Business - Home-grown F&B brands take MNCs head on

NEW DELHI: The Rs 25,000-crore food and beverage market seems piping hot for Indian brands. And the table looks set for a new crop of homegrown players to take on the global biggies in the eating-out arena. At least 12-15 new Indian brands, across formats, are opening shops to compete with McDonald’s, Pizza Hut, KFC, Domino’s Pizza. Savour this: Lite Bites—the Amit Burman and PVR Cinemas JV—is rolling out Asia 7 and Fresc Co to add to its existing platter of Street Foods of India (SFI), Punjab Grill and Bakers Street.

Similarly, RHW Management—promoter of The Great Kabab Factory (TGKF) and Superstars—will launch two new brands, Chinese and Italian, by the next year. That apart, the Rs 7000-crore Alchemist Group is also investing Rs 1,300 crore in its F&B foray. It has recently launched its chain of quick-service restaurant (QSR), Republic of Chicken (ROC), and plans to start brands of fine-dining restaurants of varied cuisine.

The reason for such fervent activity by Indian players in eating-out space is not far to seek. With margins as high as 30% in the restaurant business, according to experts, the industry looks mouthwatering enough. Besides new launches in the pipeline, several players are expanding aggressively. “Local brands have an edge over international players as they understand the market well,” says TGKF and Superstars (RHW Hotel Management) director (brand development) Ashna Kapur. “Even home-delivery market is something that local players can tap more easily.”

RHW plans to add eight new outlets of TGKF to its tally of nine by the year-end. Adds SFI and Punjab Grill MD Zorawar Kalra: “We understand Indian psyche better and have selected menu according to that. At some places we do more business than international competitors as we offer food at affordable prices.”

However, some are conscious that to compete with foreign brands even on the home turf is not going to be a cakewalk, especially when eating-out market is highly competitive. “Funding is still an issue for Indian players as compared to foreign biggies, who have deep pocket and spend lavishly on sales, branding and marketing activities,” says Kwality Group ED Dhruv Lamba. The company owns brands such as Chopsticks, Kwality Express and Bread & More, and plans to double the number of outlets from the current 49.

However, MNC food chains don’t see the development as a big challenge. While KFC India director (marketing) Unnat Verma dismisses any likely competition from Indian brands, some like Pizza Hut marketing head Anup Jain feel that the market is roomier than it seems: “International brands really attract Indians,” he says. “But in India, only 35% urbanites eat out once in three months. Considering this, there is a huge market with room for everyone.”

Nevertheless, global majors have their own expansion plans at work. Yum International’s Pizza Hut plans to double its outlets from the present 138, in the next five years. Similarly, KFC plans to increase its touch points in India from currently 35 to 100 by 2010. The company has earmarked an investment of Rs 130 crore that will be partly borne by its franchisees.

Meanwhile, the established Indian brands are confident of their chances in an increasingly competitive space. “We are the oldest in this space in India and have seen changing market conditions, consumer tastes and profiles,” feels Nirula’s marketing head Sudipta Sengupta. “Also, the fact that we are closely connected to consumers will help us gain an edge over others.” Nirula’s will be spending over Rs 90 crore to take its outlet count to 200 by 2010.

While most upmarket streets are dominated by the presence of international players, food courts in malls have given some visibility to local players at lower rentals. But to get higher footfalls, Indian brands are eyeing transit points and unconventional set-ups such as hospitals. So if Kwality is present in Fortis and Apollo, besides other hospitals, RHW Management and Lite Bites are in talks with airport and railway authorities to set up shop.