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Jul, 11 2013

MAKE MONEY ON THE GO

Are you looking to kick-start your business with low investment and still want it to yield high returns? Your wait is over as tiny concepts are set to add a zing to your profits while on the go!

TEENSY weensy formats have yet again set the industry on fire as there has been an inexorable demand generated by a flock of investors who look to invest low and garner benefits. Investing in carts, vending machines and kiosks has always been a preferred choice for franchise investors as it entails lower investment and risks compared to the big-box retailers.  In addition, franchising has also turned out to be blessing in disguise for investors as it helps in extending the reach to locations with high potential.  The major drivers that have pulled bigger investments in the small businesses are changing consumer preferences in terms of buying for quality products from organised brands, rise in impulse buying on quick bites while on the go and the increasing middle class income.One can start with as low as vending machines, carts to kiosks and other small format stores.  Below are the sub-categories that are robustly seeking to spread wings via franchising.

Ice creams: Scoop full of success

Who can say no to ice-creams? As summers begin, ice-cream makers get set for churning out industry's bigger pie. Currently, India's ice-cream market is flooded with a mix of domestic and international brands. At present, the market is ruled by brands like Kwality Walls, Amul, Vadilal, Havmor Ice-creams, Hokey Pokey Ice Creams, Pabrai's Fresh and Naturelle Ice Creams, Gelato Vinto, Baskin Robbins, London Dairy, Movenpick, Mini Melts, Haagen-Dazs, Swensen's and many more. Most of the brands are operational in India by way of franchising. The competition is tremendously fierce as many brands are looking for avenues to sustain their competitive edge.  The major drivers that augment the industry growth with a bang are mainly the transforming consumption patterns during summers and the entry of international brands in metros and mini-metros, disposable incomes, a burgeoning middle-class, availability of multiple options to consumers in terms of flavours, toppings, traditional kulfi's and new forms of gelatos. Also, the increasing health awareness among young urban population, focus on sugar free, fat free and pro-biotic variants.

As per the market survey, the Ice cream market in India can be divided into: the branded market and the grey market. Grey market consists of small local players and cottage industry players. The total market is Rs 3,000 crore. The branded market at present is 180 million litres per annum valued at Rs 1,500 crore.

Ice-creams vary considerably as the market is flooded with a horde of brands offering frozen desserts at varied tastes and price points. Rohan Mirchandani, CEO, Hokey Pokey Ice Creams, feels the major growth drivers include modern retail and the development of supermarkets, increased investment in the cold chain logistics infrastructure, and an evolving taste palette that is leading to higher awareness about quality products. About the retail formats they follow Mirchandani says: “We offer three models to our potential franchise partners: kiosk, parlour and café. The chosen model is based on the partner's investment capacity, location, size of outlet, etc.”

The increasing involvement of international brands in India's growing ice-cream market is giving strong impetus to and influencing the domestic brands to improvise their offerings. Domestic labels too have upped the ante with new launches and wider expansion strategies on the cards. Commenting on the business model they offer, Kunal Pabrai, Founder, Pabrai's Fresh and Naturelle Ice Creams, says: “We, at Pabrai's Fresh & Naturelle, offer the franchisees the opportunity to open their own ice -cream parlours - either through standalone parlours or through the kiosk model. We guide them through the entire process, right from site selection, doing due diligence for site , helping guide through lease agreements, interior design and décor  and finally detailed training for both the staff and the franchisees on all aspects of this business. We also guide franchisees on how to market the product, prepare accounts and regularly monitor the business for progress.” In terms of capturing market share, Mirchandani says: “Over the next five years, we intend on capturing at least 5 per cent of the total frozen dessert industry market share in India while expanding our reach to select tier II cities.”

On the other side, R S Sodhi, MD, GCMMF Ltd (AMUL), says: “We offer opportunity to all kinds of entrepreneurs. We have two models i.e. Amul Ice Cream Scooping Parlour & Amul Preferred Outlets (APOs). Both models are among  the least expensive and high sales franchise models in the nation. Depending upon the market segment i.e. retail market, institution, mall, etc. we customise designs, interior elements, deep freezer/ refrigerator, etc. for these two franchise models.”

The ice- cream industry is warming up like never before. With the influx of organised bigwigs in the business, the industry is set to rev up. Extension of distribution channels, new product launches and growing per capita consumption of ice- creams in India are pulling investors into the business.

Yogurt: Set to add flavour to profits

Now, the traditional form, dahi, takes a backseat as its newest avatar yogurt is set to take over the industry's share as today's consumers are becoming more health -centric. Even the flavoured yogurt is also becoming popular in day-to-day purchases among the affluent class in almost all the tiers of the country. With this, India's yogurt industry is regarded to be the most promising industry to be tapped by foreign top guns too. As per ASSOCHAM report, the Indian yogurt industry may touch Rs 1,200 crore by 2015 from the current level of Rs 750 crore as a low-fat and even no-fat alternative. Currently, India's yogurt market is in its budding stage. Many international brands that have lately ventured into the market involve Yogurberry, Singapore's Berrylite, Kiwi Kiss, Red Mango, Froyo and Spanish label  Smooy. Cocoberry is the only Indian brand that first started the concept of yogurts. Talking about the business opportunity they offer, Rahul Deans, CEO, Cocoberry, says: “Our core franchise business model is franchisee- owned and franchisee- operated. We would want our franchisees to invest in the store and manage the franchise as their own business.” When asked about the competition, Rahul said: “We are focused on a growing market rather than fighting competition. To do this we are constantly innovating with new products and offers. Recently, we introduced zero sugar yogurt and sugar free chocolate at a price point of Rs 25.”

As consumers are more health conscious, frozen yogurts have started replacing ice-creams to a certain extent. As per the ASSOCHAM report, the market demand for frozen yogurt is likely to see a growth of 70-80 per cent over the next three years. It's further expected that the yogurt market in India would make swirling profits in a row.

Chocolates: Offering a 'chocolicious' opportunity

Currently, the chocolate industry in India is growing at a rate of 22-25 per cent. Darshit Shah, MD, Premium Pralines Pvt Ltd, says: “The per capita consumption of chocolates is increasing in the country, which will continue to increase the market revenues. It is expected that the Indian chocolate industry will grow in volume between 2013 and 2018. In the coming years, dark chocolates are expected to account for larger market share as compared to milk and white chocolates.” In this segment, Leonidas  the Belgian Chocolates and Cocoa World are offering business opportunity to investors.

Franchising dominates!

When it comes to spreading the brand's aura to different cities, franchising still rules the roost as it is a proven and replicable business model for expansion. Starting from tea, coffee, popcorns and ice-cream vending machines to carts, kiosks and small exclusive parlours serving the quick bite  with this, the food & beverage industry is once again on a new high. As high real estate rentals become a major barrier to growth, investors are investing in scalable retail formats that ensure high returns.

Are you the right franchisee?

Food and beverage is a business of details; therefore, the franchisors have to be very selective in terms of picking up the right franchisee. Jumboking, the vadapav king looks at partnering with young individuals in the age group of 30  35 years, with 4-5 years business experience and the ones who can devote 100 per cent to the business. Kunal says: “Young, who are eager to learn, with backing of finance from family; also, slightly mature people in their 30's and 40's, who have saved enough money to become entrepreneurs to control their own destiny.  While Rahul says: “We look for franchisees who understand our product and share our vision for the brand; who would be actively involved in the day-to-day processes at the store and must possess good knowledge of the catchment around the store and the city.”

Dealing with challenges

Be it ice-creams, yogurts or any other brand operating in the food & beverage space, all go through different set of challenges, starting from identifying the right location that can generate huge returns to picking the right franchisee who has the potential to scale up the business. Says Rohan Mirchandani: “The major challenges faced while setting up one of our outlets are primarily around training, logistics, and special equipment. Since our concept is a specialised one, any new staff member has to go through a rigorous training protocol in order to have the appropriate skill-sets to work at the store. Furthermore, coordinating deliveries and using the right temperature controlled environment for logistics are essential as heat shocks can compromise the product quality. While the special equipment we require is not very expensive, it is very sensitive and requires proper servicing.” For overcoming challenges, Mini Melts believes in developing the product according to the local taste, right marketing strategy, a low investment model that assures RoI in a short period of time.

In any business, an effective marketing strategy plays a big role in garnering profits. On this aspect, Kunal says: “We follow a combination of old and new marketing methodologies for promoting our brand for each new counter and existing counters. We partner with our franchisees and share with them the cost effective ways to market the product. The product's promotion on a pan-India level is done by us, while local marketing campaigns are conducted by the franchisees. We guide them through the process. Also, social media marketing channels for reaching customers are helping us improve our communication with our customers. There is a strong emphasis on monitoring the RoI of marketing expense, both at local as well as pan-India levels.”

Spreading foothold

For chalking out expansion plans, Shoeab Salim, MD, HoneyBee Amusement Pvt. Ltd, says: “We are targeting 12 of industry share by 2015, opening 1200 franchise retail kiosks across the country.” As for Darshit Shah, they are looking at expanding to their priority markets and are currently focusing on New Delhi, Ludhiana, Chandigarh, Gurgaon, Jaipur, Ahmedabad, Pune, Bangalore, Hyderabad and Chennai via the franchise route. Within this year, Hokey Pokey is planning to open 50 stores. While Pabrai's Fresh and Naturelle Ice-creams is looking to double their store count from 18 counters and take it to more than 50 by the year- end.  The company is also looking to consolidate their back-end operations to gear themselves for the fast expansion in years ahead. Jumboking is looking to open 75 stores within this year. On the other hand, Cocoberry is looking to have a pan-India presence within this year.

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