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INTERVIEW

“We expect to reach Rs 1,000 crore in 3 years”
Monday, 31 December, 2018, 08 : 00 AM [IST]
Bonn Group of Industries was founded in 1985 by Manjit Singh. The brand Bonn known for bread and bakery items has a dominant market share in north India. Its head office is based in Ludhiana. The group produces a range of food products including bread, biscuits, cakes, rusk and cookies that are sold in India and exported to about 55 countries. The company has 12 manufacturing plants. It is fully integrated having its own fleet of more than 500 trucks and an in-house setup for developing packaging. Amrinder Singh, director, Bonn Group of Industries, in an email interaction with Anurag More highlights his company’s progress over the years and the prospects for bread market in India. Excerpts:

How has the Indian bread market performed so far, and how will it perform in the coming years?
The bread market in India has been resurgent as bread is being rediscovered as an acceptable hygienically made and economical ready-to-eat food. The bread market in India was said to be worth US$1,867 million in 2018 while growing at a CAGR of about 10.4 per cent every year. The segment for healthier whole wheat bread is growing at a remarkable rate and currently accounts for 25-30 per cent of the market. At the same time, there is a lot of excitement around gourmet varieties of bread where expert chefs are pushing the limits of culinary creativity. Bonn has been a big part of this journey by enhancing its distribution networks and also only player which has come up with gourmet preservative-free breads to the Indian kitchen table.

What are the popular product types available in the Indian market for bread?
A wide variety of breads are available in the Indian market including whole wheat, whole grain and multigrain breads whose fibre content has made it easy to digest and therefore popular, there is the luscious garlic bread, the crusty suji bread, fruit bread with a hint of cake, bran breads, oat and rye breads. The gourmet segment boasts of an expansive variety with premium whole wheat bran, bran, multigrain, garlic, garlic oregano and honey oat breads and burger breads making up the lunch table. These are in addition to the ubiquitous sliced and sandwich breads.

What are the major distribution channels in the Indian bread market?
Retail is still the biggest distribution channel though e-commerce is coming up in major cities such as Delhi and Chandigarh. In FMCG, The retail chains are the major contributor due to vast reach to consumer.

What are the various stages in the value chain of the Indian bread market?
Value is added to the raw material at the bakery where, wheat and other ingredients are procured, handled and precisely and hygienically mixed for the first proof. This is then set in mould for the final proof which undergoes baking at suitable temperatures and lengths of time. Finally, the mould is cooled industrially and taken off the pans to be sliced, packaged and dispatched. Great precision, care and food hygiene standards are employed in our units producing at an industrial scale. Bonn also does its own packaging of food items to ensure cleanliness and hygiene. These are then sent across to retailers all over north India by our own logistics chain of 500 trucks to maintain the purity and freshness of the bread before it reaches the consumer’s kitchen table.

What are the key driving factors and challenges in the Indian bread market?
The driving forces are a rapidly expanding productive population base with ample disposable income, and that is well informed and health-conscious, and is looking for a ready-to-eat, balanced and nutritious meal, easy access to global trends and transforming lifestyles. Being a perishable product, the bread industry faces numerous challenges. Like lack of a modern well-developed retail network necessary for distribution of a perishable product. However, things are changing for the better now.

What are the key trends you have witnessed in the market?
The millennial consumer is in search of memorable flavours and culinary experiences. Hence, gourmet breads baked expressively and delivered fresh are gaining popularity. The second distinct trend is the familiar inclination toward healthier whole wheat grain breads from the ordinary variety.

Around a year ago, the health category bread used to contribute 10-12 per cent of the total Indian bread market. Now, its share is 25 per cent. The significant growth is attributed to growing awareness about benefits of fibre content in bread. Bonn already caters to the first of these categories with its La Americana Gourmet brand of bread. We will also reach out to the healthy food markets via a new brand, which will cater exclusively to whole wheat grain and multigrain bread options that lower the risk of heart disease, lower blood sugar levels and improve digestion.

What is the structure of the bread market in India and who are the key players?
Speaking for ourselves, Bonn has significant market share in north India with manufacturing units spread across the country. With one million loaves of bread being produced out of our units each day, we serve 25 per cent to 30 per cent of the market in north India with shares going up to 60-65 per cent in Punjab, Himachal Pradesh and Jammu & Kashmir. To attain a bigger pie of the market share, the company has launched a range of whole grain products, including whole wheat bran burger bread, bran bread, honey oat bread and garlic oregano breads under the brand name “La Americana Gourmet.”

Tell us about the products offered by Bonn.
Bonn has an extensive repertoire of products that range from breads, biscuits, burger bun and pizza base, pav and cakes as well as gift packs. We also have our own QSR chain under the brand name of La Americana Burgers.

In the bread segment, our brand is led by the premium La Americana gourmet bread, which is the only gourmet bread that does not use artificial preservatives. We make white bread, slice breads, sandwich breads, brown breads, whole wheat grain breads.

In the biscuit portfolio we make a range of high quality, ingredient-rich cookies made from the finest wheat flour, loaded with butter, chocolate and nuts under the Americana biscuits brand name. These biscuits include the popular Americana Butter cookies, Xo-Xo cream and Choco-nut cookies apart from Americana Healthy Marie, Americana Digestive, Americana Coconut and Americana Tomato Tangy.

Brief us about your expansion plans. How much will you be investing for the same?
Bonn has many exciting new plans for the future. These include the strategic push towards the south for our extensive variety of biscuits. For this, we have an agreement with an existing manufacturing unit in Mysore for cookies and biscuits only. With this, Bonn has expanded its distribution network in south India. We aim to reach a turnover target of Rs 700 crore by the end of this fiscal, which will be a growth of 32 per cent over current revenue. We also expect to reach a turnover of Rs 1,000 crore in the next three years out of our 12 units across India. We have made a number of investments in new capacity building as reflected in the new products to be launched. We are trying to acquire or tie up with existing manufacturing units across India to allow our products to reach the consumer faster and in a fresher state.

Do you have any plans to launch new products?
We have already opened a new outlet in Dwarka to cater to demand from south-west Delhi and within two years; we hope to have 10 such QSR outlets across the city. We are also expanding the menu with new exciting flavours like we have recently launched Bombay Twist Burger.

We are planning to launch new and innovative products which are inclined more towards health. And we are planning to develop La Americana Gourmet preservative-free portfolio further by adding more lifestyle and healthy products and by 2020; we hope to have a complete pan-India presence for food lovers throughout the country.

What makes you different from other players?
There are a number of distinct qualities that give Bonn an advantage over other players. A case in point is our extensive variety of breads that cater to customer economy, taste, flavour and indulgence as well as health imperatives. Further, the ability to deliver pure food experiences to the Indian palate from the bakery unit directly to the consumer owing to our well organised distribution structure with our very own fleet of 500 trucks that travel 40,000 km a day ensure that we are uniquely positioned. We drive constant innovation in food services. We are the only bread maker to have a line of preservative-free products (La Americana gourmet breads).
 
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