The company mainly targets the Indian diaspora and exports from over 40 per cent of its sales. DFL has also been accorded the ‘Two-Star Export House’ status by India’s Ministry of Commerce & Industry. In the last 10 years, the company has grown at a CAGR of over 20 per cent (aiming to grow at over 30 per cent, going forward) riding on the rapidly-growing domestic branded packaged food market, which is growing in excess of 11 per cent.

In the domestic market, the company is competing with players like Nilons, Bedekar, Tops, Aachi and Priya in pickles; Dabur, Capital Foods (Smith & Jones) and Nilons in ginger/garlic pastes; Lijjad, Haldiram and Bikanerwala in papad and MTR, Gits and Haldiram in instant mixes. Besides, there are several local and regional players, as also players in the unorganised segment. 

“Packaged ethnic food products are witnessing massive traction in the last decade or so and this will continue to sustain this momentum going forward with the entire food space undergoing a massive transformation,” says Anurag Katriar, president, National Restaurants Association of India (NRAI) and CEO, deGustibus Hospitality. “With households changing their approach and looking for convenience, the ready-to-cook and ready-to-eat product categories are expanding base in a big way. However, maintaining quality and taking care of regional palate will be crucial for the players”.

DeGustibus Hospitality enjoys a reputation as one of the finest hospitality companies in India, with its successful restaurants Indigo, Indigo Delicatessen, Neel, and Tote on the Turf, and the fine catering venture, Moveable Feast, under its umbrella.

Big demand

Experts are of the view that in the last few months, amidst the pandemic, the Indian households have increasingly come to prefer homemade foods and that is where the demand for various packaged food categories in the ethnic food space are generating huge traction. 

“Already, these food categories, including ready-to-cook and ready-to-eat products, have been in big demand,” says Archit Goel, director & CFO, Shri Bajrang Alliance Ltd. “But, now, with this ongoing pandemic, households are showing their distinct preference for convenience food products in packaged format. The space is expanding in a big way and the players engaged providing right kind of products will be able to make its presence felt”.

Shri Bajrang Alliance has recently forayed into vegetarian ethnic food categories and has set up a modern processing facility in Raipur, Chhattisgarh. These frozen ready-to-eat ethnic products are currently available across modern trade and retail under the brand name GOELD.

“The domestic food sector has been in a transition mode,” informs Desai. “With the income and demographic changing, there has been a major shift towards convenience foods, even as consumers have evolved and are looking for quality products in the branded space. We at Desai Foods are keen to serve this transformed market place with our services and products. Over the years, we have carved a niche for ourselves in the market where our quality offering and our quest to come up with newer and innovative products have been received quite well”. 

Desai is a third generation entrepreneur. The family business having been started by his grandfather Haribhai V. Desai in Gujarat, way back in 1901 (subsequently, they shifted their base to Mumbai and then to Pune). The group began its venture primarily in tobacco business, manufacturing bidis, and it continues to be one of the largest bidi manufacturers in the country, with a production capacity of about 70 million sticks per day. Bidi making remains the family’s flagship business, even as the group has been diversifying in the last couple of decades. 

Over the years, the Desai group has diversified into businesses like food processing, specialty chemicals, healthcare, logistics, finance, and hospitality. Backed by a combined workforce of over 100,000 people, the group has a wide global reach, with established operations in the Middle East and the Far East, as also Australia, the UK, the US, Canada and Africa. 

Desai Brothers diversified into the packaged food business in 2001 and acquired the pickle brand ‘Mother’s Recipe’ from the Mumbai-based American Dry Fruits Ltd in 2002 for about R6 crore. In 2001, the group hired McKinsey as a strategic consultant, which advised it to restructure and diversify its operations in the wake of increasing regulations in the tobacco sector. The food business was started as a division of Desai Brothers; however, in 2019, it was demerged as a separate company. 

In 2015, Desai Foods acquired the Kolkata-based Elmac Agro Manufacturing for Rs30 crore. The Kolkata company makes a range of sauces, including `Kasundi’ – the famed mustard sauce from Kolkata. The acquisition not only added newer categories to the company’s overall portfolio but also helped it increase its presence in the East with Elmac’s over 150 distributors. 

The company has ramped up (upgraded and expanded) Elmac’s Kolkata facility in a significant manner in recent years. In order to get into spreads and mayonnaise categories, DFPL acquired Spread On, while also launching a sub-brand, Dabee, in order to strengthen its pickle category. 

“It was a strategic decision on our part to go in for a mix of organic and inorganic expansions,” contends Desai. “It was a conscious move made to keep pace with the market and we are happy the way things have progressed so far. Going forward, as things stabilise further, we are looking to get into a higher growth trajectory in excess of 30 per cent from the present over 20 per cent”. 

During the past few years, DFPL has invested significantly in ramping up and upgrading its overall manufacturing capability across all its locations. Backed by a strong R&D and innovation team, which keeps its eyes on the fast-evolving market to continuously come up with newer products, the company offers the largest gamut of local and regional cuisines across all product categories, made using the best quality ingredients sourced from specific regions. The company’s manufacturing facilities are state-of-the-art, certified under ISO 9001-2008 and ISO 22000-2005. All the facilities are compliant to stringent global food safety guidelines, such as HACCP and USFDA. 

“We adhere to stringent standards of hygiene and implement firm quality control procedures at various stages of processing,” says Sanjana Desai, executive director, DFPL. “This is done to ensure that only the best quality products leave the factory. Our plants have an in-house laboratory facility equipped with the latest equipment, to ensure that the quality of the products remains up to our high standards. All this, along with our sales and marketing efforts, has paid rich dividends to us in the market”.

A graduate from Bryant University, US, with a degree in finance, economics & international business, Sanjana, the eldest daughter of Desai, joined the company (then the food division of the family business) in 2010 as a trainee. She was the first woman in four generations to join the family business. Currently, as executive director, she is responsible for driving strategic initiatives and supports the development of long-term growth plans and profitable goals. She is also involved in analysing emerging industry trends, expansion opportunities including M&A, and identifying opportunities to grow the business. Her younger sister Presha Desai is also part of the business activities, overseeing HR and new product developments.

During the ongoing pandemic, DFPL has witnessed a significant rise in consumption of its packaged ethnic food products as most of the households preferred to eat at their homes. Moreover, the company has also seen significant rise in online sales. In fact, the online sales in the last six months have gone up to about 7 per cent of the total sales from, 2 per cent before the Covid period in February. Apart from having its own site, the company also partners with all major e-commerce players, including Flipkart, Big Basket, Milkbasket, Grofers and others. 

“After the initial two months of disruption in manufacturing, we are fully back on track,”says Sanjana. “The overall food consumption, particularly consumption of packaged food, has seen a big jump since home-confined households looked for alternatives. We have continued to ramp up our offering. Our panipudi chatni and other similar ethnic food products launched recently have been a big success and, going forward, we will continue to expand our offering with newer products and variants,” states Sanjana.

Growth drivers

Experts are of the view that, with rising urbanisation trends leading to changing lifestyles, with less time available to prepare food at home, willingness to experiment with different, especially newer, products, changing tastes and preferences, exploration of new tastes by the consumers, etc, are the key drivers of the recent growth of the convenience food sector in the country. The sector, which has been growing at about 12 per cent in recent years, will continue to maintain its momentum going forward as well.

Within the convenience food sector, the RTE and RTC markets are undergoing continuous evolution, caused by changes in consumer behaviour and food technology. Many leading food companies are augmenting their infrastructure and developing new categories of convenience foods such as soup powders, artificial gravies, cereal based breakfast options, and various kinds of pudding mixes, etc. 

DFPL has also prepared itself well to explore the opportunities arising in the convenience food segment by significantly boosting its manufacturing and other capabilities. The market relating to the food categories the company is involved in at present is valued at about Rs10,000 crore and is growing over 13 per cent.

Over the years, the market is getting organised and branded products are gradually increasing their footprint. This is where players like DFPL, backed by a strong brand, Mother’s Recipe, will be able to position themselves strongly. 

More importantly, Mother’s Recipe is now a part of a separate company, not a division and, hence, it would get the desired attention and focus, which is essential to succeed in a competitive packaged food market. This is a good move at a right time and this will allow the brand to carve a distinct place for itself in the market, where opportunities are aplenty for innovative and enterprising players.

The company has already proved itself, with its offerings, not only in the domestic market, but also abroad, where quality, innovation and consistency are strictly adhered to. With all this, DFPL seems all set to commence its second phase of growth journey in the rapidly-growing ethnic food market.