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Food Gourmet

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Food Gourmet

  1. 1. 78 • PROGRESSIVE GROCER • September 2013 AHEAD OF WHAT’S NEXT www.imagesfood.com Apart from the high volume-driven categories in the gourmet space, there are newer products and categories that are being rapidly adopted by the Indian consumer By Reteesh Shukla & Vidul Sharma O ver the years the kind of food consumed by Indians has undergone an incredible transformation.The gourmet retail space has witnessed rapid expansion in the past five years, and seen a strategic shift from traditional, low-cost products to premium offerings like Washington apples, Australian Kiwi fruit, Swiss chocolates, French cheese, and Italian pastas. Chocolates, cookies, juices, pasta, olive oil, honey, sauces and salad dressings, and certain fruits are the major categories constituting the bulk of the gourmet market in India. Apart from these categories, ingredients such as truffles, artichokes, asparagus, Australian lamb, and Norwegian salmon have also found their way into the Indian food and beverage space. The growth of organised small-to-large format/specialty retailing, a surging economy, rising disposable incomes, ever-widening urbanisation, exposure to global cuisines and food habits, newer travel destinations, growth in the specialty food and beverage (F&B) space, and relaxation in regulatory restrictions are the catalysts for the growing gourmet F&B market in India. Estimated to be worth USD 1300 million, the Indian gourmet food market is growing at a CAGR of 20 percent and expected to cross USD 2800 million by 2015. Indian consumers now have both the willingness and the ability to try new products. Urban residents are, by and large, becoming regular purveyors of gourmet food in India. As the urban populace has higher earnings compared to the rural equivalent, and spend over 40 percent of their income on food alone, this is enhancing the quality of products consumed. Young urban Indians are increasingly experimenting with exotic global products in their kitchens, a trend set by expatriates, returning NRIs, and jet-setting corporate executives. The core target remains the population between 16-40 years which has exposure to varied tastes, uses such products, and is willing to pay a premium for better culinary tastes. Hotels and restaurants are the other major consumers of gourmet food products in India offering seasoned international variants such as Peking duck with Ossetra caviar, Kanzuri Shrimp, JamóIbérico Pata Negra (a gourmet ham sourced from acorn-fed pigs), and contemporary sushi in an increasing number of fine-dining, specialty restaurants such as Hakkasan, Le Cirque, Megu, B Bar, etc, with more set to enter the market. To fulfill this increasing demand, there are enough third-party importers already bringing International Food Gourmet in the Kitchen LeMarche,Gurgaon
  2. 2. www.imagesfood.com AHEAD OF WHAT’S NEXT September 2013 • PROGRESSIVE GROCER • 79 expected to grow at 45-50 percent annually over the next five years. While the increase in imports is around 49 percent, the per capita consumption in India is still well below the international average. Health attributes, such as the absence of cholesterol, have driven its consumption by affluent Indian households. Consumption of Extra Virgin Olive Oil has increased by 35 percent, while that of Pomace Olive Oil has increased by 14 percent, in the past one year. Given the rising aspiration for the finer things in life, urban Indians are also scouting for ways to get a taste of the world in their own kitchens. The growing popularity of gourmet cheese in India is largely due to the increasing exposure to world cuisines. These, along with olive oil, have truly arrived in the Indian market and are well accepted by the affluent and middle classes. The imported cheese market in India is growing at a rate of 30 percent, and cheeses varieties like Haloumi, Fiore Sardo or Flower of Sardinia, Parmigiano Reggiano, Stilton, Provolone, Mozzarella, Roquefort, Gruyère, Camembert, Feta, etc, can be spotted in retail outlets across the metros. Pasta is one of the most popular items in the gourmet foods category alongside olive oil and cheese. The universal popularity of Italian cuisine and the emergence of organised retail have boosted consumption of imported pasta in India. Its market size is expected to grow by 25-30 percent annually. Barilla, De Cecco, in these products and thereby facilitating ease of availability. These importers have paved the way for a number of brick and mortar, gourmet-retailing concepts across India. As a result, sales are no longer restricted to only select retail stores across the country. Today, almost all stores ranging from small departmental stores to big retail chains sell imported food products. Wholesale player Metro Cash & Carry has also introduced an international foods section which offers more than 2,000 gourmet food items at its outlets in Yeshwanthpur in Bangalore and Zirakpur in Punjab. Gourmet-focused retail chains are also expanding in a market which includes names such as Nature’s Basket, Nuts & Spices, Foodhall, Le Marche, etc. The rise of the online gourmet retail space is another indicator of consumers adapting to newer tastes and lifestyles, and includes names like thegourmetbox.in, yzury.com, deliciousnow. com, among others. In terms of product demand, consumer preference is slowing shifting and replacing the usual products on the kitchen shelf. Similarly, an increasingly health-conscious consumer segment has propelled the olive oil market in India. Brands like Leonardo, Cola Vita, Bertolli, Fragata, etc, which were only known to five-star hotels a couple of years ago are today easily available through retail outlets. The olive oil market is worth around USD 80 million in value now, and is and San Remo are the most popular brands of imported pastas in the USD 14 to 15 million- worth Indian market. With rapid urbanisation and changes in eating habits, sauces and condiments have begun to occupy substantial shelf space in Indian gourmet outlets. While mayonnaise, ketchup, and olives are the most popular, others such as chili, soya, gherkins, etc, have also gained wide acceptance. The growing demand for sauces and condiments comes from both individual customers as well as institutions such as hotels, restaurants, and clubs. Heinz, Tabasco, Remia, Barilla, and Prego are some of the famous imported brands. Apart from these high volume-driven categories in the gourmet space, there are newer products/ categories that are being rapidly adopted by the Indian consumer. These include fresh/frozen berries, Greek yogurts, preserved lemons, yuzu fruit (an east Asian fruit which is a hybrid mix of mandarin, orange, and lemon), tagines (vessels to cook Moroccan dishes), salad leaves (radicchio, kale, Chinese lettuce, arugula, watercress, etc), grains (Quinoa and Couscous), egg replacements (200 gm pack is equivalent to 66 eggs), gluten-free foods, and processed butter. The gourmet market is poised to grow thanks to both demand and supply-related forces but is challenged by drawbacks such as limited product/segment awareness, poor management of shrinkage, wastage, and vendor management for proper product replenishment, limited product shelf life, and restrictions on imports and FDI. These challenges have kept many players at bay for a long time; but it is expected that with the opening up of FDI norms, we will now witness the growth of such players. n Reteesh Shukla is Associate Director andVidul Sharma is Sr. Consultant, Food Services & Agriculture Estimated to be worth USD 1300 million, the Indian gourmet food market is growing at a CAGR of 20 percent and expected to cross USD 2800 million by 2015 Foodhall, New Delhi
  3. 3. 80 • PROGRESSIVE GROCER • September 2013 AHEAD OF WHAT’S NEXT www.imagesfood.com International Food About the company: The company specialises in food processing based on modern European technology. In the beginning: The company was started in September 2011. Initially, we were working from our living room table at home. Four months later, we launched our first product. Production facilities: We have a very modern plant in Attibele village in Bangalore. The machines are imported from Germany. We have a water recycling plant and we run partly on solar system. The plant is ISO 22000:2005 certified; it includes HACCP and ISO 9000 which is critical for management operations, and ascertains that our production is hygienic. We chose Bangalore because of its temperate climate as our products require cold storage. A city like Delhi would require more energy to run a cold storage unit. Brand’s USP: High tech machinery, imported German ingredients, and a German master butcher with 14 years of experience - all of this make our product authentically German. We have a smoking chamber as we do not use smoking liquids, preservatives or artificial; colourants. So ours is a natural product that costs half that of an imported equivalent. We have noticed that people are wary of buying sausages because they think that they might contain chemicals, preservatives, etc. Our focus is on the highest quality and reliability. Our products are produced under the supervision of our German Master Butcher, who has over 35 years in the business. Investment and ROI: Our investment was mainly on FDI basis and a couple of German investors. We broke even after 18 months. We do have to pay 40 percent import tax for meat, and we sell at half the price compared to other imported products. This has attracted the hotel industry as well to our brand. The hotel industry in Bangalore is set to boom; Marriot is planning 6 more properties in the next one year. This will give a boost to our business. Growth rate: From the initial 3 tonnes, we now produce 14 tonnes, which indicates around 25 percent growth rate. We want to keep our growth linear since we have just entered the retail market and we need to build up our Bon Appetitbrand. We are happy to realise how curious India has become towards foreign cusines and tastes. Market view: Products are coming from Sri Lanka and from local players, but they are of a very different quality. We target a niche clientele because our products are very superior. The retail industry is growing and we would like our products to become more visible across stores. Apart from HoReCa, we are also targetting deli counters and gourmet shops. Our brand is present in all the metros and big cities from Kolkata to Trivandrum and in Goa, Pondicherry and Coimbatore. There are three kinds of trends that are happening in India: consumers want to eat only the best food, and they are studying Robin Decher, Business Development Manager, Arthur’s Food Company labels for the ingredients. The second trend is demand for ready-to-eat products. Our products can be prepared on the pan in less than five minutes. The third trend is barbecuing, especially by men, who enjoy sausages with their beer while watching sports on TV, or during small get togethers. Our products are easy and quick to grill on charcoal. Products: We have cooked or smoked pork and chicken products. Our best seller is chicken sausage with chives and pork bratwurst. From only 5 products, we have increased to 22 product offerings, out of which 8 are new to the Indian market. Our frankfurters, bacon, smoked ham and cocktail sausages, pork cheese sausage, pork zrakauer sausage, as well as the famous pork bockwurst,.are like no other. At our smoking chamber, we use wooden chips to create smoke that gives bacon, ham and sausages the flavour and authentic taste. Many of our competitors use artificial smoking liquid that turns the sausage brown in colour. Chicken products contribute 73 percent to our sales and pork 27 percent. Retail: We have 11 skus. Prices range between Rs 99 per 150 gm of chicken sausages with chives to Rs 164 per 150 gm for smoked pork cheese sausage. 350 to 400 gm of smoked pepperoni salami costs Rs 490. We have 150 and 250 gm packs for retail, and 1kg packs for institutional sales. We have installed our own freezers at two supermarkets, and our merchandisers go to the stores everyday to check our product display, etc. Currently, we are present in 35 retail outlets; our best performing cities are Bangalore followed by Delhi, Chennai and Mumbai. Marketing: We do live grilling and sampling at supermarkets. We have an active Facebook blog apart from our website, www.bonappetite. com that also offers recipes. We also send out flyers and inserts in newspapers. We have participated in trade shows such as Ahaar, Annapurna, and Food Expo. Challenges: Frequent power cuts affect cold storage or freezers at retailers. There is limited supply of pork due to few producers, despite the high demand for pork-based products. Also, handling of meat is a very sensitive factor as the temperature has to be controlled, but our distributors are doing a good job of the logistics. Products are packed in thermocol boxes and sent to the distributors’ freezing units by air freight or by train from our production unit in Bangalore. We have installed our own containers with chefs or purchase managers at hotels. Lastly, we have had to acquire around 18 licenses! Future plans: We plan to introduce more products such as pepperoni salami and mini pepperoni salami. We want to enter Rajasthan, and also Gujarat, though the city is mainly vegetarian. We are also looking at entering Bhutan,Thailand and Dubai.
  4. 4. www.imagesfood.com AHEAD OF WHAT’S NEXT September 2013 • PROGRESSIVE GROCER • 81 Approximately 80 percent of sales comes from retail and 20 percent from HoReCa. Challenges: Custom duty and FSSAI clearances which lead to delays of up to 14 days. Lack of specialised cargo handlers for transportation of stocks made of glass bottles and tin cans. Promotions: We promote our brand at the retail level with branding and visibility elements at the stores; below the line (BTL) advertising, offers like buy one get one free on selected skus, and through print ads. Market view Future plans: We are currently focussed on developing the west and north zones. We will tie up with modern retail chains and appoint distributors who will cater to them. We plan to launch a host of products like olive spreads, cereal bars, things that have a health benefit from the Greek/ Mediterranean region About H&H Hellenic Heritage: A Greek brand founded in 2011 by VTV Europe (importer and exporter of Greek food worldwide). It was launched in India in 2012 by Kolkata-based Indian importer, Deli Foods. The brand has charted a business strategy to grow and expand in increasingly competitive imported foods category in India. Brand positioning: H&H Hellenic Heritage captures the essence of Mediterranean cuisine and its globally acknowledged health benefits. It has introduced international style packaging for the first time in this category in India. H&H is also the only Greek olive oil in the Indian market, where the olive oil market size is approx Rs 400 cr. Retail: We are present in Big Bazaar, Spencer’s Retail, Dorabjee, etc. We are currently concentrated in the east Indian market, with a sporadic presence in other zones at select retail chains. We are currently developing distributor tie-ups in Mumbai and Delhi and increasing our retail presence everyday. We are currently supplying to select HoReCa in the east zone. About Kelsen: Founded in the year 1933, as a small family bakery in the Jutland, Denmark, Kelsen has today grown to export its cookies to more than 110 countries around the world. Kelsen launched Royal Dansk cookies in India in 2011. Despite stiff competition in the space, the product has performed very well, and sales are growing rapidly by more than 100 percent over last year. Brand positioning: Since the brand has been introduced very recently, we are creating the platform to build up volume, understand market behaviour, consumer preference, buying pattern, trade gimmicks, etc. Retail: We are present in D’Mart, Big Bazaar, Spencer, Nuts & Spices, Easy day, Le Marche, Metro Cash & Carry etc. Our best performing retail zone is north India which gives us 45 percent of the sales, 30 percent comes from the west, 20 percent from the south, and 5 percent from east India. The product has been positioned at attractive price points, and has a high shelf life of 18 months. Challenges: Cookies are still an unknown category in India as premium biscuits cannot be called cookies. Size in value for imported cookies in 2013 would be around Rs 500 cr. In my view, there was no company or brand with a significant presence till we appeared on the scene. Today, we are the market leader and have no direct competitor. But yes, indirectly, there are around 15 small competitors from Asian countries such as Indonesia and Malaysia. Manav Agarwala, Managing Director (H&H Hellenic Heritage) Deli Foods Srikant Panda, Country Manager (India), Kelsen As regards operational challenges for importers, cookies are a very upmarket product and new as a category in India. People do not understand what a cookie is. If called a special biscuit, then it loses its credibility because consumers will compare them with other premium biscuits made in India. High custom duty and a weak rupee makes the MRP very challenging and the product unaffordable. Logistics too is a concern. Future plans: The company is not looking at setting up a manufacturing unit or subsidiary in India, because they cannot be called Danish Cookies then. To call them Danish Cookies, they must to be made in Denmark, even if the same ingredients are used in India. It’s always better to import directly than through an importer as it ensures better control. It is important to be focused. Importers bring in multiple brands and have to deal with issues on finance and operations. We associated with the best importers in the country for transparency, and a strategy for helping us to grow together! We are continuously focusing on our primary and secondary growth and increasing our presence to Tier II cities as well. Currently, we are monitoring the price point, consumer demand, and market competition. We are the largest cookies maker worldwide. Once our retail presence becomes strong, we will enter the food service space. Worldwide, all QSRs are buying cookies from us. Many of them are present in India, so, it’ll be easy to tap them in the future.
  5. 5. 84 • PROGRESSIVE GROCER • September 2013 AHEAD OF WHAT’S NEXT www.imagesfood.com International Food Overall, our refill rates vary on a case by case basis from once in 7 days to once a month. It also depends on the assortment size/movement from a given store – so this varies from store to store. As we have a selective retail footprint, all retailers are serviced very well, through our appointed distributors and supported by our sales team. In the east, we do not operate through a distributor, but deliver directly. Promotions: There is no better way to promote a brand such as ours than to get consumers to ‘experience’ us. We lay a lot of emphasis on sampling – both dry and wet. A team of trained promoters are stationed at our major retail stores to engage with prospective consumers. We use selective print for advertising and brand building, and are exploring avenues like digital/social media and trade events to further build our brand amongst the niche audience. Challenges: The market is hyper-competitive. In the premium space, the key issues, besides distribution and marketing support, is maintaining the inherent quality of the product and the systems and processes to keep the quality consistently high throughout the year. This is critical for an agri-based product like tea, where the quality of the tea crop varies widely month on month from the same sourcing base. Buying the right teas and adherence to foolproof quality standards in production and packaging holds the key. Our back-end systems are best-in-class for delivering a product that matches and surpasses the very best anywhere in the world. The other challenge – particularly in the flavoured, herbal tea segment – is to continually develop variants/flavours that appeal to consumers. At Newby, this is an ongoing process as a result of which our portfolio today is amongst the widest across all major premium tea marketers. Future plans: We have a robust plan in place with respect to new product launches and entering new markets. Our recently launched Masala Chai and Green Lemon are doing very well. We have plans to launch our pyramid tea bags across 10 variants in select outlets, besides products in the herbal/infusions space. While we are primarily a metro-centric brand, we are closely looking at lucrative smaller markets – particularly in the north and west – which we will be entering shortly. We do not plan to enter the volume business in India at all. Our brand philosophy is captured in our product promise ‘The finest of Fine Teas’. We wish to remain wedded to producing teas of the highest quality. This is our operating principle worldwide, and the same will apply in India. So,we will not compromise on our product quality to chase volumes. Packaging: Our primary packaging facilty (across 2 plants) is in Bishnupur in South 24 Parganas in the outskirts of Kolkata. It is a state-of-the-art facility with systems and QC processes, built over 70,000 sqft, and has an annual capacity of packing over 800 tons of tea. It services a significant part of our international market, besides our domestic market. About Newby: UK-based Newby has its headquarters in India in Kolkata, which is their centre of production for both their India and international markets.Newby India, its subsidiary, commenced operations in 2010, and is engaged in the distribution, sales and marketing of Newby’s vast range of teas in the Indian market. Brand positioning: We operate in the top-end of the premium segment, which is very small as on date, but poised to grow exponentially in the short/medium term. We have a wide tea range (black, green, flavoured and infusions) in various skus – teabags, cartons and caddies - with a price range between Rs 215 and Rs1,500 per unit. We are achieving healthy double-digit topline growth year-on-year. Obviously, for a mass consumed beverage like tea, the premium segment is still relatively small in volume terms – but growing at a very fast pace – as newer consumers with a willingness to experiment with different tastes/formats within tea enter the market. The other big driver is health and wellness – where tea clearly has an edge over other beverage categories. This explains the interest shown by virtually all traditional tea marketers, including plantation companies, to premiumise their product offerings with green teas, organic teas, etc. Locational advantages: As a premium tea company, we pride ourselves in our ability to provide the consumer the freshest cup of tea – which, amongst other things, entails cutting transportation lead time between the tea garden (sourcing base) and the end-consumer (consumption base). To this extent, Kolkata’s strategic location at the heart of India’s tea growing region offers huge advantages. The city is very close to Assam and north Bengal - the top two tea producing regions in India (they produce the finest black teas), besides its relative proximity to China – home of the world’s finest green teas. This locational advantage has made Kolkata the hub of tea production since the British days. Since we at Newby deal with teas from the best sources of origin in the world, it made sense to have our manufacturing facility in Kolkata, from where we service a large proportion of our domestic and international markets. Retail: We are in the early stages of our presence in India, having entered organised retail less than two years ago. We are doing well across all markets. North contributes a higher percentage vis a vis other zones primarily because our market presence (distribution) in this region is the most. However, based on the trails and feedback we have received from across the country, we are bullish on all zones. The east zone (Kolkata especially) has a captive base of fine tea lovers. This is an early/growth stage of our retail presence. Some of our prominent retail customers are Food Hall, Spencer’s, Brown Tree, Amma Naana, Naturally Aurovilly, Godrej Nature’s Basket, Ratnadeep, and Modern Bazaar, to name a few. As a premium brand, we are very picky about the retailers whom we partner. We offer an attractive sales margin to all our retail partners, and those with better offtake obviously stand to gain more. Debraj Banerjee, Head of Marketing, Newby India
  6. 6. 86 • PROGRESSIVE GROCER • September 2013 AHEAD OF WHAT’S NEXT www.imagesfood.com International Food About Royce: Launched in Japan in 1983, Royce’ offers high-quality, innovative products. The selection of ingredients, experimentation in recipes, combination of flavours, and unique textures. It has a discerning following in Malaysia, China, Singapore, Russia and very recently New York, where its store is located at the upmarket Madison Square. In India it is present through a JV with Burgundy Hospitality. Brand positioning: We believe that the Indian market is ready for luxury chocolate. There is a clear and burgeoning interest in high quality and exotic foods from across the world. This insight led us to a partnership with Royce’. In fact, some of the most discerning customers at the Royce’ stores in Singapore and Hong Kong are vacationing Indians. By investing in what truly matters, that is, the highest quality, original ingredients, and a very responsive local supply chain, the Royce’ operating model makes for a compelling business case in this context. Retail: Royce has a standalone store at the Palladium mall, Lower Parel, Mumbai; the second will come up in Delhi soon. Royce’ products are for everyone, from potato chips dipped in chocolate to almonds dipped in bitter chocolate. we will start with 19 varieties ranging from Rs 484 to Rs1665, and with time, introduce limited editions and seasonal varieties as well. Marketing and promotions: The brand believes in subtelty and discretion. Our focus will be non-traditional marketing initiatives and a lot of in-store activations. Market view: India is the world’s fastest growing market for chocolates. Registering 15 percent annual growth between 2008 and 2012, the Indian chocolate industry is projected to grow at an even higher rate in the coming years. Even in times of recession, chocolates remain ‘recession proof’ as Indian consumers are willing to spend on affordable luxury for festive occasions and personal consumption. According to India Chocolate Market Forecast & Opportunities, 2018, India’s chocolate industry will be growing at a CAGR of 23 percent by volume between 2013 and 2018. Dark chocolates are expected to account for the larger market share when compared to milk and white chocolates.The Indian gifting market continues to provide captive demand for high quality confectionary, and is certainly considered in our go-to-market strategy. Avani Raheja and Samir Gadhok, Founders, Burgundy Hospitality Challenges: The luxury chocolate market is a completely new product category in India. The country has a rich heritage of producing, purveying and consuming some of the finest and most original sweet foods. Over the last two decades this “sweet enthused” culture has transgressed into a demand for newer and more unique sweet “sensations”, including international chocolates and confectionary. However, the supply side has not kept up with this demand. Indians remain chronically underserved when it comes to consistently fresh and well-crafted chocolate. Given the country’s diverse climatic conditions and challenging supply chain systems, most chocolates available are exposed to temperature abuse and degenerative environmental conditions. Future plans: Burgundy Hospitality aims to tap Royce loyalists and connoisseurs of luxury fine chocolates with 20 stores in the next 3 years and 50 stores over the next 5 years across India. No two Royce’ spaces will be identical in India; each will have its own unique and expressive characteristics. However, all our stores will evoke a sense of space, luxury and a touch of Japanese quirkiness.

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