Mahindra War Room 2017 Agri-business Caselet

MAHINDRA AGRI-BUSINESS CASELET

EVOLVING THE SABORO HEALTHCAFE BUSINESS

Mahindra ventured into the Agribusiness sector in the early 2000s, with the vision of
bringing farm-tech prosperity to their long-time tractor customer - the Indian farmer.
During that time, Mahindra was already a force to reckon with, having sold tractors
since 1960, pioneering the green revolution in India. In the 3 decades between 1960
and 2000, the tractor business subsequently globalized and expanded into over 40
countries, making the Mahindra brand the largest seller of tractors by volume in the
world. The Farm-Tech Prosperity vision, which Mahindra originated in the early
2000s, aspired to go beyond just selling tractors and farm equipment to the farmers.
Pursuing the vision of Farm-Tech prosperity, Mahindra started assisting farmers by
providing them the market linkages for their produce, to increase their returns and
disposable income, under the Shubhlabh business. More services, such as Crop-
care, Seeds, Micro-irrigation, and Agronomy, grew under the name of Samriddhi.
Collectively, these services are referred to as Input Driven businesses, where
Mahindra helps the farmers with key inputs for the farm (such as Seeds, Agri-
chemicals and Micro-irrigation). Input-driven businesses grew through the first decade
of 2000s, diversifying Mahindras Farm related businesses. Subsequently, over the last
5 years, a parallel Foods business - spanning Dairy, Edible Oil, Fresh Fruits, Pulses,
Processed Foods and Basmati Rice Businesses, has evolved. Overall, Mahindras
Agribusiness has recorded an 8x growth in the last 4 years, ranking among the Groups
fastest growing businesses. Mahindra War Room contestants too have played an
impactful role in evolving the strategy, with active participation in Edible Oil, Dairy and
the Fruits businesses in the past. Some of the winners have eventually even joined the
Group to build the businesses - for instance, the Dairy case winner who articulated the
strong case to enter the business, eventually joined the Group to implement the
strategy and create the business itself!

LIVE BUSINESS CHALLENGE: EVOLVING THE SABORO HEALTHCAFE BUSINESS

Mahindra has been oering better quality seeds, Agri-chemicals, and extensions such
as the MyAgriGuru app to empower the farmer to earn better. Mahindra has done
pioneering research in Seeds, and sees a large opportunity in growing the seeds
business into a successful R&D driven business. In Agri-chemicals, Mahindra is looking
at the possibility of alliances to expand. The Micro-irrigation business is also likely to
grow at an average of 20% CAGR over the coming 5 years, and Mahindra has already

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moved from being the #6, to the #3 in this space over last few years. These businesses
come under the Inputs side businesses as defined earlier.

On the Foods side, Mahindra oers Edible Oils and Pulses under the brand NuPro
which stands for purity and authenticity. Mahindra also oers Fruits & Dairy under the
brand Saboro which stands for health & wellness, and holds the promise of a healthy
lifestyle. From the perspective of the Antifragile principle, returning to natural and
healthy lifestyle is like the future returning to the past. The Vibrams shoes of today
mimic the barefootedness of the past. Tablet computers and touchscreen are closer to
Babylon tablets. Both these new inventions resulted after a bunch of unnatural
iterations. In the same way, the success of the quick service restaurants that sell tasty
but often unhealthy food, may be an unnatural iteration that is really looking to a
return to the healthy lifestyle, but with the speed, eciency and variety benefits of the
modern life.

To help the consumers Touch & Feel the Saboro brand, and engage with the brand
more intensely, Mahindra pioneered the Saboro Lounge which is now being called
the Saboro Health Cafe. Saboro Health Cafe is about understanding the needs of the
Millennials and the middle-aged, for healthy & tasty foods, and allowing them to
indulge healthily. The first Saboro Lounge launched in Mahindras Kandivali facility, as
an in-house, beta and the second one opened in Mumbais Churchgate station about a
year ago. Both these proof of concepts are doing well, in terms of customer
satisfaction & business performance. Mahindra is now evaluating the right scaling up
strategy for the Saboro lounge, and has a few alternative approaches.

1st option is to follow the QSR route, following the playbook of Dominos, Starbucks &
McDonalds. This route involves larger capital expenditures and longer gestation
periods, while ensuring consistent brand experience and a strong brand recall.

2nd option is to pursue the current trend of oering Cloud-kitchen based Fresh
Food, which would be the playbook of FreshMenu or Faasos. These players oer
tasty & convenient food options, though not positioned as healthy. The orders are
placed online through website/ app and serviced through central kitchens located
across the city.. These players target more oce deliveries and are achieving good
success.

3rd option is oering healthy food in Corporate Oces, creating cafes inside
companies where 500+ people work. Both Corporates & HR personnel seem to be
looking for companies which oer healthy, high-quality food options. These three
alternatives of growth leverage the new mantra of fluid interaction between work and
life. This is synonymous with another property of Antifragile systems that talk about

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building Optionality, which enables business to build the feature of maximizing the
upside and minimizing the losses.

There is a growing trend of eating health foods and snacks around the world,
particularly in corporations. This is more so in snacks, where people generally tend to
snack unhealthily. Large successful companies could be interested in oering healthy
food options inside their premises, if good quality & standards are assured. Saboros
uniqueness lies in the items used and the way the dishes are prepared, creating food
options which are both healthy & tasty. Interesting & innovative products designed by
expert Chefs aided by Nutritionists. Possible future products include healthy
indulgence alternatives to common junk food. Getting the product, the brand and the
experience right is vital to Saboros success.

Given this background, which of the strategies explained above should Mahindra
pursue - should it be the QSR route, the Cloud route, or the Institutional segment
route, to expand the business, or a combination of these? Or are there any other
routes? What are the merits and demerits of each of these alternative routes,
what opportunities exist in each of them? The problem also encourages you to
look at leveraging the Antifragile principle of Random tinkering, which entails a
series of small connected experiments across all options to see which route
could be most profitable for the business to take in the long term. What are the
needs, segments and global benchmarks of people who aspire for a healthy
lifestyle - who will be excited by such a concept? How can Saboro Health Cafe
evolve into a premier, trustworthy health cafe chain - the Starbucks of Health
Cafes, if you will? How can Mahindra make health food more interesting? Can
Mahindra create a subscription based health food oering, to cater to people with
specific vitamin, multi-mineral or nutritional needs for health reasons? What
viable level of actual store footprint will be needed to enable customers to touch
and try the Saboro experience, before they are able to order oine?

Evolve a detailed roadmap for smartly scaling up the Saboro Health Cafe
business of Mahindra, to be amongst the Top 3 Players within the next 5 years.

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