Ministry of Food Processing Industries Set to Train Youth
The Ministry of Food Processing Industries (MoPFI) with the support of National Skill Development Corporation (NSDC) will train 10,000 youth every year. This move will upgrade the skills and increase employability of youth in the food processing sector. The food processing sector is predicted to register a growth rate of about 15-16% which the Ministry hopes will provide more employment to youth.
Employment in registered food processing units is set to increase by 2.75 million by fiscal year 2019-2020 from the present 1.76 million as the food processing sector is growing at a faster rate than any other sector in the economy. The major contribution in the growth of the food processing sector is likely to come from fruit and vegetable processing. Processing of ethnic and regional foods like ‘khakhra’ from Gujarat and ‘idli’ from the south would also see growth.
Areas that have been identified so far for the training are fruit vegetables, meat, dairy and poultry processing as these areas that lack a skilled workforce. Trained workforce could help to reduce wastage of fruit vegetables. Food processing is being encouraged as it impacts farmers positively and helps to reduce inflation.
Beneficial Merger of Papa John’s with Pizza Corner
Papa John’s commitment to expand its presence in India, especially in Bengaluru, Chennai and Hyderabad saw proof with the merger of Papa John’s with Pizza Corner. Papa John’s Indian franchisee, Om Pizza & Eats Pvt. Ltd has merged with Pizza Corner which is operated by Fred Mouawad’s Global Franchise Architects (GFA).
The existing Pizza Corner stores will be converted to Papa John’s branded restaurants by the first quarter of 2015. This unification not only sees expansion by Papa John’s but the move also fulfills GFA’s expansion plans. GFA had announced that it would open a total of 40 stores across all brands to take its total share to 100 stores in India.
Om Pizza & Eats Pvt. Ltd is owned by Avan Projects Pvt Ltd, promoted by Atulya Mittal. TVS Capital and the Jawad group of Bahrain hold a minority stake in Om Pizza. GFA’s Pizza Corner has a strong presence in south India where it operates about 70 outlets.
This move will allow Papa John’s to capture opportunities in this region and expand on their current 15 outlets. Pizza Corner is the third largest pizza chain in this region which is now set to get international branding once the outlets are named Papa John’s. On the other hand Papa John’s will see deeper penetration and a more rapid growth.
Both the companies are seeing the merger as a synergy in the expansion of stores. They are sure that the combination of Papa John’s world class pedigree with Pizza Corner’s local expertise will not only complement each other but will capture a huge chunk of the growing pizza market in India.
Yum! Restaurants Wants to Opt Out of Its KFC Business in Western India
Yum! Restaurants earnings for the quarter ended September shows a 14% increase in system sales in its India division, driven by 26% unit growth. But what is disappointing is that same-store sales declined by 4% and operating loss stood at $3 million. This is probably why Yum! Restaurants has put its KFC business for sale.
Yum! Restaurants has 700 KFC, Pizza Hut and Taco Bell stores in the country through a mix of company-owned stores and franchisee outlets. Yum! Restaurants runs its 340-odd Pizza Hut and Pizza Hut Delivery businesses through franchisees including Ravi Jaipuria-promoted firm Devyani International. It runs 350-plus KFC, or Kentucky Fried Chicken stores partly through franchisees and partly by itself.
This offer for sale of its operations in western India to a franchisee is being seen as a move by Yum! Restaurants to cut real estate costs like rents, staff costs and other overhead expenses that are eating into its profits. Yum! Restaurants, like other international brands, would also like to leverage the experience of local franchise operators to increase profitability. Many international brands now focus on branding and customer relationship while the local franchisees take care of operations.
Other quick service restaurant like Domino’s Pizza and Dunkin’ Donuts which are franchised to Jubilant Food-Works (JFL), McDonald’s west and south region operator Hardcastle and Costa Coffee’s India business, run by Devyani International are also showing a decline in same store sales. In fact a number of Costa Coffee loss making stores are being shut down.
In the coming months quick service restaurants are likely to continue seeing a profitability constraint. However with the food inflation easing off, the sector is hoping to see a revival.
Future Group Expansion Moves
In what is being seen as a planned move to strengthen their expansion plans Future Consumer enterprise Ltd. (Integrated food and FMCG Company) has acquired the Nilgiris convenience store chain that operates in South India. Established in 1905, Nilgiris is a well known food and grocery retail chain of South India. It offers not only a wide variety of products but also manufactures dairy, bakery, chocolates and staples in its Bangalore facility. Nilgiris operates more than 140 stores in Kerala, Karnataka, Andhra Pradesh and Tamil Nadu. It has eight distribution centers and owns its own fleet of refrigerated vehicles for supplying dairy and bakery products.
The Nilgiris branded bakery and dairy products will now be channeled through the Future Group and other modern retailers. On the other hand, FCEL portfolio of brands like Sunkist, Tasty Treat, Golden Harvest, Premium Harvest, Sach Ektaa, CleanMate and CareMate, will be channelised through Nilgiris store network. Future also hopes to gain leverage from Nilgiris’ expertise in running a successful franchise model. FCEL an arm of Future Group operates retail networks in 102 cities and 40 rural areas through brands like Big Bazaar, Central, Foodhall and Brand Factory.
McCafe Stores to Open 150 Locations
Coffee consumption has been on the rise in India. Taking advantage of this, McDonald has planned to expand in this area and will open 150 McCafe Stores in the next 3 to 5 years. McCafé is the third line-extension for McDonald’s in India with McDelivery and Dessert Kiosks being the others. The capital investment required for each McCafe store would be between 30 to 35 lakhs.
McCafes are housed within McDonald’s outlets internationally and in India the same pattern will be followed. The coffee stores would operate from within the existing McDonald outlets. McCafe will offer premium specialty coffee including cappuccino, latte, iced mocha and frappe. It would also sell quality beverages such as hot chocolate, specialty teas along with cookies, pastries and muffins.
McDonald has already opened 27 McCafé restaurants in Mumbai, Pune, Ahmedabad, and Nashik in a planned move to elevate its coffee portfolio. They will open more McCafes across west and south India as they have a license to operate there. McDonald hopes to see McCafes becoming a one stop destination for coffee lovers and so their emphasis is on offering great value for money and relaxing ambiance. They have stiff competition from Cafe Coffee Day, Barista, Starbucks, Costa Coffee, Mocha, The Coffee Bean and Tea Leaf and Gloria Jean’s. The organised cafe market in India is about Rs1, 380 crore and is predicted to double by 2017.
RJ Corp to Undertake PepsiCo’s Bottling Operations in North India
Varun Beverages owned by Ravi Jaipuria’s RJ Corp will now be running all north Indian bottling operations for PepsiCo. The US beverages and snacks major has divested all these operations to Varun Beverages as it feels that its franchisee partner understands the local market and will deliver.
PepsiCo hopes the move will step up its market share to provide a stiff fight to Coca-Cola. India is the fifth-largest market for Pepsi-Co globally but it trails Coca-Cola in the Rs 14,000-crore Indian soft drink industry. Ravi Jaipuria’s RJ Corp will work to close the gap with Coca-Cola which presently has 56% share of the market.
Varun Beverages will take over four plants and two co-packing units spread across Uttar Pradesh, Haryana, Chandigarh, Uttaranchal, Himachal Pradesh and Punjab. This transfer makes Varun Beverages PepsiCo’s top franchisee bottlers globally.
The north and east regions contribute about 40% of PepsiCo’s national sales. However, after this deal PepsiCo’s role in these regions will be limited to marketing and supplying concentrates to bottling operations. However, they will continue with their bottling operations in west and south India.
This acquisition will help to increase Varun Beverages’ current $1.5 billion business through Pepsi-Co. It will own 13 PepsiCo bottling plants in India including those in Delhi-NCR, UP, Rajasthan, the northeast and Goa. If we include the plants in Sri Lanka, Mozambique, Zambia and Morocco then the total plants owned by Varun Beverages now stands at 19 plants.
RJ Corp business interests include restaurants, ice-cream, education, hotels and real estate. Jaipuria also has the franchisee rights for quick service restaurants Pizza Hut and KFC and exclusive franchise rights for UK cafe chain Costa Coffee.