Home Progressive Grocer Freshkins Foods to expand presence in Mumbai and other cities

Freshkins Foods to expand presence in Mumbai and other cities

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Freshkins Foods India is the latest organized retailer to sell fresh fruits and vegetables based on the Farm to Fork model. Supported by the Maharashtra State Agriculture Marketing Board, Freskins will distribute fresh produce sourced from farmers directly to consumers, and encourage budding entrepreneurs to set up franchise outlets in neighbourhoods

Neeraj Gupta, chairman, Freshkins Foods India Pvt Ltd (the man behind Meru cabs), is determined to change the way fruits and vegetables are sold and purchased in the country. With the launch of Freshkins Foods, he has created a distribution channel to organize the traditionally unorganized fruits and vegetables market. The first destination for change would be Mumbai followed by Delhi, Pune, and Hyderabad, followed by other metros and cities across the country. This first of its kind retail model in Maharashtra will source fresh produce from farmers directly at the right price and serve the urban consumer, thus making way for many more micro-entrepreneurs to earn a livelihood through this unique initiative. Helping them in this endeavor is MSAMB.

Teaming up with Gupta are K. Radhakrishnan (earlier with Reliance and Future Group), Anjaney Bhutada (formerly from Future Group), and Ram Nair (ex-Future Group) in the capacity of chief mentor, CEO, and director, respectively.

What inspired you to take up such a challenging venture?

Gupta: The idea came to me right at home from watching my wife order large quantities of fruits and vegetables from the local grocer without any understanding of the rate, quantity or quality. She would also source from several vendors for variety and freshness. Also, the traditional way of grocery shopping means having to go to a nearby market and haggling with the vendors over rates, freshness, etc. Clearly, there was a need for a neighbourhood store that would meet the daily requirement for fresh and quality fresh produce, at affordable prices, and right at the consumer’s doorstep. Since I did not have any prior experience in this field, I undertook a lot of research, read about international trends, met both modern and local kirana grocers to understand first hand the issues and challenges in sourcing, supply, storage, etc, of fresh produce.

From operating a fleet of radio cabs to F&V retailing, any similarities in the two widely different businesses?

Gupta: The big similarity in both the businesses is that both are consumer oriented. Both are highly unorganized and fragmented, and, above all, both have the scope to create a large network of micro-entrepreneurs who will become the face of the organization. Freshkins aims to provide employment opportunities to over 500 micro-entrepreneurs. NGOs like Apna Bazaar have approached us to take care of their fruit and vegetable section.

The challenge here is to manage the entire supply chain of F&V in the most efficient manner, for which we have tied up with MSAMB and bought in K. Radhakrishnan, Anjaney Bhutada and Ram Nair to leverage their vast experience in the business. My job is to ideate and incubate the businesses I launch. I will let Radha, Anjan and Ram manage the business on a day to day basis and I  will provide assistance whereever required. So far, all the investment has come from my family, but I will consider PE funding once the business stabilizes and has to be expanded.

What are your observations on the current F&V market?

Nair: In urban India, more than 96 percent of fruits and vegetables are sold through traditional channels (pavement vendors, pushcarts). Sales in organized channels (supermarkets, grocery stores, online, etc) is still low due to limited reach. With the majority of the population in India being vegetarian, demand for vegetables is always on the upswing. The per capita consumption of fruits and vegetables continues to increase despite high inflation. Mumbai alone requires 3,500 – 4,000 tons of fresh produce everyday. Freshness and Convenience followed by Range and Price are key considerations for consumers. This is what we aim to tap through Freshkins.

Gupta: The Rs.4,000 crore F&V market in Mumbai alone is completely untapped with no organized player looking at this as a category to service the end consumer. We will specialize in this category and cater to the large market in the way it wants to be served. In Urban India, less than 4 percent of the sales of fruits and vegetables sales take place through departmental stores, supermarkets, online deliveries, etc.

What is Freshkins F&V retail concept based on?

Radhakrishnan: This concept is about combining the ‘Science’ of modern retail with the ‘Art’ of street retail. This first of its kind retail model in Maharashtra that has been launched with an investment of Rs 5 crore. We will source fresh produce from farmers directly at the right cost and serve urban consumers through sellers appointed by us as franchisees. In fact, this is a great opportunity for micro-entrepreneurs. The franchise of Freshkins can be availed either through a 150-300 sqft store, a mobile store, or a portable kiosk/shop-in-shop. From our 35,000 sqft central warehouse/cold storage facility in Goregaon in Mumbai, we will deal directly with institutional buyers (hotels, restaurants, residential societies, food processors and exporters).

Gupta: There will also be a Sabzi Bazaar here for direct selling to vendors and  hawkers. For our registered franchisees, we will have a doorstep delivery. The entire delivery and ordering system will be IT linked. Based on the algorithms, we would suggest the quantity the franchisee should order, but they can also increase/decrease the order as per their understanding of the demand in their catchment.

How will you invite franchisees?

Bhutada: MSAMB has a database of around 1760,000 farmers. It will help us connect with them for sourcing the fresh produce. Based on the model of Private Public Partnership (PPP), Freshkins has received a license from MSAMB to invite micro-entrepreneurs, especially women to run franchised outlets of Freshkins, for which they will have to invest Rs 2 to 5 lakh. To break even, the franchisee will have to sell atleast 300-400 kg of vegetables and fruits in a day. The daily selling price will be suggested by us but he/she is free to sell at a lower price, but under no circumstances would be allowed to sell at a higher rate. We will not compromise on our promise to our consumers for freshness, variety and affordability.

Radhakrishnan: We will be working on a profit sharing basis with the micro-entrepreneurs. But out of the franchisees’ investment in Freshkins, the Maharashtra Government will rebate around 40 percent. Our ‘farm to fork’ model is designed in such a way that farmers will get the right price for their agriculture produce and consumers will get fresh fruits and vegetables at fair prices.

What other plans do you have for growing the Freshkins retail concept?

Gupta: In the  next 18 months, we aim to open 300 retail touchpoints in Mumbai alone. A thorough training will be extended to our franchisees (each will be allowed only one Freshkin outlet). The bank account of each franchisee will be directly linked to our system and no one person will be allowed to take more than one franchise. So far, over 50 housing societies have contacted us for setting up mobile shops. By 2015, we plan to be visible in Delhi, Hyderabad, Bangalore and Pune. With an additional investment of Rs 10 crore, we plan to cross our target of Rs 250 crore till 2016. Ours is an asset light model as the business will be built around franchisees. We will need funds to tide us over  the initial hiccups (including operational and overhead costs and losses), and also for creating a strong technology driven platform, and for marketing our brand.