "I travelled to Saswad - a small town near Pune - for sitafal and to Ratnagiri district for mangoes," he said. "It is also an acquired art to understand fruits."
Soon, from sitafal to jamun, from musk-melon to mangoes, Kamath gave customers a wide choice.
Apart from the simple but highly original idea of combining traditional ice cream with fruit, Kamath's pricing was astute.
He charged a mere Rs 8 for two scoops, much lower than the established brands that sold industrial ice creams.
By 1994, the business had really taken off, and Kamath wanted to open five more outlets in the city. Since Kamath's overheads were minimal, he was by then making a reasonable profit. So he decided to expand. He approached his childhood friend, Girish Mallya, to join him. Mallya, who was working for State Bank of India for 15 years, decided to take up a new challenge and came on board. "When Kamath went ahead with his expansion plans, I thought it would be quite exciting to help him with his venture," Mallya said, who is now general manager. "He had the technical expertise and I was sound in the financial world. Also, we were busy with our own jobs, but we met almost everyday, so I already knew what Natural was all about."
As a first-time entrepreneur, Kamath learnt something every day. "The customer is a good teacher," he said. "Some of my customers would give suggestions about flavours. Some of them even told me how people are getting innovative with fruits and ice creams in places like Africa and Singapore. I took all the suggestions seriously."
Kamath introduced the jamun flavour, for instance, based on a customer's suggestion.
Gradually, from 1994 to today, Kamath opened more outlets, which today number 46 in Mumbai. All these outlets get their ice cream from one factory in Charkop, Kandivili. The ice cream is dispatched in batches to ensure that only fresh produce is stocked at the outlets. Because the process uses no preservatives and fresh fruit is added, the ice cream must be sold soon after it is made.
It wasn't all smooth sailing. The traditional Indian method of making ice cream was slow and laborious because it had to be done manually. This also meant that maintaining consistency in taste was a huge challenge. It also meant that scaling up was bound to be difficult.
"There is still no equipment in the market that can make traditional ice cream," he said. Unlike industrial ice cream, Natural's ice cream has to be made in batches, to ensure it is fresh. After all, no preservatives are added. Natural started looking out for equipment for making the kind of ice cream it wanted, and would increase productivity and ensure quality. They approached Raju Jituiri, a dairy technologist and consultant who develops special machinery that makes both traditional and industrial ice cream. "I educated them on efficiency, bacterial quality, hygiene and consistency," Jituiri said.
"Gradually, we had to custom-make and develop some equipment to help us enhance the process," explained Kamath. By the time Kamath began to think of expanding, he had all the equipment that he required.
But some fruit also posed a problem. Sitafal was one of the most popular flavours, but the fruit had to be manually deseeded. "At a time, one person can deseed only two kilograms a day," he said. "Now I use 500kg of sitafal everyday. This was one big challenge I had to face." Eventually, they found a machine to do it.
Then all of a sudden, just as he was poised to expand in 1994, he was faced with a serious tax problem. Because Kamath was not educated he did not understand the nitty-gritty. He faced a huge loss but managed to resolve the problem. He finally ensured all his papers were in order and all taxes paid. "I wanted to grow my business, but also wanted to ensure that it was on the right track," said.
Mumbai, said Kamath, gives everyone a chance. "It was an alien city for me," he said, "But I was not scared to experiment here."
From the Rs 1,400 that came in from the first sale of 300 scoops, or 12 kg, of ice cream on the first Sunday of February 1984, to a whopping Rs 10 lakh that came from selling three-and-a-half tonnes of ice cream last week, Natural's growth has been astonishing.
Kamath invested Rs 3 lakh in 1984. Twenty-five years later, he makes a profit of Rs 1.4 crore, which he thinks will double to Rs 3 crore this financial year.
Despite the success, Kamath still does not feel the need for advertising campaigns to boost his sales. "I am quite happy with the way we have achieved popularity," he said. "My ice creams are still nominally priced, at Rs 28 a scoop, and I am sure newcomers will be no competition."
Loyal customers swear by Natural. "In the early 80s, we were used to the old brands," said Vasanthi Rajaram Baliga, a homemaker and one of Natural's oldest customers. "After returning from the UK, it was great to be treated to Natural, which was served with fresh fruit. I also bought an ice cream maker from Singapore and tried making homemade ice cream. But it was never as smooth and consistent as what Natural offered."
How has Kamath dealt with the competition? When Natural came on the scene, Yankee Doodle and Vadilal were already established players. But he said his chain had a created a stable niche. He admitted that the entry of Gelato, which occupied a similar niche, dented his business a little before it recovered. "Mumbai is receptive to changes, they like to try out new things," he said. "But they are also very loyal customers. Even though the market is flooded with new products, there will always be customers, including new ones everyday."
Relaxing in his plush 2,000-square-feet bungalow - a replica of a traditional Manglorean house - at Lokhandwala Complex, Kamath said that he was in the big league now.
"Before multinationals came into the market, I was not very ambitious," he said, sitting in the courtyard. "But now, I have learnt to think big. It's time for me to expand."
By next year, Kamath would like to double the number of outlets in Mumbai from 48 now, and take the chain to most Indian cities. To back this expansion, the 54-year-old entrepreneur is looking at expanding his 4,500 square feet factory into 20,000 square feet. "I am a technical person, so it is not very difficult for me to supervise such an expansion," he said. "We are ready to take the next step forward."
Natural makes 7,000 litres of ice cream every day. Next year, the figure is all set to double. With home delivery accounting for a third of sales, Natural has also started an all-India service. In the next two months, sugar-free kulfi ice creams for diabetics will be available in all the outlets.
"Right now, we have 100 natural flavours, but I am constantly trying to think of new ones," said Kamath. "We tried to introduce the raw mango flavour and call it 'Pickle'. It was an instant hit. Yet we have to be consistent with our flavours and that is our biggest challenge."
Kamath is proud that his older son Shrinivas will join the family business soon. Shrinivas, a third-year student at the Family Managed Business course at SP Jain Institute, said that after completing law last year, he realised that his interest lay in the family business. "I travelled to Germany with my dad for a food fair, and then it dawned on me that this is what I want to do," he said. "I am taking a keen interest in the business and am waiting to join my dad."
With Natural now a humming business, Kamath, confident in his entrepreneurial abilities, is now diversifying. "My annual turnover is Rs 25 crore," he explained. "For the past five years, I have been successful. I have learnt several lessons, and now know whom to trust. I am looking at Mangalore, where I have developed a resort and have recreated the life of south India. Spread on a five-acre plot, the resort is set in a natural habitat. There are fruit trees and vegetables grown everywhere. It will be open for the public soon."