Tag: food processing

Fast and furious

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August 11, 2023

Christina Moniz, Financial Express

August 11, 2023

Pizza chain Domino’s recently unveiled a Rs. 49 pizza, its cheapest anywhere in the world. At $0.60, the pizza chain’s seven-inch cheese pizza is priced far lower than Domino’s in China (where $3.80 is the cheapest option). As per media reports, the rising inflation has caused Jubilant FoodWorks, which runs Domino’s outlets in India, to see a 70% slide in profits in the first quarter of CY23.

Competitor Pizza Hut has launched its Flavour Fun range, offering 12 new pizzas in five different sauce flavours, starting at a price of Rs. 79, which is easy on the pocket, especially targeted at young consumers. “We further stabilise costs by rolling out value deals from time to time such as 1 Plus 1 (two personal pizzas at Rs. 299 each), a Hut Treat Box for four starting at Rs. 799 and My Box deals starting at Rs. 229 for solo consumption. While food inflation is projected to persist, QSR brands must demonstrate agility and innovation in their offerings to effectively engage with customers,” says Merrill Pereyra, managing director, Pizza Hut India Subcontinent. Despite the competitive nature of the QSR market, he remarks that the rising purchasing power of consumers opens up promising opportunities for brands to expand.

Get the drift?

Crisil says the cost of a vegetarian thali rose 28% in July on the back of high tomato, onion and other raw material prices. With consumers also cutting back on eating out and discretionary spends, brands are bending over backwards to serve offerings at attractive prices to drive up footfalls .

Other fast food chains in the country too are rolling out value meals and snacks to appeal to price-conscious consumers. Burger King India announced its latest value range of ‘Tasty Meals’ starting at Rs. 99 to encourage dine-in consumers, while KFC too has unveiled its snacker range, featuring its most popular offerings like the classic chicken roll and chicken popcorn, at Rs. 99. McDonald’s India (West and South) also recently unveiled a campaign showcasing its easy-on-the-pocket McSaver meals at Rs. 179. McDonald’s India (North and East) made headlines with its decision to temporarily drop tomatoes from their products due to quality concerns and supply shortage.

This is just the second quarter of the current fiscal, but Devangshu Dutta, CEO, Third Eyesight, observes that the trend among QSR brands is to absorb costs or reduce expenses rather than raise prices and risk a drop in footfalls. Most brands are hoping to keep consumer demand up and make up for the loss in margins in the second half of the financial year.

That would be a 1% hit on margins on account of inflation, say experts.

Pramod Damodaran, CEO, Wagh Bakri Tea Lounge, has a slightly different take. Noting that food input cost is just one cost item for a QSR brand, he says that most companies make gross margins of over 60% on each order. These margins are without taking into account costs of labour, rent, etc. “The new price points are designed to drive more walk-ins and new customers. The menu is vast enough to get consumers to eventually spend more after they walk in. Customers often buy a small burger but that is not a substantial meal and so they need to buy fries or other sides, which have higher margins. Most QSR chains find a way to pass on the inflation-added cost to the customer,” says Damodaran. For example, he says, if the inflation rate is at 5% this year, restaurants may increase the price of certain items on the menu by 3% for the first six months and by another 3-4% in the next six months, thus covering the additional input cost.

Focus on efficiency

The fact that brands have launched affordable, lower-priced offerings may have landed them in a slightly tricky situation, says Rajat Tuli, partner, Kearney. “The value offerings at lower prices have encouraged trials and new customer walk-ins, but existing customers are also opting for these. That has resulted in a lower average ticket size, while the cost to serve stays the same. Order volumes have grown but average order values have stayed the same or reduced, which could be a challenge if the trend continues,” he points out, though he adds that gross margins in the current quarter have shown improvement over the last quarter. Fast food chains need to bring in more efficiencies in cost, streamline processes and introduce more digitalisation.

It is also something that McDonald’s India (West & South) is working towards, says MD Saurabh Kalra. Noting that inflation is not new to the company in India, Kalra explains, “Recognising that food inflation is a domestic truth, over the years, we have developed tools and strategies to manage it effectively. This is attributed to our strategic management of our supply chain and product mix, as well as our cost initiatives. We have been successful in managing our costs and in maintaining healthy margins.” Further, with the reality of global warming, there will be pressures on agricultural output.

Kalra argues that enhancing efficiency and adoption of new technology are the only ways to create long-term solutions, something that McDonald’s has been doing globally too.

(Published in Financial Express)

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How Revant Himatsingka is waging a battle against FMCG companies and bringing them to their knees

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July 28, 2023

Manu Balachandran, Forbes India

July 28, 2023

Revant Himatsingka doesn’t despise junk food.

The 31-year-old firmly believes that those who consume it also know the perils and long-term risks associated with it. From obesity to heart disease and diabetes, junk food is often counted as a more serious threat to life than even smoking according to some studies. “Most people who consume Coke and cigarettes know they are bad for you and consume them,” Himatsingka says.

Himatsingka, however, has a problem with junk food masquerading as healthy. That’s why over the past few months he has been busy calling out its makers, and in the process taking on some of the world’s biggest FMCG behemoths.

Since April this year, Himatsingka, through his social media profile, Foodpharmer, claims to have taken on almost all the FMCG companies in India, whose products he has reviewed, and in the process has been swamped with lawsuits. Himatsingka has a following of half a million followers on Instagram.

“Food is probably 60-70 percent of what shapes our health,” Himatsingka told Forbes India over a telephone call. “And what is shaping our food today is packaged food, which is very different from what our grandparents grew up eating. Most packaged food is just selling junk and they’re marketing it as healthy. This happens even more in relatively poorer countries.”

Himatsingka began his war against fake claims with a video about Bournvita, made by confectionary maker Mondelez. That video, critiquing the children’s drink for its excessive use of sugar, was shared across social media and on WhatsApp. Himatsingka poked fun at Bournvita’s tagline Tayyari Jeet Ki (preparing for victory), instead suggesting that Bournvita was preparing children for diabetes.

He listed out all the ingredients in Bournvita, debunked claims that the drink is healthy, and remarked that half of a package of Bournvita is sugar, and [it] even contains cancer-causing ingredients.

Trouble soon followed. Mondelez sent Himatsingka a legal notice asking him to take down the video within 24 hours. Coincidentally, the notice came to him on the last day of his notice period at McKinsey where he had been working as a consultant. Unfortunately for Mondelez, the video continues to be in circulation, more so across WhatsApp. Himatsingka took down the video and even issued a statement saying that he had no interest or resources to take on the company in any court cases.

“Most people have Coke once a week,” Himatsingka says. “But people have Bournvita twice a day. So you end up having 14 [servings of] Bournvita in a week. So, the net impact of Bournvita is probably worse than that of Coke.”

“As a growing market, India is potentially a natural “dumping ground” for poor products and processes that have been used by prominent brands in other markets,” Devangshu Dutta, the founder and CEO of management consultancy firm Third Eyesight says. “It is incumbent upon Indian customers to be diligent, picking up cues not only from Indian consumer-activists and but also their counterparts in the developed economies.”

From Kolkata to New York and back

Himatsingka grew up in an upper-middle-class household, with a homemaker mother and a father running his own business in Kolkata.

After his schooling, Himatsingka went to New York to study finance at the New York University’s NYU Stern School of Business where he graduated in finance. For a year after that he worked with a bank in the US. At 22, he ventured out into writing a book, Selfienomics, a self-help comedy book focusing on managing finances, health, religion, death, starting a business, and even completing projects on time.

“I wrote one chapter on how to read a food label even then,” Himatsingka says. “Back then, and even now I believe that it is the most important skill in the 21st century.” While he did secure admission into the illustrious IIM Bangalore, Himatsingka turned it down, instead focussing on his book.

By 2018, Himatsingka went to do an MBA at Wharton and followed it up with a course in nutrition, while also starting work at McKinsey as a consultant. “As a consultant, you work to solve business problems and you try to structure solutions,” Himatsingka says. “We focus on our career when it comes to structuring solutions and being data driven. But I try to extrapolate that into life. In life, one of our most important aspects is health.”

Himatsingka was also concerned by the growing link between cancer and heart diseases to packaged and processed food. In 2019, a study published in the British Medical Journal (BMJ) suggested a possible link between “ultra-processed” foods and cancer. The study defined ultra-processed foods as those lacking vitamins and fibre, which also contain high levels of sugar, fat, and salt. Such ultra-processed food, the study noted, represents as much as half of the daily energy intake in several developed countries.

“This is such a big problem and no one is talking about it,” Himatsingka says. “No one is trying to solve it. So, I thought, I wanted to do something in this space.”

That meant, Himatsingka, who by his own account was making very good money in the US, decided it was time to come back home, and try and do something around awareness. “I’m very social impact driven,” Himatsingka says. “April 1st is when I made the Bournvita video. I made a video showcasing how Bournvita was falsely labelling itself. Their label showed that you get stronger bones and muscles. Then I got a legal notice from Bournvita asking me to take down the video in 24 hours.”

The idea for the Bournvita video, Himatsingka says, came from his concern that a product like Coke had become the face of obesity and junk food, while many others were marketing themselves as healthy, without it being so.

Mondelez, the makers of Bournvita soon retorted that the drink contains nutrients such as Vitamin A, C, D, iron, zinc and copper that help build immunity and have been part of its formulation for 70 years. It also said that every serve of Bournvita has 7.5 grams of added sugar, much less than the recommended limit for children.

imatsingka though found support from unexpected quarters. The Nutrition Advocacy in Public Interest India (NAPi) a think tank comprising independent experts in epidemiology, human nutrition, community nutrition and paediatrics, medical education, administration, and management, issued a statement supporting Himatsingka.

“The food product Bournvita falls under the ultra-processed food (UPF) category based on its ingredients list,” NAPi said in a statement. “This industrial formulation is inherently harmful. There is enough scientific evidence present in the public domain pertaining to the negative impact of increasing consumption of UPFs on human health, which include several chronic diseases such as obesity, diabetes, cardiovascular disease, cancer, and depression (Non-Communicable Diseases-NCDs).”

The National Commission for Protection of Child Rights (NCPCR) also issued a notice to Mondelez asking the company to review and withdraw all misleading advertisements, packaging, and labels. The NCPCR is a statutory body to protect child rights.

Fighting it out now

Personally, for Himatsingka, the pushback from Mondelez couldn’t have come at a worse time. “I had just quit my job. And my family was asking me what I was trying to do with my life. They said ‘you had such a good job, you left all of that, now you are getting into a legal fight’,” Himatsingka says. “So I removed the video as they asked me to. And that got even more attention.”

Since then, Himatsingka has been actively taking on FMCG companies and their products in the country, ranging from ketchup, and chyawanprash to juices and bread among others. Himatsingka recounts having received legal notices from Dabur and even been asked to remove a video by Sting Energy, owned by PepsiCo.

He says his strength, however, comes from many parents who have reached out to him and are thanking his efforts for making them aware of the importance of reading labels. “People are reading labels for the first time and have now started figuring that many of the products are not that healthy,” Himatsingka says.

However, the pressure of the job continues to be heavy. “There is a lot of pressure,” the 31-year-old says. “These companies send legal notices and I have no idea how to deal with it. These are very technical and very dense documents, where they analyse each line and write a paragraph on each line. I once got a 300-page document from one company and they were asking me for a few crores. It’s strenuous.”

What lies ahead?

For now, the 31-year-old says his focus remains steadfast on raising awareness around food.

“Because of the Bournvita controversy, the rollover impact is that all the other companies are also going to get scared now to falsely market themselves,” Himatsingka says. “I cannot think of a human problem that is relatively easy to solve than nutrition labels and it creates massive impact.”

A few weeks ago, Himatsingka raised awareness about the growing consumption of bread in India and how most makers of bread who sell whole wheat or brown bread use more maida, which has less fiber, and is unhealthy. He had also called out juice makers for their use of sugar by comparing various mango juices available in the country.

“When a movie comes out, there are reviews and I can openly say whether I liked a movie or not,” Himatsingka says. “So why can’t I say the same about a food product? I’m just unboxing a product and saying what is there inside it. So I don’t think I’m legally wrong. They can ask me for whatever money they want. But I don’t think they can win on that.”

Along the way, he says he has also seen positive changes in companies. For instance, Himatsingka made a video on ketchup and explained how Maggi Rich Tomato Ketchup has more sugar than tomato in its ingredients. “Last month, they (Nestle) announced that they’re changing the recipe,” Himatsingka says. “They’re reducing their sugar content and they are going to have more tomatoes than sugar. One tiny change like that has such a major impact on the large scale.”

Experts agree that the growing scrutiny about ingredients is certain to give FMCG majors sleepless nights. “Given that food has a disproportionate share in our spend, an enormous impact on our health as well as a tremendous ecological footprint, it is only natural for consumers to question the composition, the origins, and the overall impact of the food that is being sold by leading brands,” says Dutta of Third Eyesight. “Over the last several decades, packaged food has become laden with synthetic flavouring, colouring, and shelf-life-extending chemicals, which are being called into question by activists through blogs and social media. On several occasions, prominent companies are forced to change their product composition or, at the very least, admit to the health-negative implications of their ingredients.”

Meanwhile, over the past three or four weeks, Himatsingka says he hasn’t been flooded with lawsuits. That’s partly because he has become quite careful about how he words his statements, instead focusing only on the merits of his argument.

“There are millions of problems in the world. But most of the problems are very hard to solve, like air pollution. But teaching people how to read a food label is easy. I feel learning how to read a food label is more important than coding in the 21st century, where most of what we’re eating is processed or packaged.”

Indeed, the fight is long. And Himatsingka is only gearing up for more.

(Published in Forbes India)

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A meaty challenge

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December 12, 2022

Christina Moniz, Financial Express

December 12, 2022

This year has seen the entry of several brands into the plant-based meat category, from large players like ITC and Tata Consumer Products to newer brands like Licious. Mock meat, a growing trend especially in Western markets, is a plant-based protein processed to resemble and taste like meat. From vegetarian ‘chicken nuggets’ and sausages to meat-free ‘mutton’ seekh kebabs, most Indian players use ingredients like soya and jackfruit to mimic the texture and taste of meat.

The Indian vegan meat market is rather small currently — estimated to be around Rs 250-300 crore. But consider the potential: About 41 percent of respondents in India identified as either vegan, vegetarian, or pescatarian in a 2021 survey. A report by Wazir Advisors estimates that this category will grow 8-10 times to reach Rs 3,500 crore in 2026.

Looking from a global perspective too, this new category cannot be written off as just a blip. Worldwide, the consumption of such meat substitutes grew from 133 million kg in 2013 to 470 million kg in 2020.

While the projections are fantastic for this market, it is still very small within the entire food category, points out Sandeep Singh, co-founder of Blue Tribe Foods, a two-year-old start-up in this segment. What is needed to grow the category, he believes, is innovation. “The food items need to move beyond burgers and nuggets to appeal to the Indian non-vegetarian consumer. For example, someone needs to create a good chicken tikka masala or a good kheema to attract the Indian palate,” he explains. Earlier this year, star couple Virat Kohli and Anushka Sharma announced their investment in Blue Tribe Foods, a move that has boosted awareness for the brand and category, says Singh.

Variety & cost

Tata Consumer Products, which launched its vegan meat brand, Simply Better, in July this year is tapping into the trend of consumers moving towards healthier and sustainable lifestyle choices. Deepika Bhan, president, packaged foods (India), Tata Consumer Products, maintains that the market holds great growth potential. “Over 70% of the Indian population is flexitarian (consumes both vegetarian and non-vegetarian food). Surveys also show that over 73% of Indians today are protein deficient. These data points signify untapped potential in the plant protein segment. The consumer cohort, which is aware of the health and environmental benefits of plant protein, is likely to expand to a more diverse audience seeking to supplement their diet with alternate, plant-based meat,” remarks Bhan.

Cost is a factor hindering growth. Currently, the pricing for plant-based meat is 1.5 times the price of real meat products. “For premium consumers, price is not a challenge but to gain scale and reach the masses, pricing needs to be more attractive,” observes Devangshu Dutta, CEO, Third Eyesight. Indians have for decades consumed soya nuggets and products as a source of protein and as a meat alternative, but brands today are targeting urban consumers who are not price sensitive. “The consumers that brands are targeting are influenced by trends in Western markets and adopting veganism for ethical or health reasons,” adds Dutta.

Another consumption trend that is unique to Indian consumers is that there are around 100-odd non-meat eating days annually, on account of religious or cultural occasions. Meat and seafood company Licious is targeting these consumers on non-meat eating days with its newly launched vegan meat brand, UnCrave. Simeran Bhasin, business head, alternative protein, Licious, states that all brands in the category are still on a journey to improve their offerings . “Our plan is to create relevance before aiming to take a share in it. Eating is believing, and we want more of our consumers to sample our alternative protein offerings. So, we send samples of UnCrave along with Licious food deliveries to encourage consumption and drive brand awareness,” explains Bhasin.

While UnCrave is currently present in only four cities (Mumbai, Delhi, Pune and Bangalore), she asserts that there is a market for the brand in non-metros too and expects the brand to reach the top 20 markets by the end of the next fiscal.

(Published in Financial Express)

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Campa-Cola’s second coming: Reviving a dead brand

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September 5, 2022

Akanksha Nagar, Financial Express
September 5, 2022

Can you give a brand a second shot at life?

Reliance Retail Ventures certainly thinks so. It has acquired Campa-Cola for an estimated `22 crore from Delhi-based Pure Drinks Group on the assumption that it will not only be able to revive the five-decade-old brand but can also use it to springboard into the dog-eat-dog soft drink market in India.

It will not be a cakewalk surely. The ones who were fans of the brand—which was launched in the 70s—have moved on, and younger customers have little or no association with the brand.

Samit Sinha, managing partner, Alchemist Brand Consulting, believes that Reliance must have been very keen on getting into the soft drinks category as a part of its overall strategy of retail expansion. In any case, it hasn’t had to shell out a bomb for the brand so it is a less audacious gambit than starting from scratch. There is one other factor that might work in its favour—which is the formula, the taste of which had near widespread acceptance in its heyday.

Sandeep Goyal, managing director, Rediffusion Brand Solutions, who is handling a similar resurrection of Garden Vareli sarees, says giving an old brand like Campa-Cola a new life will be far from easy—the Campa-Cola generation is now in their sixties and therefore there is very little monetisable value in the nostalgia.

RESURRECTION RULES

Breathe life into an old brand if:

1. The market presents an opportunity to refresh the brand without compromising on its core promise

2. There are positive connotations for the brand that can be built upon in the current market context

3. The company has the resources and inclination to be a “caretaker” or “steward” of the relationship that had been created between the brand and its customers

Courtesy: Devangshu Dutta, CEO, Third Eyesight

Launch versus resurrect

From the looks of it, Campa-Cola will have to fight sip for sip, bottle for bottle.

Rohit Ohri, chairman and CEO, FCB Group India, who had managed the Pepsi account for more than a decade, says it will be difficult for a new brand to find space in a market dominated by multinationals like Pepsi and Coke. While the residual equity can help get the foothold, the real challenge would be to woo a younger consumer set.

Naresh Gupta, co-founder and CSO, Bang In The Middle, concurs: “When you try to resurrect a brand, you do it knowing that the brand isn’t doing well or has been out of circulation. That is big baggage for the brand to wipe out. Often the residual awareness and following are limited to the audience that is less likely to be your core audience today.”

There is also the fact that young people in the metros are moving away from colas, preferring healthier drinks or niche artisanal products instead. At the same time, soft drink is an impulse category and needs a large dose of salience to fly off the shelf.

Gupta says Reliance can try and build on the Indian-ness that Campa-Cola exudes. His guess is the old brand will be used as a calling card in trade and there would be a host of new launches that build upon it. “Campa-Cola may fuel a lot more fresh fizzy drinks launch from Reliance,” he adds.

That said, just the sheer time an old brand has spent on the shop-shelves would give Campa-Cola an edge over any new brand that its current owner might want to launch. An old brand can appear to be proven, experienced and secure, while a new brand could be seen as untested, raw, and risky. An old brand may have had a positive relationship with the consumer but may have been dormant due to strategic or operational reasons. In such a case, reviving the brand is clearly a good idea, says Devangshu Dutta, chief executive, Third Eyesight.

Reliance could have launched a new brand but if the existing brand has residual awareness or connection, it could be the pivot around which other brand properties can be built. Here, the new owner also has the benefit of having a wide retail network. As on March 31, 2022, Reliance Retail operated 15,196 stores across 7,000-plus cities with a retail area of over 41.6 million sq ft. This, if nothing else, will give Campa-Cola a start any new brand will die for.

(Published in Financial Express)

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What does Reliance Retail’s FMCG venture mean for the market?

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August 31, 2022