The Case of the Missing Lid
Customer Experience 101: What a pot of yogurt can tell you.
Ate any store-bought yogurt lately? I have. A favorite is Actiplus by Nestle. Just 1 large container can last for days. Except once you open it, you are left with a conundrum — how to store the rest of it because,
Nestle forgot to add a lid!
I am being generous in saying that Nestle forgot — rather it sells without a lid.
In most countries, yogurt is typically sold with a lid by market leaders like Danone, Arla, and Fage. Even Nestle’s Swedish Kvarg and a store brand — Sainsbury’s — in the UK carry lids.
If you are a dairy producer in India, you may be inclined to see others selling curds in packets/pouches and mud pots and conclude, consumers “are used to it.” Or that it is favorable unit economics. Or that if it ain’t broke (i.e. customer complaints), don’t fix it.
An idea is still bad even if it is the prevailing wisdom.
If you are a consumer, you may prefer instead, to know why brands don’t set better standards, what the price-value ratio is, and why the customer needs to discover defects.
Brands can create quality customer experiences only when they fully understand the journey from awareness, purchase, delivery, consumption, storage, and disposal of a product.
Disadvantages of a missing lid across touch points
Pre-purchase
A shortened product shelf-life.
Insecure packaging creates broken foils and product drips.
During purchase
Broken foils cause unhygienic touch and exposure. This is especially true in India where helpers abound and are most likely to handle the product (from stores to delivery) before the customer.
Broken foils almost always end in a return or an exchange, increasing overheads.
Post-purchase
One Nestle Actiplus container shows the best-before date range as the 9th to the 24th of the month — 15 days — but in reality, this is impossible to achieve.
Open containers stored in the fridge are unhygienic.
It is difficult to repurpose containers even though delaying items to landfill is better for the environment.
More on Lids
Constantia Flexibles, a leading manufacturer of flexible packaging, shares:
“Lids for dairy products are usually die cut aluminum lids with a seal layer that encloses the aluminum. The seal is heated in order to fasten the lid to the yoghurt container so that nothing drips out.
Lids have been made this way for more than 50 years, but naturally the process has been improved and enhanced as well.”
Later, discussing a new type of innovation in lids:
“Here, we can achieve material savings of up to 50%. This spares resources and makes the process more cost-effective for our customers.”
Greiner, another European yogurt packaging company, shares that lids:
“provide a secure seal for yogurt after it has been opened — and they extend the shelf-life of the food product, prevent it from absorbing odours, and ensuring it does not spill. ”
Fun fact: Clean empty containers with a lid can be used for storage (think DIY knick-knacks like screws, nails, or kids’ playdoh, crayons).
Business Snapshot
The global yogurt industry is segmented mostly by category — dairy or non-dairy, type — plain or flavored, fat content, and distribution channel —online, offline, or retail store format.
A former MD of Danone summarized the business landscape pre-2019:
“India is a market where the per capita consumption of fresh dairy products is just three kg, as compared to 25–30 kg in Europe. Of this, almost two kg is consumed in the form of home-made yogurt. The business we are in, which is doing the same thing in an industrialised form, is of 0.2 kg per capita. Hopefully, in 10 years, the market is not three kg per capita but 10 kg per capita.”
Fun facts: Plain yogurt is the best-selling type of yogurt in most countries including India. In 2022, India’s per-person consumption of yogurt was 11.4 kg and revenue was $19.15.
Let’s look closely at Nestle, a global brand, which has sold products in India for over 110 years, and an Indian startup, Epigamia, which was founded in 2015.
Nestle
Nestle, Switzerland is one of the largest food and drinks processing companies with 2,000 brands in 7 product categories, 270,000 employees, and a presence in 186 countries with WW revenues of $93B. (Read its 150-year history).
Nestle India owns 50–97% of the market share for instant baby cereal, pasta, and coffee. Annual revenues were ~$2B in FY21–22 with a 29.7% increase in profits and a 13.7% increase in revenues. In 1H2022, its revenues also grew ~13.4% from ~$830M to $1B, compared to the same period in 2021.
According to Nestle’s 2021 annual global report, India is the third highest growth region by percentages (Swiss Francs) after the UK (18.1%) and Canada (12%). It is also the 10th region by revenue (Swiss francs).
In its half-yearly 2022 report for Zone Asia, Oceania, and Africa (AOA), Nestle reports an impressive 8% organic growth due to increased prices and that it had “market share gains across categories, particularly in culinary portioned and ready-to-drink coffee as well as dairy.”
Business Today notes: “Nestlé’s business strategy was focussed more on healthy margins and bottom lines than on growing its sales or widening its retail footprint beyond the large metros packed with consumers who can afford its premium offerings.”
Clearly, India is a success story for Nestle. See its financial summary below which shows a 10-year period of increased revenues and healthy margins of over 20%.
Consider: In 2022, the Indian yogurt market was a $27B market and is growing at 9.94% CAGR for the period FY22-FY26/27 while the global market is growing at 5.5% CAGR.
Epigamia
The new kid on the block, with a fancy name randomly borrowed from Greek (meaning “intermarriage”!). Epigamia is focused mostly on plant-based and lactose-free options. Its success is validated by a 2019 investment of $25.6M from Danone. Overall, it has raised more than $55M from local and overseas investors. It claims to be the first “Indian Greek yogurt.”
Epigamia revenues bolstered by its direct-to-consumer selling grew by 20% to $15M in FY20 with a 20% margin improvement and a customer “minimum order value” of “10/15 cups of yogurt per order.”
A startup with a cool name (even if a bit opaque) and an innovation mantra. A Wharton MBA alum of Indian origin in Mumbai as one of the founders. A global dairy producer for an investor. Growing revenues and margins. A quality product. A winning combination, you would think, for a global product experience — not so fast!
Epigamia also sells yogurt with missing lids.
Yet, its pricing and positioning are for a premium segment.
Contrast this with the Nandini brand from the co-operative, Karnataka Milk Federation. Its 400g yogurt container sells with a lid as seen below.
Other companies selling with lids at times: Mother Dairy ($1.6B in revenues), Namdharis (~$100M in revenues), and MilkyMist ($130M in revenues).
Some types of yogurt-based desserts are almost always sold with a lid by many brands including a leading national brand, Amul ($6.5B in revenues) as shown below.
Why does an infrequently eaten dessert deserve a lid over a frequently consumed yogurt?
Pricing
Greek Yogurt
Epigamia’s 400g greek yogurt sells at Rs. 220 ($2.66). A Chobani 32 oz., 907g greek yogurt in the USA is priced at $5.58, 450g Skyr at Tesco in the UK sells for $2.11 while Waitrose sells its store brand of 500g greek yogurt in the UK for just $1.50. A fast-growing brand in South India, Milky Mist’s newly launched “Skyr” style yogurt sells for Rs. 120 ($1.43) / 250g.
Epigamia, with a missing lid, is the most expensive.
What would make its Indian Greek yogurt more expensive?
It is also interesting to note that Epigamia sells a 2fer deal (without a lid) that makes a single pot Rs. 50 ($0.60) cheaper which shows there is room to improve the single-unit pricing and provide a lid.
Plain Yogurt
Nestle’s probiotic yogurt (400g) is sold at ~Rs. 80 ($1), ~4x as expensive as Nandini’s 500 ml “curd” packets which are sold for Rs. 21 ($0.26) or 2x as expensive as Nandini containers sold with a lid at Rs. 38 ($0.48).
Fun fact: 500ml yogurt packet from Nandini’s is usually the same quantity as a 500g yogurt pot. So ml for gm, you are getting more or less the same quantity of yogurt for 50% less $.
(Learning this fact was topped only by finding a cooking sub-stack of stack exchange. Who knew that existed?)
If you discount Nandini as a co-operative, then consider that 1kg of Lancashire Bio, a quality probiotic yogurt in the UK sells for $1.20 at Asda’s. Milky Mist, sells its 1kg probiotic “curd” for Rs. 110 ($1.32) and includes a lid.
Even an organic probiotic yogurt, Akshayakalpa, is 13 cents cheaper than Nestle.
Why would Nestle’s process for making yogurt at scale in India be more expensive than a quality brand in the UK ?
This is even more surprising when you consider that Nestle has its own milk factories in India and has had time to build a robust supply chain.
Conclusion
A best practice should be applied to all markets rather than waiting for consumers or regulations to enforce it. That is the hallmark of innovative market leaders.
Nestle in its 2021 annual report: “Our unmatched expertise in nutrition science and technology enables us to deliver innovations quickly and scale them up across brands, categories, and geographies. In 2021, we continued to deliver fast innovation by leveraging our vast expertise and global innovation capabilities.”
Epigamia in its vision: “Innovation is our fuel. We love thinking outside the cup. Oops, we mean box. And we put that thinking to work at the Drums Food Innovation Centre. With plenty of creative elbow room and a passion for pushing boundaries, we experiment with unique flavors, create new products and bring innovation to life!”
A failure to apply best practices to the customer experience impacts consumers, whether it is a 150-year-old $100B business or a 7-year-old startup with $20M in revenue.
One can argue till the cows come home that their product quality is better but the proof is in the yogurt, the price, and the customer experience.
This case remains unsolved.
First published in UX Design Bootcamp, on Medium, Dec 30, 2022.
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Free to Choose - Milton Friedman. The Invisible Hand - Adam Smith. Nestle will react to market forces. If sales plummet, they'll either figure out that their otherwise tasty yogurt needs a lid or they'll drop the product from their line because it is unprofitable. "Lidlessness" problem solved either way. I like yogurt. We buy it in cheaply packaged lots of 6 or 12 in sizes that are meant for consumption of the whole in a single sitting.
Hi Jayshree, now THIS was interesting! How many hours of research did it require?? Thanks for the effort!