Snapshots of Food Industry News
Amazon Inc. hopes to buy BigBasket to gain ground in Indian market
The US based e-commerce firm Amazon Inc. is in talks with hyper-local delivery service provider BigBasket which operates in 25 countries across USA. Amazon would like to be part of this fast growing market and so wishes to buy BigBasket, India’s largest online grocery store. The company has been having zooming sales and has reached a break-even point in two. Amazon has also been expanding its own online food and grocery sales and wishes to increase product offerings.
Amazon has been most successful in India and the company plans to spend $5 billion in the coming years so it can stay ahead of local competition. However, the talks with BigBasket are at a very preliminary stage and would not necessarily result in a sale. So far Big Basket and Amazon have not really talked specifics. Also BigBasket has been having talks with private equity firms for funding. Last year, BigBasket raised $150 million in a funding round led by Dubai’s Abraaj Group, and also has backers like Bessemer Venture Partners and Helion Venture Partners.
Yellow Tie Hospitality aims to open 50 Genuine Broaster Chicken outlets by year end
Yellow Tie Hospitality introduced America’s Genuine Broaster Chicken to India in May 2016 and the brand has been expanding mainly in the North-East in India. It opened its first store in Guwahati and has now launched another store in Gangtok and Imphal is next on their radar. In Gangtok Yellow Tie Hospitality has tied up with franchise owner, Karma Doma Bhutia who feels that the menu offerings are in keeping with the taste buds of consumers in this area.
North East India is a very high potential market but because of geographical constrains the region does not get much attention from restaurant chains in India. Yellow Tie Hospitality plans to make it a key market for Broaster Chicken. In fact they plan to open a total of fifteen stores of Genuine Broaster Chicken in North East by 2018.In the rest of India Yellow Tie Hospitality plans to open Genuine Broaster Chicken restaurants at Vashi in Mumbai, Varanasi, Bangalore, Delhi and Pune in next one month. Its expansion plans will also cover Bhubaneswar.
Wow Momo aims to expand to 180 cities and targets 50 stores a year
Kolkata-based Wow Momo Foods has raised Rs. 44 crores through a Series-B round led by venture capital firm, Lighthouse Funds. The new funding will enable Indian Angel Network (IAN) to partially exit the restaurant chain in about two years. IAN is the oldest and largest angel investor group in the country and a founder funder that has helped Wow Foods build a good company.
Wow Momo caters to the growing Indian middle class which now has more disposable income and are keen to experiment with new food choices. The company will use the funds to expand its presence across the country. Wow Momo, which currently has 117 company-owned and operated stores in eight cities, is targeting to have a presence in 180 cities this year. It also plans to open 50 stores per year over the next two years.
PepsiCo launches its Nacho Chip brand – Doritos in India
PepsiCo has begun the manufacture of its nacho chips in India in its Kolkata plant. The Beverage and Snack maker already makes snacks under the Kurkure brand and now they will also launch Doritos salty snacks under the ‘Make in India Policy’. PepsiCo plans to source the corn used in Doritos from Indian farmers as their goal is to develop the local ecosystem as per government policies. Doritos will be marketed in a number of formats like retail chains, online and in neighbourhood stores. Doritos is one of the fastest growing snacks in PepsiCo’s portfolio. Among beverages they manufacture Pepsi and Mountain Dew carbonated soft drinks.
Coca-Cola to launch frozen desserts in India
In a bid to expand its portfolio beyond beverages, Coca-Cola is planning to introduce frozen desserts in the next three months. Initially the desserts will not be marketed as retail packs but will be available through institutional formats only like in movie theatres. Desserts are generally considered sugary and fattening but providing a healthier option can offer the consumer a guilt free experience. The new products will challenge the dominance of Hindustan Unilever and Amul in the Rs.10, 000 crore ice-cream segment.
As consumers have made known their preference for healthier food choices, Coca-Cola also intends to move towards healthier beverages. They will launch new versions of Maaza and Minute Maid which will have fruit chunks. As part of their Virtuous Circular Economy, Coca-Cola intend to invest Rs.11,000 crores in building an agriculture based ecosystem, food processing units and sourcing so that in the next 5 years they are able to introduce a number of fruit-based products that would also benefit farmers. They intend to add juices to carbonated drinks, have more local fruit variants, launch new fruit based products and export Indian fruits globally.
ITC to diversify to enter the premium fruit and vegetable category
ITC is planning to enter into the premium fruit and vegetable segment and into priced processed foods segment. They will be given a new brand name and will compete with new-age grocers like Amazon Fresh, Mother Dairy and other retailers. The fresh produce market is estimated to be a Rs.3 lakh crore market and ITC intends to find a space there. Processed foods will include products that have high variability in price. ITC will begin selling online through BigBasket and other online channels.
ITC intends to grow beyond snack foods and climb up to be India’s most diversified Consumer Company. ITC is also planning to build its portfolio of processed frozen foods and use its Master Chef franchise for that. Each quarter the company will roll out either processed, frozen or dehydrated products so that their products are on top of existing products in the cold chains and stores. ITC is no longer known just as the biggest cigarette maker, but the Kolkata based company is also the fasted growing branded packaged food company.
Pulse has become the number 1 candy in the confectionery market
According to the Nielsen data Pulse, the centre filled sugar candy, has become the leading hard boiled candy (HBC) in the market. Pulse candy sales have doubled to Rs.326 crores as compared to the previous year. Second in rank is the Indonesian coffee flavoured brand Kopiko which had sales of Rs.306 crores. Pulse was launched by the DS Group the makers of Pass Pas and Baba Elaichi. Pulse candy has a tangy taste with a masala centre which became instantly popular among adults too.
It seems that hard boiled candies are driving the Rs.8, 500 crore confectionery market. Candy segment is growing fast because of innovation and new launches unlike the éclair and gum segment which has slowed down. Last year candies made up just one third of the market share and this year they rule half of the total confectionery market. Besides hard boiled candy gums rule 20% of the market, éclairs 14%, cough lozenges 13% and lollipops 4% and jellies have only 1% of the market. The percentage of market share might be low for jellies but it is growing exponentially.
Parle Products to foray into Pulses
Parle Products have launched their pulses under the Fresh Harvest brand. Fresh harvest will market Toor, Moong, Urad, Channa and Masoor dals. These pulses will be sourced from the best farms in Karnataka and Maharashtra. The pulse market is set to grow to 35 million tonnes by 2020, from the present 27 million tonnes. Fresh Harvest intends to offer consumers unadulterated and nutritious premium pulses which are healthier and safer.
Fresh Harvest will be marketed through class- A outlets, self service outlets and in local retail chains across Maharashtra. They will be launched in a phased manner in other parts of India within one year. The biscuit and confectionery maker intends to be fully involved right from sourcing to delivery and will go all out to convince consumers to make the switch to packaged pulses.
Sapphire Foods looks to raise Rs.400 crores from private equity investors
Sapphire Foods is looking to raise Rs.360-400 crore from private equity investors to fund its new store expansion plans. Sapphire Foods owns more than 300 outlets of Pizza Hut and KFC in South India and Sri Lanka is valued at $250-300 million. The raised fund will largely be a primary one and existing investors could decide to monetise part of their stake.
Sapphire Foods is owned by a consortium of PE investors like Samara Capital, CX Partners, Goldman Sachs and IDI Emerging Markets Fund. The EBOTDA positive company has seen same store sales grow by more than 10 per cent, year on year in the last three years. They wish to add 50 new stores and the raised capital will fund this expansion.