Yogurt Chain Looks to Indian Culture for Growth

Posted on 7 May, 2012  in Press

Los Angeles Business Journal by Bethany Firnhaber

In India, yogurt has been a longstanding feature of the national cuisine. So will selling yogurt in India be akin to selling ice cream to Eskimos? Pinkberry Inc. will soon find out.

The L.A. frozen yogurt chain announced late last month that it signed a franchise agreement with Mumbai, India, company JSM Corp. Pvt. Ltd. to open Pinkberry stores on the subcontinent. JSM already operates other U.S. brands in India, including California Pizza Kitchen, Trader Vic’s and Hard Rock Café.

The openings will start slow, with only one store by the end of the year. The plan is the chain’s latest step to grow its brand of frozen yogurt globally, especially in emerging markets.

Chief Executive Ron Graves acknowledged that entering the Indian market presents certain challenges.

“India is a very complicated country to break into,” Graves said. “It’s a very large, emerging country so the infrastructure isn’t as developed as a country like the United States. It takes partnering with someone who’s operated businesses in India to be able to navigate the hyperemerging growth.”

But Darren Tristano, executive vice president at Chicago market research firm Technomic Inc., said Pinkberry’s frozen yogurt will likely find many customers among the young.

“It has a product that has international appeal and it’s a very contemporary concept,” Tristano said. “The brand seems to resonate with the younger generation.”

India has a lot to offer Pinkberry in that segment of the market. Of the 1.2 billion people in India, almost 60 percent are younger than 30. In the United States, with 308 million, only 40 percent of people are younger than 30.

Overseas Expansion

Pinkberry opened in West Hollywood in 2005. It was the first such yogurt shop to open in the United States, and within months, copycats started popping up. That first tiny store attracted thousands of customers a day, many of them willing to wait 30 minutes and risk parking tickets. By 2007, the company had opened 33 stores throughout Los Angeles and New York. The company opened its first overseas store in Kuwait in 2009, which led to more stores throughout the Middle East and in Morocco, Russia, England, Canada, Peru and, earlier this year, the Philippines. Today, Pinkberry has more than 180 stores in 17 countries, not including India.

It isn’t the first froyo chain to open in India, however. Cocoberry, a native entry, opened in 2009, followed by Canadian company Kiwi Kiss. Last year, Seoul, South Korea’s Yogurberry started opening stores, and this year along with Pinkberry, Dallas chains Red Mango and Smoothie Factory will make their debuts. All of those brands have announced more aggressive growth strategies than Pinkberry’s.

Graves, Pinkberry’s chief executive, said he’d rather be the best than the first or most widespread.

“When you grow fast it’s easy to cut corners and compromise, but we refuse to do that,” he said. “We’re looking to open one store at a time, exceeding customers’ expectations there and then moving on to the next. I think the brands that have the best partners with the most thoughtful, long-term plans are the ones that will be successful.”

In India, most families make their yogurt at home, though commercialized variations sold at grocery stores are becoming more common with younger generations.

Common Ingredient

Chef Hari Nayak, a culinary consultant in New York who specializes in Indian cuisine, said yogurt is a common ingredient in Indian recipes.

“We use yogurt in savory dishes, from marinades to curries to condiments,” Nayak said.

It’s also used in most religious rituals, along with milk and honey, as an offering to various Hindu deities, and to make a few popular desserts, such as lassi and shrikhand.

Nayak said frozen yogurt, though, is still a new concept.

“Ice cream has always been popular,” he said. “But frozen yogurt? There aren’t many Indian brands out there that have ventured into that.”

So Pinkberry and its rivals are pioneering the concept.

“I think what they’re trying to do is to build an opportunity outside at-home dining,” Tristano said. “They’re looking at a product that’s already accepted by consumers and trying to bring them convenience and a variety of flavors.”

Graves is eager to see how his brand of yogurt will be welcomed.

“It’s one of the countries in the world where yogurt is very relevant,” he said. “There have been some Pinkberry copycats who’ve entered the market there, so we look forward to bringing the Indian customer the original.”