Beating Coronavirus blues: Bikanervala charts new growth path with Bikano

With snacks brand Bikano growing 30 per cent, the group is now breaking the Rajasthani stereotype

The Coronavirus (Covid-19) pandemic may have hit many restaurant owners hard, but traditional North Indian cuisine chain Bikanervala is not one of them. Thanks to its exposure in the packaged snacks market, the Delhi-based family business has managed to weather the storm and is now gearing up to expand its wings into new territories, breaking the Rajasthani stereotype that it has stuck to for over 7 decades.

To do so, the group is heavily banking on Bikano, the inhouse packaged snacks brand that helped it stay afloat during the past one year. While the restaurant business suffered due to the lockdown and gathering restrictions in 2020-21, Bikano has registered 30 per cent topline growth – highest in several years. During the year, revenue from Bikano touched Rs 1,200 crore as consumers chose branded snacks as their companion while locked in home.

Set up in 1950, Bikanervala Foods (BFPL) expanded into a quick service restaurants chain in early-2000s with its first store in Karol Bagh under the Angan brand. Since then, it has opened up 150 outlets, including over half a dozen in Dubai, New Zealand, the US and Singapore. However, it is the traditional snacks business that will come handy in lifting the group's fortunes.

According to Manish Agarwal, director at the Rs 2,500 crore group, it is now ready to take the business pan-India with a new plant, retail and distribution strategy and a new portfolio to suit regional demands.

While the group is a dominant player in the northern part of the country, its presence in other regions is insignificant. Majority of restaurant business revenue comes from the north, while for Bikano, North India's contribution to the total sales is 90 per cent.

According to market research provider Euromonitor International, Bikano is one of the leading players in the Rs 45,000 crore per annum savory snacks market in India. In the other savory snacks category, the brand stood fourth in 2020, behind Haldiram's, Balaji and Bikaji.

While the market has been growing steadily for the past five years, industry estimates suggest, the pandemic injected a booster dose into many packaged food categories. Packaged sweets, for instance, is now growing at 32 per cent, while western snacks at 18 per cent. In fact, Bikano's rival in the west, Balaji Wafers – a Rs 2,400 crore business – is estimated to have grown by 22 per cent during FY21. ITC's Bingo, which recorded a dip in growth during the first half of 2020, regained double digit growth rate in October-December quarter, the FMCG major said.

According to Euromonitor International, the savoury snacks market in India is set to witness growth rates pick up in 2021 and remain strong over the next few years. “Many Indian consumers associate food with their local culture and identity, and the increasing prominence of local snacking options reflects a growing interest in connecting with local heritage amongst Indian consumers. Other savoury snacks is, therefore, expected to be the most dynamic savoury snacks category over 2020-25,” it noted. Moreover, while demand for traditional snacks is growing in India, there is also a growing consumer interest in innovation and novelty.

This has opened up a new window for growth for Bikanervala. Banking on the Bikano brand value, Aggarwals are now gearing up to expand into categories like ready to eat and ready to cook Indian dishes, frozen foods, launch regional flavours in snacks and aggressively expand its reach into the markets in south and west.

To streamline its supply chain, the company is setting up a plant in Hyderabad that is expected to become operational within months and cater to the untapped markets. “We keep a very tight control over the quality of our products. Food business is a business, where you have to serve the same quality everyday. Thus, we never tied-up with third party manufacturers”, said Pawan Agarwal, chief operating officer at Bikano.

Currently, it sources all its products from five group-owned manufacturing units and a lack of supply in the south was a major barrier ahead of its expansion plan. Agarwals have set an ambitious target of generating Rs 2,500 crore yearly sales from Bikano by 2023-24. And to achieve that, it will have to shed the burden of its legacy.

Apart from better market prospects, Aggarwal may also have drawn inspiration for the next phase of growth from their peers in the industry. With consumer's focusing on healthy offerings, leading player Haldiram's entered the healthy snacks category in March through a tie-up with a South African health food company. While, Balaji is planning to foray into emerging categories like wafer biscuits and rolls. The Rajkot-based player, however, is not looking into the frozen foods category like Bikano.

Founded by Manish's grandfather, who moved to Delhi from Bikaner (Rajasthan) and set up a small shop in Chandni Chowk, Bikanervala has followed its Rajasthani traditional foods cuisine since. Through its restaurants, the group may have expanded into many categories like sweets, fresh foods and ice creams but its portfolio revolved around its original cuisine. Now, however, it is stepping out of that boundary for the first time.

“Our system is now streamlined and we are now ready to expand beyond known territories. There is huge potential in the untapped markets and we now believe that we can succeed outside,” said Manish Agarwal.

While the restaurant's business was severely impacted last year, sales recovered to near normal by early April. Agarwal now expects to register 10-15 per cent same store growth. New store openings will stay lower in 2021-22 at 8-10, compared to 10-15 before the pandemic. But Bikanervala has planned to expand aggressively from next year with a target of 100 new stores, including expansion in the US and launch in Australia, by 2024-25. Apart from deliveries and pick-ups at stores, its new line up of ready to eat and cook portfolios to help grow the restaurants business in India and abroad, he expects.

To support the expansion plan, Bikanervala needs some Rs 500 crore – an amount it may find difficult to put together from its internal accruals. While it never had to borrow large sums earlier, this time the traditional family business may have to borrow from outside.

Pointers:

# Bikano ranks among top 4 in other savoury snacks & top 9 in savoury snacks market

# Recorded 30pc revenue growth in FY21, 11pc in FY20 and 20pc in FY19;

# From current revenue of Rs 1,200 crore, group plans to grow Bikano's revenue to Rs 2,500 by FY24

# 100 new Bikanervala outlets by FY25, new plant in Hyderabad in FY22; expansion in South and West

# May have to borrow to meet Rs 500 crore investment requirements for the expansion