Food and Beverage Sep, 17 2012

Fruitful returns for F&V biz owners

The age old practice of selling fruits and vegetables from cart and roadside vendors is now giving way organised fruit and vegetable retail stores and online stores. Franchising has a major role to play in encouraging this trend. Read on to know more

By Abha Garyali
Sub Editor
Fruitful returns for F&V biz owners

Horticulture retail, better known as selling of fresh fruits and vegetables (F&V), is slowly but steadily becoming more and more organised. This change can be attributed to the emergence and popularity of the neighborhood grocery stores that have been opening up. Till a few years back customers used to flock at the local fruit and vegetable vendors but the present horticulture retail scenario is attracting consumers towards the organised neighbourhood stores, thereby taking Indians towards the progressive path. However, at present India stands at four per cent in organised horticulture trade as compared with 56 per cent globally. This shows that organised veggie trade in India still has a long way to go to reach the global status. However, with the Indian Government’s decision to open FDI in retail the scenario is sure to be reached sooner than expected.

Franchising can be the best foot forward even for veggie trade as it is getting the stature of a globally acclaimed business model with thousand of new and exciting business opportunities. In the recent past we have seen a number of super stores and convenience stores coming up pan India via the franchise route. Let us firstly study the various factors that have led to the popularity of franchising in the horticulture sector.

Favourable factors for F&V franchising

Traditionally being sold through small road side kiosk and mandis, fruits and vegetables are now being sold through various supermarkets, departmental stores and convenience stores. Let us explore the factors favouring this shift:

Comparative prices: It was in minds of consumers that fruits and vegetables are cheaper in mandis and local grocery shops. However traditional F&V sellers used to charge whatever they wanted but with the emergence of organised players the prices are more regulated. Consumers are now well aware that there is not much difference in prices but a lot of difference in comfort.

Convenience of organised superstores: The modern franchised superstore or a convenience store does not only sell fresh fruits and vegetables but all other important household items like dairy products, oils, pulses, soaps and many other important products.

Government Initiatives: Initiatives taken by the government can be considered as the primary factors for organised veggie trade.

Increase in disposable income: With both husband-wives working, couples can afford to spend a bit of extra money for a comfortable shopping experience.

Effect of Foreign Direct Investment

The government has now opened a gateway for foreign funding into the sector. In 1997, FDI in cash-and-carry (wholesale) with 100 per cent ownership was allowed under the government approval route. It was brought under the automatic route in 2006. However FDI in multi-brand retailing was prohibited in India. Now the latest policy of the government is opening gates for FDI in single-brand retail to 100 per cent while creating a path for FDI in multi-brand retail to the tune of 51 per cent. This passing of FDI policy would surely affect and improve the standard of organised veggie trade and take it to greater heights. Many foreign brands which were prohibited to enter India can now invest in the Indian markets, enhancing the organised retail. This would, in a way, also add up to the organised veggie retail, which needs more and more players as well as their partners to expand to small cities and towns.  

Franchising trends in veggie retail

In countries like Australia and United States, buying fruits and vegetables from organised players is well accepted and there is a flourishing retail franchise model for such business concept, now the trend is catching up in India also. A few players have already tasted success in this field. Safal, Sai Niranjan Fruits are some players which are sure to have tremendous scope in future. However, Safal takes credit of initiating the concept of organised fruit and vegetables (F&V) retailing and franchising. Pradipta Kumar Sahoo - Business Head (Horticulture), Safal shares: “Safal is a thriving business proposition that has taken both the Indian retail as well as Indian F&V retailing by storm.” Safal has franchised outlets in Delhi, NCR and Bangaluru which sell fresh fruits and vegetables, milk and milk products under Mother Dairy brand and also processed food products under Safal brand. The brand has 410 franchised outlets in these cities. But looking at the success of the brand Sahoo says: “As our organisation gains impetus and increases its customer base with each passing day, we intend to explore new markets and penetrate new customer base by launching new Safal stores across Delhi NCR, Bangaluru and other cities.” 

Online franchise segment

The on line ordering system for buying fruits & veggies is already flourishing in foreign nations. Now the trend is catching up in India also. Here, the concept of buying fruits and vegetables through web sites is relatively new and limited to metros. But there are several entrepreneurs who are seeing the enormous scope of this business concept, and realised that there is a huge untapped market for this unique idea and that these ventures are also franchisable. There are web platforms like N-Fresh (Delhi), Veggie Bazaar (Chennai), Farm2kitchen (Gurgaon), Mandi on Wheels (Surat) and Veg On Call ( Delhi) etc.

Regarding the franchise model Akrosh Sharma, Founder, Mandi On wheels shares: “We are a Surat based venture having two operational franchisees and also signed one more which is expected to open in July with three more in pipeline for Surat city. The company provides back end support for its franchisees in the form of sourcing and own ware house/refrigeration facility. The company would seek franchise expansion in other Indian states in coming years after consolidating its position in Gujarat." Similarly Seema Dholi, Founder and CEO, Farm2Kitchen says: “At the moment we are focusing on spreading our network in NCR (Delhi/NOIDA) and we would focus on going nationwide very soon. Yes! We are considering franchising our business as it would help us quickly reach more cities in India.” 

Looking at the giant steps taken by organised veggie retailers in both offline and online segments it is not so difficult to predict the bright prospects for aspirants in this field. Players who have entered timely in the segment are cashing in on the unlimited benefits. So aspirants on the look out for a healthy, evergreen and profitable venture can surely invest in veggie franchising.

Related: Freeze profits with cool prospects

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