Leonardo: Indianizing Olive Oil

Abstract

This field-based case works as a solid introduction to new product positioning in a nascent market with an opportunity to define the product category. At the start, the brand creates a new category product line with an entry-level cheaper product with plans to later move up the value chain. The position the firm takes in the beginning sets out to change consumer's perceptions of the product's use and convince consumers that the value of olive oil is in cooking. While the market for healthy cooking oils is large, the brand should overcome entrenched consumer beliefs about the best oil to use for cooking, and develop strategies for repeat purchase beyond just trial. From the humble beginning of his first taste of olive oil in Australia, VN Dalmia, chairman of Dalmia Continental Pvt. Ltd. (DCPL), in New Delhi, India, had created an INR40 crore brand by the end of 2012. As he worked on future directions, Dalmia thought about where the company had been and where he believed it should go. The major issues before the company were how to generate volume by converting the mid-segment consumer, attaining exponential growth, and setting strategy for future distribution to feed this exponential growth. Was the company doing all it could to inform the masses about the benefits of cooking with olive oil? And between its two channels—traditional, unorganized retailers and modern, organized retailers—was it getting its brand message through? Would future direction include adding more olive-based products beyond oil? Or would selling the brand to a more entrenched consumer-products company that could take Leonardo to the next level make sense? Excerpt UVA-M-0904 Rev. May 4, 2016 Leonardo: Indianizing Olive Oil VN Dalmia (MBA '84), chairman of Dalmia Continental Pvt. Ltd. (DCPL), in New Delhi, India, announced plans to invest INR60 crore toward expansion of DCPL's distribution network. This investment was more than its revenues of INR40 crore even as late as 2011 and 2012, and was expected to generate growth of about 150% within a year. Launched in 2003, Leonardo was the leading olive oil brand and had a market share estimated between 22% and 25% of the 6,000 tonnes per annum olive oil market in India by 2011. The tastes and food preferences among the people of India were as varied as the influences that shaped each region's history and religious beliefs. Some regions preferred fish and rice, others added coconut and potatoes, but the one common ingredient among vegetarians and meat eaters countrywide was spice. Dalmia wanted to introduce olive oil as another common food staple. “Olive oil in India was used for massaging babies,” he said, “Not for cooking.” The major issues before the company were how to generate volume by converting the midsegment consumer, attaining exponential growth, and setting strategy for future distribution to feed this exponential growth. Was the company doing all it could to inform the masses about the benefits of cooking with olive oil? And between its two channels—traditional, unorganized retailers and modern, organized retailers—was it getting its brand message through? Would future direction include adding more olive-based products beyond oil? Or would selling the brand to a more entrenched consumer-products company that could take Leonardo to the next level make sense? . . .