News Snippets on the recent happenings in Food Industry
Italian company Ferrero Rocher to make big investments in India
Ferrero Rocher, the makers of Kin der Joy chocolates and Nutella chocolate-hazelnut spread, is to invest Rs.367 crore in India. The company entered the Indian Food Industry seven years ago and to date this will be their biggest investment. The investment will be largely used to increase their distribution network, warehousing facilities and to upgrade their production facility at Baramati, Maharashtra. Chocolate consumption in India is lower than that of developing markets and even though consumption stands at 117gm of chocolate a year on a per capita basis; it is the lowest among emerging markets. Ferrero Rocher is however, committed to be a part of the Indian chocolate story as the volumes for chocolates is huge.
Café Coffee Day to Use Franchising for International Expansion
Café Coffee Day outlets belong to Coffee Day Enterprises and the company will soon be expanding their business in Egypt and Malaysia. They have chosen to use the franchising mode which the company says is their strategy for international expansions. The company is likely to partner with entrepreneurs who own a commercial or commercially converted or convertible retail space including on rental basis. They are opting for ground floor spaces that are about 1000 – 1500sq.ft with a minimum frontage of 25 running feet and ample parking space. In India Cafe Coffee Day is the largest coffee-shop chain with about 1,500 outlets. They have plans to expand in India too and have set a target of 135 new stores. Also each year they will open 5,000 vending machines. They also have outlets in Austria and Prague.
In the premium gifting category Ferrero Rocher is ahead of its nearest competitor Monde lez. With revenue from sales amounting to almost Rs.1000 crore it is already within striking distance of Nestlé’s chocolate division. The company is aggressively aiming at the Diwali gifting market as that is where the company has emerged the strongest and competitors could feel an entry barrier. Ferrero Rocher however, could feel the pressure because it does not have ‘bar’ products but the design and packaging concepts have allowed them to command a higher price per gram and therefore the gifting market has proved to be highly profitable and growing.
India Value Fund to invest handsomely in the growing food business sector
Private equity firm India Value Fund Advisors (IVFA) is all set to invest in the food business in the food service, ingredients and food packaging midsize segments. The company will be investing anywhere from Rs.640 crore to Rs.970 crore in the coming two years. They believe in backing entrepreneurs to scale up and have recently bought controlling stake in the chef Rahul Akerkar founded – deGustibus Hospitality which owns brands like Indigo, Indigo Deli, Neel and Tote on the Turf. They already have stakes in the ingredient business of VKL Seasoning and packaged food business of Keya.
The National Restaurant Association of India (NRAI) is expecting the size of the organised as well as the unorganised food service market to grow to Rs.408, 040 crore by 2018. The restaurant and QSR sector is expected to grow with sharp PE interest. IVFA intends to offer backing to packaged food brands and QSRs who have to often invest in their own infrastructure which bloats up investments tremendously. Growing concerns about food safety is as also an important area that food businesses need to invest in. Food sector is going to be one of the highest growing sectors in India with growth rates as high as 30-40% in some segments.
Nestle Increases Spending on Television Commercials Prior to Maggi Re-launch
After the June 5 ban and the loss to its reputation Nestle India is once again setting the stage for the re-launch of its Maggi instant noodles. With the Bombay High Court lifting the ban and the company receiving the green signal to go ahead with the Maggi production it is likely to go all out to advertise Maggi aggressively. The company has sought to use advertising as a strategy prior to the re-launch and hence their advertisement time on television has jumped to 96% in September as compared to August. This is also in sharp contrast to the decline in advertisement post the Maggi food safety fiasco. However, most media buffs feel that Maggi has become more known than it was earlier as a result of the controversy.
Last month the company had released its corporate campaign to coincide with 100 years in India and though Nescafe and Kit Kat were featured there was no mention of Maggi. However experts felt that whatever Nestle advertises has an umbrella effect on Maggi. Maggi has now been declared safe by all the laboratories that are mandated by the Bombay High Court to test Maggi samples so the company released a paper advertisement on Monday which stated “Your Maggi is safe, has always been.” The advertisement goes on to say that 3500 samples went through stringent tests in India USA, Canada, UK, Australia, New Zealand and Singapore. It is believed that company has asked McCann World Group to create new TV commercials for Maggi which should be going on air prior to the re-launch.