Bakery business is catching investors’ attention

Franchisors can make the most from the bakery sector, as today it occupies an important place in the industrial map of the country. Improved standard of living, rapid growth, westernisation, increasing spending power, change in eating habits of people and increasing transition from the unorganised to organised sector, has given a great impetus to bakery products. Moreover, though the demonetisation drive had slowed down the retail industry due to decrease in cash flow over the last few months, the budget did not impact franchising in bakery industry either positively or negatively.

Opportunity for investors
Bakery industry comprises categories like breads and biscuits, which form about 82 per cent share of the market. Cakes and pastries are next in the row. The segment is estimated to be worth Rs 1,250 crore, of which a significant 65 per cent is accounted for by the unorganised sector.

Australian brand Cookieman is a major player in the franchise industry and its kiosks have a pan-India presence. We plans to open 12 to 15 stores in the year 2017-2018, which includes stores in metros like Bangalore, Hyderabad and Pune, as well as tier I cities like Kota, Salem and Mysore,” says Anupam Saluja, CEO, Australian Foods India Pvt Ltd (Cookieman).

Recently, Monginis Food – the oldest Indian player in bakery franchising, revived its old unit in Hyderabad. “We shut down the unit around 15-20 years ago, as the franchise market had not developed in the city at that time. However, the model has matured now and we have re-entered the market by reviving the factory at a cost of Rs 3.5 crore that will cater to 100 stores opening up in Telangana,” said Ashok Nair, Chief Operating Officer, Monginis Food. It plans to open two more units at Patna and Delhi by April end.

Challenges to growth
The bakery market has grown tremendously over the last few years, but still there lie challenges for franchisors. Bakesmiths & Company is of the opinion that the industry in India is highly fragmented, largely unorganised and extremely diverse in terms of product assortment and target market. “Although foreign players like Bread Talk, Cinnabon and Au Bon Pain have entered the market through joint ventures on huge financial reserves, the Indian brands are absolutely unfazed and up to the challenge. The lines are just being drawn as far as the confectionery and bakery retail is concerned,” says a company official.

As put forth by Krispy Kreme, “The biggest challenge is supply chain and providing value to the discerning Indian consumer. For supply chain we work with our partners to improve the infrastructure and also look at locating stores close to each other, so we can control supplies and costs when restricted to a smaller geographical region. Regarding value for the customer, we are constantly looking at new products that we can offer from which our customers derive more value.”

Airports hotspot for franchisors
Bakery brands like Krispy Kreme and Cookieman have a wide presence at the airports. Lite Bite Foods opened its first franchise outlet at Terminal 1D, New Delhi, in 2015. “With millions of passengers travelling annually, airports have become a hub for quick serve restaurants and cafés. The outlets here add variety to the existing food options to the travellers and open our market to youngsters and kids,” said Rohit Aggarwal, Director, Lite Bite Foods.

Cookieman plans to foray all the major airports in the country. “We are now present at Chennai, Coimbatore and Kolkata airports. The brand is also planning to tie up with all the major cineplexes across the nation and launch the brand’s very own ice cream kiosks in theatres. Cookieman will launch stores in premium malls that open in tier III cities,” says Anupam Saluja.