In India, food processing has a long way to go, to minimise wastage of fresh produce and also to create a sustainable livelihood for our farmers. The state and Central governments are supporting the food processing sector through multiple Mega Food Parks and cold chain units, states Prabhu Gandhikumar, co-founder, TABP Snacks and Beverages, in an email interaction with Nandita Vijay. He also divulges his company’s plans for raising funds and expansion. Excerpts:
How would you describe the current scene in food processing in India?
Food processing in India is in its infancy. Hardly 4% of the fruits and vegetables in India are being processed compared to the 40% to 50% of the fruits and vegetables that are getting processed in the Western world. In India, food processing has a long way to go, to minimise wastage of fresh produce and also to create a sustainable livelihood for our farmers. The state and Central governments are supporting the food processing sector through multiple mega food parks and cold chain units. Food processing chain needs to be made stronger for the economic well-being of our country. This can be possibly achieved by encouraging farmer produce companies in a smaller scale, for instance, opening up of a small processing unit in Mettupalayam. This cluster doubles up as a storehouse for vegetables that are grown in the Nilgiris to be stored. If we can have a processing unit set up in this pocket with a capacity to process about 10 to 15 tonne of vegetables a day, it would offer respite, for access to fruits and vegetables that are seasonal.
What are the visible trends and challenges in this space?
Opportunities outsmart the challenges in this space in India. Packaged food is growing leaps and bounds in India. Movement of rural population is increasing and so is the dependency on packaged food. With an increase in disposable income, food processing is the right space to be in, for now and the future is bright.
Challenges like the ongoing Covid pandemic are a passing cloud. However, the concern is about securing the supply chain for a longer term. This along with managing the supply chain like the logistics of transporting farm fresh perishable produce to the processing unit, without any pest attack or even during a natural or man-made catastrophe have hurdles that need to be mitigated.
How has the company fared since inception?
The company, founded by Prabhu Gandhikumar and Brindha Vijayakumar, commenced operations in 2016. With funds from angel investors, in August 2018, we were incorporated as a private limited company. We have been able to grow since 2016, close to 3 times, every fiscal, recording a year-on-year, growth of 200% until last year, due to Covid-19. However, despite the pandemic, we grew by 36% last year and this year, we are expecting a growth of around 50% to 60%.
Which of the brands are fastest growing?
Beverages are the primary product, which make up for 95% of our overall sales. Our beverage range, sold as ‘Plunge’ and ‘Gulp,’ has a footprint across five states in South India, in Odisha. It is sold as a 200 ml pack for Rs 10 and the fastest moving and growing among our brands. We continue to target the consumers at the bottom of the pyramid, who earn a few hundred rupees a day. Currently, even in Tier I markets, like Chennai and Bengaluru, this 200 ml beverage has many takers. Overwhelmed by the response, we will make the beverages available across all taluks in southern India over the next four years and this is a part of our vertical push sales strategy.
Our secondary line consists of the snacking business, which is in its infant stage. Extensive R&D is underway. Even our ‘MilletMight’ products are also in nascent stage.
We position all products as ‘Full value for money’ meeting consistency in taste, quality and packaging.
Provide details of your manufacturing units.
Manufacturing facility is at Coimbatore for all our beverages. The bottling takes place at six locations at Chengapalli, Krishnagiri, Dharmapuri, Mysuru, Aurangabad and Chennai. All the snacks are manufactured in our units at Coimbatore and Tiruchengode. In a bid to meet demand with supply of our products, we are looking for a third-party manufacturing unit in Odisha and northern Andhra Pradesh where a lot of sales happen.
Which are the most promising markets of the company?
We have a strong presence in Tamil Nadu and in Karnataka. No doubt there is a lot of scope for growth in Andhra Pradesh, Odisha and Telangana as these markets are promising. Also, the virgin markets of Maharashtra and Goa which we are preparing to enter are also expected to contribute towards the top line. In the coming years, we will explore markets from Surat to Kolkata.
How is the company planning its entry to Maharashtra and Goa where similar products are extensively marketed?
In Maharashtra and Goa, our marketing strategy is similar to other markets. We will let our quality, taste, service from distributors enable us to stand apart. We are confident that these factors will contribute to our significant growth in the new states that we are planning to penetrate. We do not see competition as a threat in these regions. With the purchasing power of the lower middle class and people below this strata increasing, we are sure that spending Rs 10 for our products will have many takers. Convenience is an added advantage of our snacks and beverages as they can be consumed even on the move.
What about exports?
We are not considering exports for the time being and will not do so for the next three or four odd years. We are predominantly focussing on the south Indian markets as of now. Nevertheless, we would explore a few offshore markets, though not so seriously now.
How has the company's performance being during the ongoing pandemic phase? Has it been via offline: retail stores or the online mode?
The company has managed to grow 35% despite the pandemic. Indian summers coincidently have proven to be the peak season for our business growth. Despite the second wave of the pandemic, which was more severe than its predecessor, we are confident of registering a 40% to 50% growth. Pre-pandemic we were growing at a rate of 200% year-on-year which has tapered down significantly. Once we get a full year of operation and when we pass through the pandemic period, we will hit our target growth rate. Predominantly, our beverages and snack products are sold in the brick and mortar stores, over the counter. In the virtual space, we are making our presence, with our ambitious ‘MilletMight’ range of products. We are considering to list our products in select B2C platforms too.
What are the likely future efforts of the company going forward?
We are looking to raise funds to the tune of anywhere between $1 and $1.5 million in the next 12 to 18 months to fund our growth. Existing investors and family will contribute funds that are required to scale up our business to the next level.
As part of our short-term business plans, over the next four years, we aim at expanding our retail footprint from 1,20,000 retail stores to 5,00,000 shops, besides being present in every taluk in South India. In the long run, we will have a pan-India presence. Our aim is to become a Rs 1,000 crore brand in India.