Case Cashews India Brazil

MARKETING INTERNATIONAL

THE CASHEW CASE

INTRODUCTION

Cashews have their origin in the Brazilian jungle. The Tupi Indians ate the cashew apple in the past. Later the Portuguese spread this tree to other tropical countries trying to grow this tree on plantations but the vulnerability of the tree towards insects makes made it impossible.

Cashews are composed of a fruit and a nut. The fruit was exploited earlier because it matures first, is bigger then the nut and processing the nut is more complicated. Later, the nut became more important then the fruit because of higher popularity of the Indian population.

By the introduction of the cashew nut processing industry in India the nut became more popular in India. Almost 50% of the Indian cashew production was for own use, the rest of was for exportation. Anyway India was the strongest export country in cashew nuts world wide until mid of the seventies.

This world leadership in producing cashew nuts is the consequence of being the world largest producer in cashews. The second reason is the high Indian demand in early days. Foreign Cashews would not be competitive due to a higher cost. Finally the workforce in India is used to this kind of work.

Processing (roasting/ steaming, shelling and peeling) operations of the cashew nut is basically manual. Modern techniques permit to process the nut automatically but efficiency is much lower then manual operation.

Due to en excess of processing capacity in India they have been supplied with raw nuts from other countries to cover the processing capacity.

1. ANALYSIS INDIA VS BRAZIL

SWOT INDIA

Strength (Internal) Opportunities (External)

* Very good trained manual workers

* Low wages

* R&D with advanced technology

* Potential in increase of production

* High nut consumption in India

* Experience in producing and processing

* Better taste then the Brazilian nut

* No competitors for the Indian market and high internal demand

* Higher output of premium nuts

* Potential increase in nuts production

* No external competitors for the Indian market

* Quality standards define and classify product very accurate

* Good education and very good qualified people

* Suppliers of raw nuts (Africa and far east) close to India

* World Market price stable

* High quality standards

* Potential in increase of production

* High processing capacity in India

* Development of products such as oil or other derivates for cosmetics, chemistry etc.

Weakness (Internal) Threats (External)

* Manual processing more expensive then automated processing * Soviet market disappears

* Suppliers from other countries try to process their own nuts and bypass India

* Brazil biggest competitor

* Lower processing cost in brazil

* Most important market US

* Long shipping time to main markets

SWOT BRAZIL

Strength (Internal) Opportunities (External)

* Automated processing, cheaper

* Low wages

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* Potential in increase of production and processing

* Experience in producing and processing

* World Market price stable

* Development of new applications for cashew oil such as fuel for cars (majority of Brazilian cars are driven by alcohol instead of gas)

* Potential in increase of production

* Most important market US

* Short shipping times to US

* High processing capacity in India

Weakness (Internal) Threats (External)

* Automated processing produces lower efficiency in premium nuts.

* Internal consumption only 15%

* Taste of Brazilian nut

* High processing capacity in India

2. CONCLUSIONS

India's advantages are based on high experience in processing, high processing capacity keeping costs low providing high quality products production.

There for the raw nut supply comes from India and also from low wages countries. As a representative value for medium income per capita, GDP/capita is taken. Brazil GDP per capita is 8600$/Year versus Indians 3700$/Year. Fact is that Brazil uses automated systems to process the raw nuts while India takes advantage of skilled and experienced manual workers. The real processing cost for Brazilian nuts is much lower then the manpower intensive Indian process. The Indian advantage is that the final product in India has a higher value due to the higher quality and higher efficiency in premium nuts.

Suppliers for Indian raw nuts are in first place the Indian production and followed by Mozambique, Tanzania, Vietnam and Kenya. This countries with even lower income (GDP/capita around 1500$/Year) supply India with cheap raw nuts. It is necessary to keep this price low due to additional shipping costs.

India is actually the world market leader in supplies of cashew nuts.

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