FieldFresh Foods, a joint venture between telecom-to-retail major Bharti Enterprises and the Del Monte Pacific arm, DMPL India, plans to begin work on a Rs 100-crore plant by April 2010.
The plant, which will be located in Hosur in Tamil Nadu, will produce the company’s entire functional processed foods’ range of canned juices, sauces, mayonnaise and mustard. It will also take care of the production of polyethylene terephthalate (PET) bottles for their fruit juices, which it will be introducing in India for the first time. The company currently imports the entire product line and the import duty on such products is 37 per cent.
“We plan to have our plant set up very soon for manufacturing all our existing products and, if need be, a few new ones, including the 1-kg glass bottles for ketchup,” FieldFresh Foods CEO Sanjay Nandrajog told Business Standard.
The equal joint venture has its distribution network in over 15 cities, but is planning to increase its reach to 25 cities by next quarter. The company had recorded a sale of 25,000-30,000 packs during Diwali. It has also made inroads into the aviation sector, with Del Monte juices now available in most low-cost airlines. In addition, the company has said it will look at full-service carriers once its factory becomes operational.
The company also tied up with ‘Gladrags Mrs India’ as a brand promotion initiative recently.
The potential is immense. According to research firm A T Kearney estimates, the market for food and beverage retailing in India is at $135 billion (Rs 6,48,000 crore). It also pegged an annual growth of 10-15 per cent.
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But the challenge for FieldFresh Foods is to get the distribution network in place.
“While retailing may not be such a big challenge for Bharti, FMCG is a different ball game altogether. Distribution here will be the key,” says a sector analyst who does not wish to be named.
FieldFresh Foods has 14,000-15,000 general outlets and about 1,000 outlets in modern trade. But the company has no immediate plans to enter the rural markets.
Industry experts also feel Del Monte’s products, especially their juice segment, come at a time when the market is filled with established players, such as PepsiCo, Hindustan Lever and home-grown Dabur. They say that even a player like Parle Agro, which very recently entered the market with its latest product, Saint fruit juice, will pose a formidable competition to Del Monte because of the brand familiarity created with its other flagship products like Frooti and LMN.
“Del Monte will have a lot of branding and promotion to do before they can hope to cut into the fruit drinks space, which stands at around Rs 1,500 crore and the fruit juice market at Rs 600 crore.” notes another senior analyst.
When launching the joint venture, Bharti Enterprises Vice-Chairman and Managing Director Rakesh Bharti Mittal, had said the company “...wants to be one of the top 10 food and beverage companies in India in the next five years”.