Jubilant FoodWorks

Jubilant FoodWorks plans non-food vertical biz

Jubilant FoodWorks which operates Dominos Pizza in the country is planning to diversify into non-food business especially hotels and apparel verticals.

It is also planning to foray in the businesses of stationery products, fashion accessories, toys, gifts, DVDs, VCDs and home décor products.

Besides, it is also looking to operate hotels, restaurants, beach resorts, health resorts, cafes and motels.

Moreover, the company is planning to strengthen its supply chain with its own or hired cold storages ice plants, warehouses, freezing houses and room coolers for storing food products being dealt by the company as a part of its business in India.

Organic Food

The new cult of Organic Food!

Organic Food is not just a luxury but a medicinal marvel too: no wonder the industry is trying to match steps with its increasing demand.

Organic food is invariably catching up fast with the Indian Retailers more so with the niche retailers for teh simple reason that there is an awakening in Indian consumers to eat healthy so the natural bent towards food which do not include foreign material that are added to traditional foods which tend to be toxic.

Indian Market

Out of total food business that is around 10 lakh crores per annum, only 1500 crores make the organic share. It is still nascent, and makes only .001 per cent of the total food markets share. But there seems to be a large opportunity for this category as demand is increasing day by day.

Target customers

This is niche retailing and organic food is expensive than the traditional food. Therefore, it caters to the rich and more so the higher middle class people because the latter is the working class that believes in staying fit for that promotion and in becoming more productive.

 People with 50,000 as their monthly income can afford it. Moreover, people with medical needs are main target. For example, Brown Rice is ideal for obese people and Wheat Grass for detoxification, One Organic food company spokesperson said.

Product categories

Cereals, pulses, spices, condiments, masala mixes, fruits, vegetables, oils, dairy products, ready-to-eat snacks, cookies, pickles, eggs, meat, fish, wheat grass, baby food, honey etc.

Price factor

With the low number of organic foods and the high demand for them on the market the prices hitch up. Here the laws of economics are put into play, where sellers see that a product is high in demand and the amount is low, they will increase the prices because they know that buyers are willing to pay anything to buy quality products. In comparison to traditional food, price is high by 30 to 70 per cent.

Conclusion 

Due to lack of accurate report, it is difficult to know exactly what the future holds for this business. Chennai and Hyderabad seems to be doing pretty well with store numbers increasing day by day. As most of them say that the demand will definitely increase in the coming 6 months to 1 year, they also advice that specialty stores still haven’t caught up that much in comparison to food chains and departmental store. The market will surely grow but how fast, is still uncertain unless there is an organic revolution in India and people are more dedicated to come back to the organic way.Moreover, there is a need for government support also in terms of subsidy and land so that there is an increase in  production and subsequent supply.

Budget 2011-12: structural concerns on inflation management

Budget moves to plug structural concerns on inflation management:

With inflation continuing to be one of the key concerns on the policy front, the Finance Minister, announced a doubling up of efforts to address structural concerns on inflation management.

The removal of production and distribution bottlenecks for fruits and vegetables, milk, meat, poultry and fish will be the focus of attention this year, announced in Budget 2011-12.

As a step in this direction, he proposed a full excise duty waiver for equipment used in the food and agro processing industry — including air-conditioning equipment and conveyor belt systems that form part of the coal chain infrastructure in the agricultural, dairy and poultry sectors.

Besides, “fast tracking” augmentation of storage capacity through private entrepreneurs and warehousing corporations, capital investment in creation of modern storage capacity in the eligibility criterion for viability gap funding from the Finance Ministry has been announced.

Admitting in his speech that inflation remained a key concern, Mr Mukherjee exuded confidence that the monetary policy measures taken by the RBI should lead to moderation in inflation numbers in the coming months.

Mega food parks

Other steps taken to address inflation concerns in the medium-to-long term include approvals for 15 new Mega Food Parks during 2011-12, an allocation of Rs 400 crore for improving rice-based cropping system in the Eastern region and another Rs 300 crore to promote 60,000 pulses villages in rainfed areas.

Besides, Rs 300 crore has been provided to bring 60,000 hectares under oil palm plantations, which is expected to yield about 3 lakh tonnes of palm oil annually in five years, he said.

Further, budgetary allocations for the implementation of vegetable initiative to provide quality vegetables at competitive prices, a scheme for promoting higher production of millets such as bajra, jowar, ragi and another to promote animal-based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries, were announced.

Allocation for an Accelerated Fodder Development Programme, which is slated to benefit farmers in 25,000 villages and benefit the dairy industry, was also announced.

Food processing sector

Food processing sector gets 576-crore FDI

The food processing sector attracted Rs 576 crore of foreign direct investment (FDI) in the first eight months of the fiscal as compared to total FDI of Rs 5,344.22 crore.

In the thick of the recent food inflation, the government had also widened the scope of service tax exemption to include foodgrains and pulses in addition to fruits, vegetable, eggs and milk. The Centre is keen on projecting FDI in the food processing industries, where 100% FDI is already allowed.

Besides attracting FDI through schemes like mega food park, the government has also extended several fiscal incentives during this financial year to enhance FDI in food processing sector, including full exemption from excise duty for specified equipments to preserve, store or transport apiary , horticultural, dairy, poultry, aquatic and marine produce and meat and its processing products.

Project imports status, with concessional rate of basic customs duty of 5%, has been granted for the initial setting up or substantial expansion of a cold storage , cold room (including farm pre-coolers ) for preservation or storage or an industrial unit for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat.

While truck refrigeration units manufacturing refrigerated vans/trucks have been fully exempted from basic customs duty, exemption from service tax has been provided to a host of services. These include ‘erection, commission or installation’ of mechanised foodgrains handling equipment for setting up or substantial expansion of cold storage and machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, dairy, poultry , aquatic, marine or meat products.

Food Inflation

CII suggests a 10 Point Actionable Agenda to Curb Food Inflation:

The Confederation of India Industry (CII) is concerned about the current situation the country is facing with regard to “Rising Food Prices” again in a short time span of one year.   The brunt of the same is being felt across India and across all sections of society. In fact the food inflation stood at a higher peak of 19.9% over the same period last year when the failure of monsoon affected prices of cereals and pulses. However its recurrence now even in a good Monsoon year shows the prevalence of a deeper structural problem in the way we are managing our Food security

CII said that the Food inflation for the week ended January 1, 2011 is reported to be 16.91%.  The price of onions was a major contributor which continued to push food inflation as prices went up by 70.7% while the individual items such as egg, meat and fish became costly by 16.7%, milk by 13.2% and fruits by 17.7% annually.

Fortunately, price of pulses declined by 14.84%, wheat by 4.87%, potatoes by 1.67% and cereals by 0.12% on an annual basis. This is in contrast to the situation last year as when these commodities were the major contributors to the food inflation.   CII has been working very closely with the Ministry of Agriculture and the Planning Commission in suggesting ways for tackling inflation with regard to the food items.

However, this year with the exception of onions, there was adequate production of other vegetables, fruits and milk. The issue of wastage due to lack of cold storage and other infrastructure issues have worsened the existing inflation. The country has enough wheat, rice and sugar, but the issue is in tackling the perishables like vegetables, fruits and milk.

the CII’s 10 Point Measures – both short term and long term to tackle the inflating prices ;

1.In Short Term, Lower import duty, especially on fruit & vegetables and allow imports: Looking at the rising prices of fruit and vegetables, the Government should react fast on lowering the existing tariffs (hovering around 30% to 50%) and allow import of these commodities.

2.State Governments should take stern enforcement measures to curb hoarding and speculations.

3.The Government should invite and Incentivise private sector (both domestic and foreign), cooperatives and NGOs to come up with business models that directly link the growers with processors and retailers.

4.In Medium to Long Term, all the fruits, vegetables and other perishables including fisheries having very short shelf-life should be fully exempted from the provisions of the APMC Act. Processors and organized retailers should be incentivised to procure directly from the farmer groups (growers’ companies or cooperatives) for building infrastructure in rural areas for aggregating the fresh produce, cleaning it, grading, packaging, and storing in cold storages before bringing it for retail distribution. This will create not only employment in rural areas but also build much needed infrastructure.

5. The Centre should also encourage the States to help build this infrastructure, especially cold storages, to save on wastages which will boost supply side and help in price moderation.

6.The Government should move towards a unified national market and allow free movement of fresh produce across the country without any taxes whatsoever.

7.Most importantly, it is time to usher in market reforms by compressing the value chain of Agri-commodities. The model of creating a marketing platform at the village level needs to be promoted where the buyers will come to the producer groups directly rather than farmers going outside to sell their produce.

8.Investments in organized retail (both domestic can foreign) to shore up the entire supply chain and ensure good prices to farmers as well as consumers.

9. Strong and urgent focus is needed to enhance farm productivity by way of adequate inputs usage and by extension for enhancement of the supply side to meet the growing demand on a sustainable basis.

10. A special agreement should be signed between India and the neighbouring countries – for import – export of perishables.  This will be a confidence building measure and will ease demand supply challenges of similar commodities between India and the neighbouring countries.

Starbucks India

Starbucks meets Tata for coffee

                              

The US-headquartered Starbucks Coffee Company is finally entering India by signing a memorandum of understanding (MoU) with Tata Coffee Ltd, a subsidiary of Tata Global Beverages (formerly Tata Tea).

To begin with, the MoU will create avenues of collaboration between the two companies for sourcing and roasting high-quality green coffee beans in Tata Coffee's Coorg facility.

In addition, Tata and Starbucks will jointly explore the development of Starbucks in retail outlets and hotels for its iconic coffee brand.

At a later stage, both Tata Coffee and Starbucks will consider jointly investing in additional facilities and roasting green coffee for export to other markets.

The Seattle-based Starbucks , is a premier roaster and retailer of specialty coffee in the world and manages over 16,000 stores and operates in more than 50 countries. Till recently, according to industry sources, the Bharti Group was in the running to bring Starbucks to India.

This MoU is the first step in the entry of Starbucks  to India. They are focused on exploring local sourcing and roasting opportunities with the thousands of coffee farmers within the Tata ecosystem. Starbucks believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations.

KFC: Strategy

KFC not chicken to serve veg platter

Vegetarian delights: A view of KFC at the Planet Yumm food court in Chennai.

While ‘finger lickin' fried chicken' is its USP, this Louisville-based brand didn't want the veto factor by a vegetarian to play against it in India. Indians eat in groups and there are at least a couple of vegetarians in the group who might turn down the choice of KFC as the eating destination because of a lack of choice for them.

Sensing that this may happen, KFC in India now has a parallel vegetarian menu. Something that the founder Colonel Harland Sanders wouldn't have imagined would happen when he started Kentucky Fried Chicken in 1952.

KFC also ran into rough weather when it logged into India in the 1990s with protests from activists on the chemical content in its ingredients.

On its brand promise and delivery in India, it's all about value, and about taste that appeals to its core audience, namely, the young adult. The plan is to take the store count to 500 in another five years, with 80 per cent of the stores owned by the company and the rest franchised.

While Tier 2 towns such as Goa, Vizag, Mangalore and Guwahati have done very well because of the pent-up demand, these would continue to comprise about 20 per cent of its overall store count.

The Indian branded qsr (quick service restaurant) market is currently estimated to be at about Rs 3,000 crore.

A KFC outlet now has about 2000 walk-ins a day. The qsr chain has seen a 6-7 per cent increase in average ticket size from last year and a 10 per cent increase in the number of transactions from the same period.

The company is also testing home delivery in select markets and will roll out the service soon in all its outlets.