Coimbatore-based Suguna Foods currently a Rs 5,000 crore company, was founded in 1985 by B Soundararajan, Chairman of Suguna Foods Limited a company that trades in eggs and poultry feed. The company is now present in over 15 states in India and in several international markets. With a year on year growth rate of 15 to 20 percent, the company’s integrated operations include broiler and layer farming, hatcheries, feed mills, processing plants, food products, retail outlets, vaccines and exports. “We had a very humble beginning 25 years back; today we are a million dollar company. Our annual turnover of Rs 2,500 crore comes from frozen foods,” informs Mohan VK General Manager – Consumer Product Division. Buoyed by consumer acceptance and demand, Suguna launched their own retail chain of stores called ‘Suguna Daily Fressh’. Currently, there are over 120 outlets in Tamil Nadu, Karnataka and Kerala, with an employment of over 5,000 people, and a slew of new products across its categories. According to Mohan, the growth of modern retail has helped in spreading awareness of their products, and enabled an ideal environment for processed frozen food products across various categories.
B Soundararajan was also the first to execute contract farming, which today, comprises of 15,000 farmers from 8,000 villages in India. The format of contract farming model(which was reintroduced as a wider operation in 1989-90) had Suguna Foods supplying farmers with DOCs (Day Old Chick), medical support, feeds and guidance. Farmers, in turn provided their land, farming and labour. Mohan informs that in a year, the company produces 395 million chicks from 36 hatcheries. About 2.2 million tonnes of feed are produced in a year, and the processedchicken production per annum is 18,000 tonnes. The company ensures quality as it handles integrated operations right from parent chicks to hatcheries, breeder farms to feed mills, and poultry farming to processing. Explains Mohan,”The farmers are given growing charges at the end of each ‘lifting’ whereby the fully-grown chicks are lifted from the farm to be taken for processing, or to be placed in retail shops. Farmers are also given expert medical guidance and supervision. The USP of this business model is that it works to the highest advantage to both the farmer and the company.” Suguna Foods ensures that every farmer is guaranteed regular income through fixed minimum growing charge rates. Proven to be cost-effective, the company does not have to shell out capital on land, labour and on sheds. Steps are also taken to trace pathogens banned antibiotics, growth hormones on products and ensure that they are hygienically cleaned, processed and then preserved in a controlled bio secure processing area. The company sells its processed chicken in a chilled format through its Suguna Daily Fressh outlets.
Suguna Daily Fressh Outlets
In order to provide customers a new experience while shopping for processed chicken, Suguna Daily Fressh (SDF) offers a modern air conditioned store, where customers can select from a range of fresh chilled chicken under the brand ‘SugunaAnytime’ which are available in 8 types of portions. Ready-to-eat products are sold under the brand ‘Suguna Home Bites’. The recent addition of a variety of specialty eggs (Suguna Eggs) like nutritive eggs, frozen fi sh and vegetable products like green peas, potato fries, refi ned soya bean oil are sold under the brand ‘Mother’s Delight’. Milk and valueadded dairy products are retailed under the brand ‘Sahanaa’. SDF caters to regular walk-in customers, institutional customers, HoReCa and QSRs, and exports its frozen chicken. Apart from these, Suguna offers nutrition-rich herbal mixes, cattle and poultry feeds, and poultry equipment. Adds Mohan, “Now, with the Daily Fressh retail format Suguna is able to offerconsumers processed chicken as per globally recognised standards. The chicken sold at SDF are processed at our state-of-the-art processing plant, which is HACCP certifi ed ISO 22000:2005 and FSSAI compliant to ensure the highest quality for product and the processes. The shelf life of a frozen product is 12 months which gives enough time for sales at the retail point, hence, there are no dead stocks. The processing plant of Suguna is FSSAI compliant, and quality standards and processes are governed by HACCP and ISO certifi cations. Frozen food slows down decomposition by turning residual moisture into ice, thereby inhibiting further growth of most of the pathogens. Freezing helps keep the food fresh and wholesome, and the nutrients intact till the product’s extended shelf life of one year.” The typical store size of a SDF is around 300-600 sqft and requires an investment of Rs 5 to 7 lakh, depending on the location. The company follows both company-owned and franchise models. Franchisees can expect an ROI of 36 to 40 percent within a year of opening. Suguna provides a franchisee the brand set up and marketing support. Explains Mohan, “For a Suguna Daily Fressh franchise, we offer great opportunities in a growing industry. With low investments levels a faster break-even model, quicker store set up time, and strong backing from the principalcompany, investors and entrepreneur who are looking to be part of the success story are welcome to approach Suguna Foods.”
SDF has processing plants in Udumalpet near Coimbatore, from where supplies are delivered to the stores. Other frozen products are sold through dealers and distributors to modern retail stores, standalone stores, and QSRs and foodservice outlets across India. Mohan informs that the company’s Sahanaa Milk is sold through distributors, dealers and retailers in Coimbatore, Nilgiris, Tirupur and Salem districts in Tamil Nadu and through the regular milk retail channels. Its Mother’s Delight Refined Soya oil is currently being sold only in the Vidarba region of Maharashtra.
According to Mohan, the processing business defi nitely faces challenges in terms of storage, logistics and cold storage, which are common to the frozen foods industry. “We have facedchallenges in terms of the number of outlets times when the distributors are very few, which impacts These challenges have addressed as the concept frozen food is very new India and just catching up.” He points out that the Indian chicken industry has only 5 percent processed frozen food, whilethe rest 95 percent are live chickens. “The greener side of the story is that the processed food industry is growing by 35 percent year on year, and we are seeing a steady growth,” he adds.
Suguna currently exports only frozen whole chicken to the Middle East. It is present in all major EC countries with a distribution set up to meet demands of retail, modern trade, and institutional requirements for frozen chicken. Processed meat is 5 percent of its overall business. Out of all the categories, frozen chicken is the best performing. Says Mohan, “This particular business is largely confi ned to institutions as there is not much awareness in India. Processed food has not gained traction in India as it has in other parts of the world, but it is defi nitely catching up.”
Mohan informs that the company plans to double the number of SDF outlets during this FY in Keralaand Tamil Nadu. Apart fromthe modernstand-alone store, Suguna is aggressively pursuing shop-in-shop models, and is reaching out to align with leading modern retail chains in south India. :The total count of Suguna Daily Fresh outlets are currently 120, and are present in Kerala and Tamil Nadu. “We plan to add over 150 stores during this financial year, and are actively looking for franchise partners in Tamil Nadu and Kerala. We are also working on shop-in-shop models and actively seeking opportunities with large modern trade chains to partner with us.” The company is also open to the idea of online retailing as it is one of the marketing avenues the company would take going forward. “With respect to frozen products, Suguna Foods would be adding to its already extensive range of products giving greater choice, especially in the ready-to-cook range. With these and greater placements, Suguna Foods penetration will increase across the country in the coming months,” concludes Mohan FACT.