Corporates spot juicy prospects in branded fruits


March 25, 2014

Nupur Anand, DNA (Daily News & Analysis)
Mumbai, March 25, 2014

As demand for branded fruits grows, corporate houses are diving into the business. After Mahindras, Tatas have entered the space.

While Mahindras sell fruits such as apples, grapes and bananas, apart from several other imported varieties under Saporo brand, Tatas have begun with grapes — Rallis-Star Bazaar Grapes.

Ashok Sharma, chief executive, agri & allied business, Mahindra & Mahindra, told DNA, "The entire Rs 3 lakh crore fruit market in India is unbranded and that spells huge advantage for players who are looking at tapping into this market." M&M forayed into the branded fruit segment in November last year and is confident of clocking a turnover of around Rs 125 crore by 2016.

However, companies at the moment are just testing the waters by only introducing few fruits and limiting the reach to select cities. For instance, the Tata group will only be offering branded grapes as of now. On the other hand, Mahindras have introduced their branded fruits only in Hyderabad and are in no hurry to expand to other markets immediately.

Sharma said at present players are also making conscious efforts to ensure that the fruits are not priced at a very high premium to the unbranded ones. "Indian consumers are very price sensitive and now that we are introducing consumers to the branded fruit category we are limiting the price to only at 5-10% premium to other fruits."

Experts said the fact that branded items can be priced at a premium ensures healthy margins for the companies and that is also getting several players interested in the business.

Devangshu Dutta of Third Eyesight, a retail consultancy firm, said there have been constraints on the supply side which had kept players away for long, but now that the issues are getting addressed it’s likely that even others will show interest in the segment.

"There have been several challenges on the supply chain side but now some of these issues are getting addressed and also there has been help from certain state governments," he said.

Devendra Chawla, CEO, Food Bazaar, Future Group, said going ahead, the market for branded fruits will definitely expand as the demand for premium products increases. "Branding of commodities has started in India and so it’s no surprise that it is happening even in the fruits category. A brand guarantees consistency and quality and especially in segments such as fruits where there are variations in terms of size, colour, etc it can play an important role," he said.

(Sourced from DNA.)