After having established itself as a major ice cream player (the second largest ice cream player in India), Vadilal Industries is now all set to focus on the processed foods segment. With eyes set on the National Capital Region (NCR) market, the company has re-launched its 'Quick Treat' range with new youthful packaging, and now sees opportunities both in the domestic as well as export markets. In a telephonic interview with Sohini Das, managing director of Vadilal Industries Rajesh Gandhi, shares the group's future plans.
What is the share of processed foods in Vadilal Industries' net turnover and what has been the CAGR of the segment?
Around 14-15 per cent of our turnover comes from the processed foods segment at present. The company's net turnover is around Rs 450 crore, of which Rs 50 crore is from the processed foods segment, and we are looking at doubling that in the coming three years. Last year we clocked a 30 per cent growth in the segment, and this year we are targeting around 35 per cent growth. However, in the year before that, our growth had been flat. So, one can say, we have started to focus on this segment from last year only
What is your market share in the processed foods as well as ice creams segments?
In ice creams, we have an all-India market share of 15 per cent, and we are the second largest player. However, it is difficult to point out a market share in the processed foods segment, as the industry is still in a very nascent stage and there are hardly many organised players barring one or two companies like Sumeru, even Mother Dairy has a frozen vegetables range. We are one of the major players in the segment, and have been one of the pioneers in exports of processed foods.
What percentage of your sales from the segment comes from exports? Which are your major export markets?
Around 70 per cent of our turnover from the segment or around Rs 35 crore comes from exports at present. Earlier, we had decided to focus mainly on the exports market, but, now we see a growing opportunity in the domestic market as well. Due to changing lifestyle of the young generation in India, especially in case of working couples, there has been a spurt in demand for ready-to-eat frozen foods across all major cities. While we expect our domestic sales to grow by 30 per cent annually, exports would also continue to clock a healthy growth rate of around 35 per cent. Thus, in the long run the 70:30 ratio in favour of exports will remain constant. We export to Australia, US countries in Africa and the Middle East. Australia is the biggest exports market for us, with a 15 per cent share of net exports of processed foods.
What is the rationale behind the re-packaging of 'Quick Treat' range?
When we decided to refocus on the whole subject of processed foods, our internal team suggested that lets change the logo, colour and the look of the packaging. We did a quick market survey and found out that customers are very happy with the vibrant colours. As the advertising budget on these segments is not very high, it is important that the packaging looks attractive. When a customer picks up the product off the shelf, the packaging definitely plays a role in attracting his/her attention. As for marketing, we are thinking of using the social media together with some print advertising to position the product range.
You had launched the Flingo, Gourmet and Badabite range of ice creams recently. What has been the response, and do you see premium segment driving sales in the long run?
The response to these ice creams has been very good indeed. Buoyed by the response, we also launched a kids category of ice creams called the Ice Trooper. All these new categories combined now constitute around 20-25 per cent of our net ice cream sales. Vadilal is more popular in the regular ice creams range, but we wanted to give a youth-connect to our brand, which is why we launched the new range.
How are you handling rising input costs? Are you mulling a price rise?
While input costs have risen, one fortunate this for us has been that cost of skimmed milk and milk powder has remained more or less stable owing to pricing pressure in the international markets. Thus, we have not been largely affected. We raised our prices by around 7 per cent in February, and have no immediate plans for further price rise.
