Food and Beverage May, 14 2012

Make profits with baking biz

Bakery is believed to be the forte of the Indian F&B industry. The sector is quite rewarding and signifies promising growth prospects as many national and international brands are offering great bakery business deals. Explore more on the baking biz

By Neha Gohil
Feature Writer
Make profits with baking biz

Today, bakery industry holds an important place in the Indian F&B Industry. India is the second largest producer of biscuits after USA. The bakery industry has achieved third position in generating revenue among the processed food sector and is expected to reach USD 7.6 billion by 2015 by a report revealed by The sector mainly deals in cakes, biscuits and breads.

Baking as an industry has always been dominated by unorganised brands which continue to occupy 65 per cent of the market share. However, gradually the organised sector is also getting hold of the market, as many national and international brands have opted for franchise route for expansion to tap the unorganised market. On the current scenario of organised bakery market, Subhash K Menon, Director, WAH Restaurants says: “Bakery business is slated for a quantum leap in the near future. This would largely be driven by the fact that retail bakery business can successfully operate out of a 200 sq. ft space with an investment in the range of Rs 7 to 10 lakh.”

Bakery industry does not only offer fresh baked products but it also offers a baked business opportunity to many aspirants. On the business opportunity Zoher Khorakiwala, Chariman Managing Director, Monginis Foods Pvt. Ltd: “What Monginis proffer is an assured business right from the day shop is opened. One need not even wait very long for break even. It is a transparent, steady business with sales spurts on days like Valentine’s Day, Xmas, New Year, Rakshabandhan, etc. To make it even more profitable entirely depends on the efforts and business skills of the franchisee.”

Baking factors

With rapid growth and changing eating habits of people, bakery products have become an item of mass consumption. The urban areas mainly hog the market share of the industry due to mounting disposable earnings and time restraint. The sector has gained popularity among people due to its health and affordability factor. The main contributing factors are increasing demand of convenient food at reasonable price, urbanisation and health consciousness. People are increasingly becoming health conscious and aware of nutritious diet. The sector caters to every age group and is slowly becoming a popular hangout place.

Players in the baking field

Cookie Man: Cookie Man, launched in India in January 2000 by Australian Foods (I) Pvt. Ltd, is a premium range of cookies made from unique recipes refined over 50 years at an exclusive R&D centre in Australia. Currently, the brand has more than 35 franchised stores in India.

Monginis: Monginis as a brand traces its roots back, to early 1900s when it was a favorite with the Europeans in Mumbai. It has 600 retail franchisees and 10 manufacturing franchisees. Monginis is present in two cities in Egypt viz. Cairo and Alenxandria.

Birdy’s: Birdy's is a chain of gourmet bakery and patisserie shops catering to a wide range of daily, indulgence and celebration needs with its delicious array of breads, cakes and pastries. It has more than 50 franchise outlets.

Baking biz via franchising

Beside the fact that the industry is tapped with unorganised brands there are many organised brands contributing to the sector also. Franchising has helped the brands to grow enormously and amplified its national and international presence. On the franchise growth of the brand, Khorakiwala shares: “We started franchising way back in the year 1971. Franchising has certainly helped a lot in growth of Monginis brand. Dedicated franchisees, spending all their time in promoting and selling its products has not only resulted in increased sales but also in spreading a positive word of mouth around in their respective neighborhoods.”

Seeing the success of this niche sector, international brands could not resist themselves from entering into the market via franchise route. About the brands presence in India Pattabhi Rama Rao, President, Cookie Man India says: “Australian Foods (I) Ltd established its presence in India with a franchise model. The franchise route is an exciting way to grow a business. Not only does it bring together a diverse group of people, it also ensures that people who take on a franchise have a genuine interest in the product and making a success of the business. Above all, it gives the mother company the ability to scale up and establish a presence in multiple markets with relative ease.”

Franchise hurdles

Flipping the coin on both sides is essential. Therefore there are certain challenges a franchisee has to face in this business. Managing a franchise of bakery business is not an easy task. There are certain factors which need to be looked upon everyday like taste, freshness and hygiene, which can make or break the business. Sharing some challenges Khorakiwala says: “Last minute orders, which are increasing day by day, pose a challenge. To cater to these orders, one needs to maintain optimum stocks at the franchisee shops. Under stocking leads to loss of sale whereas overstocking leads to higher returns of stale unsold goods. Therefore, there are not many chains of franchised bakeries in the World. One learns the intricacies after experiencing only.”


To own a franchise of a bakery brand an area and investment vary from brand to brand. An international brand like Cookie Man demands an area which will vary from store to store (between 60 - 600sq.ft) and the investment will vary from type of store (between Rs 5 - 40 lakh). Birdy’s a national bakery brand requires a 200 - 250 sq. ft area, franchisee would need to invest in shop interiors, equipments, cooling counters, etc. Typically, the set-up cost of an outlet would be in the range of Rs 7 to 8 lakh.

The future of the bakery industry is baking to the pinnacle with many organised brands providing a productive business opportunity to aspirants. Throwing some light on the bright future of bakery industry Khorakiwala says: “Future is certainly promising. Celebrations are increasing in terms of scale and frequency. But, the business is difficult due to its intrinsic factors as mentioned above and also because of competition from unorganised local bakeries coupled with strict government policies and regulations.” So, bake profits everyday!

Related: ‘Take home’ strategy triggers sale for ice cream brands

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