The bread-makers for Mcdonalds
Sep 01 2012, 12:32 | By Entrepreneur
By Pranbihanga Borpuzari
But that was easier said than done. Unlike a manufacturing unit, McDonald's relied heavily on sourcing from vendors on an everyday basis, vendors that were almost impossible to find for even local players, let alone a foreign newbie.
That is when the folks at McDonald's stumbled on Mrs.Bector's, a small food processing company, which started as a hobby project for its founder Rajni Bector in her backyard in the nondescript town of Phillaur in Punjab.
A small town beginning
"When I was in college, my mother started developing a hobby in cooking. The family was very involved in agri-commodities and my mother got into her hobby of making ice-cream in a very small way in our backyard in 1978," he says.
The hobby soon became a backyard business of sorts and the family also started a bakery selling breads locally in Ludhiana. "It was more about passion and making money was never the main objective," says Bector.
What Rajni Bector achieved in 1978 makes her one of the first women entrepreneurs in the Punjab and India. As her three sons graduated, each of them got into the business. "Making breads and ice-cream was more appealing instead of going to the mandi and dirtying our feet.
When I graduated, I took upon myself to transform the business and started by setting up a new bread plant," says Bector. That plant became a reality and by 1989, the business started doing well with most of the towns in Punjab growing as well. One thing led to another and the company soon got into biscuits around 1992. Akshay Bector's younger brother joined the business and set up a biscuit plant worth Rs. 2 crore. That year the company reached revenues of about Rs. 10 crore. In the process, it broke even within the first year in the biscuit business.
'I'm loving it'
He sent a small letter introducing his company and stating that he would be happy to work with McDonald's. Days later, an unannounced visitor came to his office for an audit, a part of many unannounced audits that lasted through the long due diligence period at the end of which Mrs. Bector's became a trusted supplier of McDonald's.
"When the McDonald's team first came to India, they were looking for suppliers who could deliver high quality ingredients," says Vikram Bakshi, Managing Director, McDonald's India (North & East). "Although it was a small enterprise then, the team sensed their [Mrs. Bector's] potential as passionate food enthusiasts who could deliver high quality."
Bector says that his company was baking breads at that time and when he first approached the food multinational, he was hoping he could supply breads to them. Much to his surprise, he was awarded with three parts of the business: buns, battering and bread pre-mixes and liquid condiments.
"The ketchup part was a very big surprise and we had to start a ketchup plant by 1996 just in time to support McDonald's," says Bector, adding that the business of ketchup was started first as a 50:50 joint venture with Quaker Oats. Bakshi says that McDonald's was impressed by the supplier's professionalism, ability to manage costs and commitment to quality and food safety.
What further impressed the McDonald's team was their entrepreneurial streak, which turned a small setup started by their mother into the large business enterprise that it is today, he adds.
"In short, it was their eagerness to learn and evolve that convinced McDonald's," says Bakshi.
Spreading the mix
"The first few years were very difficult but McDonald's helped us in a big way when we started off. Of all those who started with McDonald's, Mrs. Bector's is one company which has maintained the relationship and in many ways enhanced it too," he adds.
While the next five to six years were mainly concentrated around McDonald's, the biscuit business of the company was also quietly expanding at the same time. In 2000, Quaker Oats was sold to PepsiCo and Mrs. Bector's bought the joint venture out from the new partner.
Freedom from the constraints of a multinational partner meant Mrs. Bector's could now sell openly in the market to the consumer. Mrs. Bector's today markets its products under the brand name of Cremica.
"Getting into the markets is tough and it tests your caliber. It was a tough journey but we pioneered marketing mayonnaise and were able to develop the mayonnaise retail market in India," he says.
The two businesses continue to grow year-on-year based on the fundamentals of affordability, quality and value, he claims. "Thanks to the McDonald's business, we had the luxury of time and could ensure that the formulations for all our products took as much time as we needed to perfect," says Bector.
With revenues of Rs. 650 crore, the company is easily one of the larger food processors in the country. About 15 percent of its revenues come from the McDonald's business while retail accounts for the rest. For this fiscal, Bector is looking at an annual growth of 20 percent.
The company has also entered into fruitful relationships with other big Indian chains like Domino's, Café Coffee Day and Barista. It is also engaged with the Indian Railways and even the Indian Army.
Bector, however, says that while McDonald's alone drives about 10 percent of the volumes, other key business lines collectively contribute only about 15 percent. The company is also looking at an IPO for the biscuit part of its business.
It currently has three plants in Phillaur, a factory in Gurgaon for biscuits, two plants in Greater Noida for buns and packed food and a factory in Mumbai for buns.
With plans drawn up for more facilities in Bengaluru and Mumbai, Mrs. Bector's has come a long way from Rajni Bector's backyard.
This story appeared in the July 2012 issue of Entrepreneur.
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