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Food and Beverage 2013-09-12

Baking big business ideas

Author C. Joybell C once quoted – “Cake is happiness. If you know the way of the cake, you know the way of happiness. If you have a cake in front of you, you should not look any further for joy.” Surely, the cake and bake industry is bringing joy

According to a recent report, the bakery industry has achieved third position in generating revenue among the processed food sector. The first and second segments are the wheat flour processing and fruits and vegetables processing. The bakers and confectioners industry is surely providing lucrative business opportunities to the franchisees. Here’s presenting various ways in which you can make your entrepreneurial dreams come true.

The Indian bakery sector consists of some of the large food categories like breads, biscuits, cakes, pastries, donuts etc. The number of players are increasing in this sector especially the international players. Anupam Saluja, CEO, Cookieman, says: “The bakery sector in India is worth $69 billion. It is one of the fastest growing segments in the food sector.  Changing demographics and globalisation have led to this segment becoming one of the fastest growing segments. Bread and biscuits constitute about 82 per cent of the entire segment.

Best foot forward

When taking a brand’s franchise, a prospective franchisee usually has lots of perplexity regarding the choice of formats. According to Saluja of Cookie Man, “All formats have their own benefits. Location plays a key role in the success of a bakery. So the ideal model is always based on a combination of factors like location, space available, target consumer profile etc.” Adding to the same, Yasir Ahmed Hamraz, Founder & Director, Bakesmiths & Company says: “The Bakery & Confectionery industry in India is highly fragmented, largely unorganised, extremely diverse in terms of product assortment and target market. It could be safely and unanimously concluded that the size is humongous and industry players are vying to get a slice of the cake.”

Growth drivers

Bakery products are consumed by masses because of its low price and high nutrient value. With rapid growth and changing eating habits, bakery products have gained popularity among masses. The industry is noticing a dramatic shift in the preferences of consumers. While traditional Indian snacks continue to enjoy widespread popularity, the Indian middle-income consumer is also looking for global flavours and interesting choices. Hamraz of Bakesmiths & Company adds: “The advent of organised retail in the confectionery and bakery industry is servicing the current needs of the society that is home deliveries, quick bites, convenience food,  manufacturers are rolling out innovative products to address the requirements. Consumers also regard these joints as a place to spend time and meet up with friends. Depending on the brand positioning few also serve as a venue to conduct business meetings.”

Franchising all the way

Cookie Man, premium fresh-baked cookie chain opened its first outlet in Chennai in January 2000. Currently, it has grown immensely with 60 stores spread across 24 cities. Saluja of Cookie Man says: “Cookie Man has been franchising since its inception in the country. More than half of our stores are franchised. Over the years we have scaled our presence across the country through franchising. We have built several successful partnerships across the country and we will continue to expand through franchise partners.” Delhi-based CCDS Bakers Warehouse, a bakery and cake decorator's warehouse, is planning to build up its pan-India retail footprints via franchise route. Whereas Bakesmiths & Company plans to open both company owned and franchise stores in the coming years.  

The global scenario

According to a research from Global Industry Analysts- The global baked goods industry is expected to exceed $310 billion in 2015. Demand for baked and pastry goods is being driven by changing lifestyles. People want a meal on the go and what better than a quick baked snack. Emerging markets such as Latin America, Middle/East Africa and Asia represent good market potential as western lifestyles and eating habits continue to be adopted in these regions. Hamraz of Bakesmiths & Company says: “With the changing lifestyles, this consumption pattern is also fast increasing. The cakes and pastries market is consistently growing at 10% CAGR. What is also promising is the change in gifting trend. People have started gifting cakes and chocolates on festivals. This vast market was dominated exclusively by traditional Indian mithai’s previously. Occasions, namely Birthdays, Anniversaries, Weddings, Valentines Day, etc. are all instrumental in propagating the cake culture. With the changing lifestyle people are becoming health conscious, greater exposure to European/Western culture, need for quick bites especially in the urban pockets, etc. have scripted success for this industry in India.”

Going the healthy way

Health and wellness is a recent float in the bakery sector. Every brand is trying to present healthier product options. Britannia's Nutrichoice has also introduced its range of ragi, oats and 5 grain biscuits. According to Yasir Ahmed Hamraz, of Bakesmiths- “Exposure has created in fact a greater demand/market for the bakery and confectionery industry in general and retailing of the same in particular. The increased spending capacity has also allowed people to spend on recreational food more often; hence, the surge in demand and consumption. Health benefits of baked products have also been well received. The Indian Mithai’s have always had a significant status on the staples spread. The confectionery retail has always done well in the country, it has now just graduated to either accommodate myriad products - ranging from traditional Mithai’s to western pastries.”

Expansion Plans

Several domestic and international players have entered this segment and consumers have a huge variety of choices available to them. Big names in this sector are coming with interesting product  innovations. Some international players like Cinnabon, Krispy Kreme, Dunkin donuts and many more have already entered India. Currently, Cookie Man has 31 franchise stores and plans to foray into Raipur, Siliguri ,Gangtok, Panchkula and Patna markets. Bakesmiths & Company has two outlets in Kolkatta and over the next five years it intends to open at least 100-120 retail stores across the country, both company owned and franchise.

Delhi-based CCDS Bakers Warehouse, a bakery and cake decorator's warehouse, is planning to build up its pan-India retail footprints via franchise route. A specialised retail outlet, CCDS has a large inventory of imported cake decorating, confectionery and cooking tools, gadgets and raw materials. It sources the best ingredients, cook ware and bake ware from around the world. They are authorised distributors for several international and national brands including Wilton, KitchenAid, LorAnn Oils, Satin Ice and PME. Established more than ten years ago, the company is seeking franchisees across the country. CCDS Bakers Warehouse plans to expand Pan India. Their business models are designed to allow franchisees to run a profitable business with low investment and quick RoI.

Franchise facts:

Brand

Investment

Area

Breakeven

RoI

Cookie Man

Rs 8-10 lakh

50-300 sq ft

12-18 months

20% net margin

Bakesmiths & Company

Rs 15-60 lakh

300-2000sq ft

3-4months- operational

--

CCDS

Rs 45.60 lakh

500 sq ft

1 year

-

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