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Cremica’s Winning Edge

Ludhiana-based Cremica Group with its brand Mrs. Bector’s Cremica entered the HORECA segment as a supplier of ketchup to McDonald’s in 1996. Since then, the company has been a frontrunner in both the food and grocery and food service industry. Managing Director, Mrs. Bector’s Foods, Akshay Bector talks with Juhi Sharma about the company’s growth over the years and their expansion plans
What would you attribute the company’s success to?

We have always been in sync with the latest trends through regular research and customer feedback. And we have always been ahead of the market in terms of deploying technology and understanding the fast changing market needs due to which we were able to introduce new products, innovate and expand our product categories. We first sought to strengthen our presence in the foodservice segment, before focussing on retailing in which we were already doing well, because business in terms of volume lies in the foodservice segment. HORECA has helped us gain brand exposure; we are widely known for our ketchup. Most businesses run the valuation game and do retail first. Today, Cremica is worth Rs 657 crore, out which Rs 200 crore can be attributed to its ketchup business, and is growing at a CAGR of 10 to 15 percent. Currently, about 60-65 percent of our business is retail.

Please elaborate on your manufacturing facilities. 
Currently, we have two operational facilities: a small snack food manufacturing unit in Delhi and a factory in Phillaur, Punjab that produces condiments. It has a capacity of producing 10 tonnes of condiments per hour, and is running close to peak capacity. It is one of the largest in the country and is equipped with expensive machinery and an R&D division with a testing lab and kitchen. We plan to open two more plants: the first will be in Mumbai as we are planning significant expansions in the western region. When it will be ready for production (by 12 to 18 months) it would have a capacity to produce 20 tonnes of products per hour. The second plan is for a food park in Himachal Pradesh, where we will set up a tomato processing facility to meet our regular need for tomatoes. The food park will give us more control over the back-end activities and would aid in our subsequent investments.

According to you, which product category is growing fast in the HORECA business?

I think ready-to-cook (RTC) products will become important in the HORECA segment in a very large way, and will offer more standardisation. Our curries and gravies are now being used in restaurants, and they are improving the quality of the prepared dishes. In future, RTC products will have considerable impact on the foodservice segment. Ketchup and mayonnaise are the two main products in our kitty, besides syrups, toppings, cake fillings, spreads, RTC curries, marinates, salad dressings, and fruit crushes.
As we move forward, I foresee the HORECA segment becoming more cost and quality conscious. Whenever the segment usage of RTC products increases, it will save money, time and effort. In the bakery segment, products like toppings and fillings will help the segment upgrade to better and consistent quality of products. We are moving into the bakery fillings business, and are already present in ice-cream and desert toppings. In the future we plan to launch coffee syrup, which will enable our clients to make coffee-based deserts easily, and will enhance their ability to make more products using this syrup. It will be launched for both retail and foodservice. We plan to introduce new products every year, when feasible. We are recognised for our innovations and quality standards, and have a good understanding with our customers in the foodservice and retail segments so we are confident that our new products will be well received by them.

How has your brand grown and evolved over the years?

In the condiments space, we have grown significantly – close to 25 percent annually – and the business is poised for larger growth ahead. We are hoping that this year, growth will be in excess of 25 percent annually as our penetration across markets is increasing significantly. In the HORECA segment, we do not have any industry data that will help us analyse how many outlets we cater to, but I think we are the most penetrated company. In terms of size, we should be double or triple the size of our nearest competitors.
In the next few years, we should continue to grow between 25 and 30 percent. We have expanded our chips portfolio with the launch of Opera, which has been a huge success and has brought us a lot of recognition. We are in talks with various F&B outlets for these chips, which is a premium product and in line with their brand image. As of now, our condiments segment is the most strong compared to bakery and others. Our nearest competitors would be brands such as Heinz and Nestle, followed by HUL and then Delmonte.
We have the benefit of being the first mover and have a fairly large network of distributors in the market, so our penetration is already ahead of our competitors. We  have a high level of acceptance with Indian customers, and we are constantly offering new products and solutions which would increase their profitability.

Which new markets are you planning to enter?

We are well-entrenched in the north, and are now exploring opportunities in the southern and western markets, which historically, have been somewhat ignored by us till now. But we have begun to look at these regions aggressively, and have started by launching our products in important cities of west India. But the fact is that we have penetrated a very small percentage of the foodservice industry, so we will continue to expand our presence in existing markets and explore newer markets every year.
There is big demand coming from small towns and even the rural markets. The Indian government has been supporting and investing in the growth of rural markets. It has been taking initiatives to increase the wages of farmers and incentivising them to increase  yield. For instance, last year, the President had launched the dry land farming initiative. Such initiatives will help raise farmers’ earning capabilities and raise the quality of life of the rural people. So, I am expecting the next level of revolution (in terms of growth) in rural areas and tier III cities. If the economy has to grow 8-10 percent, then there is no way that it can happen without investing in the agriculture sector and making value additions, which will lead to higher incomes and better living standards, which will, in turn, generate more and more demand.
As a supplier, what are the issues and challenges? 
During inflation for instance, or when we are upgrading our systems and infrastructure, we cannot afford to compromise on quality, so we are forced to squeese the margins of our customers. But these are trivial issues and manageable. On the whole, I feel that this market is very good and we do not encounter many challenges.
We have invested a capital of over Rs 100 crore as of today and plan to invest Rs 150 crore more in the next two years. We have reached a significant scale of operations and have built our infrastructure and efficiencies in the supply chain and logistics. Through a hybrid supply chain system, we are managing timely deliveries to clients in various locations.
The entire country is carrying on business with the existing infrastructure in logistics and supply chain, but there is room for developing better warehousing and logistics in the country. At Cremica, we plan our supplies in advance so that there is no delay in delivery. If it takes seven days to deliver to a specific location, we dispatch the products much before that. It is all about good planning and management. GST, when implemented, will enable us to set up warehouses across many regions, and we will save significant costs in storage and transport.

What is your view of FSSAI rules and regulations?
It is a new legislation and a nice initiative by the government, but it needs to be reviewed so that it becomes more suitable and relevant in the prevailing scenario in India. Most of the laws have been taken from the European legislative framework governing the food sector and from other developed countries as well. India is a developing country and the market requirements here are different, so the entire Act merits a review.

What are your international activities?

We have been exporting our RTC curries and gravies to two major restaurant chains in the Middle East and Hong Kong; mayonnaise to Africa; salad dressings to the US; and we have recently made a small entry in Pakistan with our branded products. We are targeting Sri Lanka as well. Once we set up a plant in South India, it will open up opportunities to explore the market potential for our products in all the neighbouring countries.