Food and Beverage Apr, 26 2010

Global brands cashing on Indian food franchise industry

Considering the current franchise scenario in India it would be appropriate to say that the international players dominate the industry especially the Food and Beverage sector. There are numerous factors contributing to the growth and success of internati

By Abha Garyali
Sub Editor
Global brands cashing on Indian food franchise industry

India being positioned among the top four Asian destinations for FDI, the F&B sector is witnessing the entrance of a number of international players through franchising. Franchising considered as a profitable venture is being opted by the foreign players to expand their business globally. According to the Top 100 franchises by The Franchising World magazine, a total of 21 franchisors belonged to the F&B sector. It was interesting to note that out of these 21 brands, 12 players were of the international origin. Therefore, it would not be incorrect to state that a major chunk of Indian food franchising is still dominated by the international franchisors. Let us have a look at the factors responsible for it.

Factors favouring international players

India being an emerging market: As India has a huge untapped market potential, especially in the franchise industry, therefore, a large number of foreign franchisors are targeting the Indian markets. India being the engine of economy for the foreign investors is also attracting the international players to enter the country.

Easy entry routes: Till a decade back, it was difficult for international players to enter the Indian markets. However, the Government’s easing the routes of entry for foreign brands with the aim to intensify the country’s economy; many global franchisors have entered successfully.

Changing lifestyles and preferences of Indians: Another contributory factor for the success of these foreign F&B players is due to the change in the lifestyles of the consumers. There is a rapid increase in the spending capacity of the middle class due to increase in disposable income. The Indian consumers spend around 51 per cent of their earnings on food and beverages. Moreover, the preferences of Indian consumers have also changed. Now-a-days people prefer trying out different cuisines rather than the regular Indian dishes.

Majority of youth population: Almost three-fourth of the nation’s population consists of the youth. Youngsters are the main consumers who desire to eat out and try different cuisines. Therefore, the growth in this segment has propelled foreign players to enter with their own unique cuisines.

Dominating global F&B brands

The Franchising World magazine identified 12 F&B franchisors out of the 25 internationally renowned players who have established themselves successfully in India. This shows the dominance of the F&B brands in the country. Let us have a look these brands.

Fast food sector: These are also known as quick service formats. This segment includes ChicKing, established under Banquet Foods International; a part of Dubai based Al Bayan Group of Companies and has 50 units across 15 cities in India, Pizza Hut, flagship brand of Yum! Brands has 143 franchised outlets in over 38 cities in India, Marrybrown, a Malaysian company with MGM Group of Companies as the master franchisor has 31 units presently, Subway presently has 165 units and aiming to have 250 by the year’s end also occupies a position among the top international brands. Another player occupying a position is The Pizza Company, launched by Minor Food Group, has 250 units and is still expanding.

Beverage sector: The beverages sector include prominent brands like Gloria Jeans, a global speciality coffee company from Australia with a master franchise agreement with Citymax Hospitality presently has 10 stores across India, Jus Booster Juice, a North American smoothies and juice chain which ventured into India through its master franchisee Brand Calculus and has eight units so far. The Coffee Club based in Australia is optimistic with plans of expanding in India soon. Another coffee restaurant, Café Jubilee has also entered the Indian markets with its plans to expand successfully. It presently has five units.

Ice-cream sector: This sector includes an already established brand, Baskin Robbins with its 375 franchised outlets pan-India and Swensen’s, a debutant brand hoping to launch its outlets successfully.

To conclude it can be said that the presence of these international franchisors have propelled the Indian franchisors to expand via franchising. The entry of the foreign brands has added to the growth of the food franchising industry in India. Thus, in the coming years, F&B sector holds a promising future ahead.

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