Innovation is a key ingredient for food packaging and services companies to scale their business and sustain growth, panellists at the VCCircle Food and Agri Investment Summit 2016 said on Tuesday.
In addition to product innovation, food services companies also need to innovate in distribution and marketing and find ways to recruit and retain talent, the panellists said at the event in Mumbai. Nearly 250 delegates, including investors and executives at food companies, attended the day-long event.
Viraj Bahl, founder and managing director at Veeba Foods, said that one of the areas of potential innovations in the food sector is in the health segment. Wherever people realise a product is healthy, they will tend to prefer that product, Bahl said.
Sadanand Maiyas, founder of Maiyas Food and Beverages, spoke about creating a variety of innovative products—such as a product mix for curd rice with a shelf life of a year–which struck a chord with customers.
Nikhil Sen, managing director at Unibic Biscuit, talked about the importance of differentiation and innovation in product design and marketing to gain an edge over competitors. “What we had to do was differentiate at every end to make sure our rupee went a lot longer than the ITCs and Britannias of the world,” he said.
Panellists also said that several consumer companies are good at building a Rs 200-crore or Rs-300 crore business within two or three states, but are not as successful in scaling it up to a pan-India level.
For scaling up, they can focus on adjacent market growth or have greater market depth within a smaller area. Companies can learn to expand their businesses in concentric circles and increase depth within the same market, said Rahul Garg, partner and co-head, India PE at PremjiInvest, the private investment vehicle of Wipro Ltd chairman Azim Premji.
In the food services segments, the challenges to expansion and growth are different, although innovation is a strong growth driver, the panellists said. The restaurant segment has seen muted growth over the past few years, but consumer sentiment has been improving, they said. Companies need to keep innovating their menus to remain successful, especially in the face of food inflation, they added.
It is important to be flexible in terms of the size of the outlet at various locations to counter rising real estate prices, Riyaz Amlani, CEO and managing director at Impresario Entertainment & Hospitality Pvt Ltd.
Food inflation can be countered by thinking differently about the menu and offering differential pricing and introducing newer products, Amlani said.
The panellists also said that a platform approach by private equity firms is a way to building scale across regions and brand formats while countering some challenges.
Platforms can help in negotiating cheaper real estate options and can provide strong leanings across geographies that can translate into innovation in marketing, brand and food, said Bhavna Thakur, managing director at Everstone Capital. Everstone has two platforms in the restaurants segment—F&B Asia Ventures Ltd and Blue Foods.
A platform approach can also allow firms a greater leverage in hiring talented management, Tarun Khanna of CX Partners said. CX Partners is invested in Sapphire Foods, a platform for Yum Brands, and has also put money in restaurant chain Barbeque Nation.
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