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2015-01-14

Snowman Logistics to expand its footprint in food space

Value-added services like chopping vegetables and assembling dishes will add to warehousing margins of Snowman Logistics.

Snowman Logistics is likely to expand its value-added services in the food space with the acquisition of two Bengaluru-based start-ups specialising in chopping vegetables and assembling sandwiches and burgers before sending them off to quick service restaurants (QSR), according to a report published by Economic Times.

Value-added services like chopping vegetables and assembling dishes will add to warehousing margins of Snowman Logistics.

"These are start-up guys who are doing a decent job. They are unable to scale up because of their own limitations. Snowman can get these guys and can replicate it across the country. It is an avenue for us to enter the fruits and vegetable business.” Ravi Kannan, CEO, Snowman Logistics told ET.

“The two start-ups run their own processing centres. One of them sources, cleans and chops vegetables, while the other assembles sandwiches, burgers and buns. Snowman has also started a similar processing centre at its warehouse in Hyderabad,” added Kannan.

"They have the technology and knowhow and it is easy for us to scale it up fast. Cold chain is moving to a more integrated model. Eventually, cold chain companies will control whole of QSR's supply chain and take inventory risks. They will do procurement and transfer it to restaurants.” he said.

Cold chain companies, mostly in India, are only involved in delivering foods from centralised kitchens to outlets. “It is common in the US but is evolving in India," said Ritesh Chandra, Executive Director and Head (consumer group), Avendus Capital.

Cold chain companies like Snowman are focusing on the QSR segment, which is expected to double to about Rs 7,000 crore in 2015-16 from Rs 3,400 crore in 2012-13, driven largely by new store additions in smaller cities, according to Crisil.

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