COVID-19 impact | Wai Wai noodles to make up for the losses: Varun Chaudhary, Executive Director, CG Corp Global

Wai Wai enjoys close to 25 percent market share with some states having a share in excess of 60 percent.

May 15, 2020 / 08:34 PM IST

Nepal-based CG Corp Global, maker of the popular Wai Wai noodles, is gearing up to make up for the losses owing to disruption in the supply chain on the back of COVID-19 lockdown. The company has set a sales target of Rs 1,000 crore for FY21, according to Varun Chaudhary, Executive Director, CG Corp Global.

"We will put every effort to ensure that we cover up for the losses that we have incurred, through the remainder year," Chaudhary told Moneycontrol in an interaction.

Wai Wai entered the Indian instant noodles market in early 2003. In India, Wai Wai enjoys close to 25 percent market share with some states having a share in excess of 60 percent. Wai Wai, is also the second largest selling instant noodles brand in India.

Edited excerpts from the interview:

Q. Convenience foods are, quite apparently, off the shelves pretty quick nowadays. Obviously, Wai Wai noodle is a beneficiary of this trend. To capitalize on this advantage further, what steps is the CG group taking? Are you able to meet the growing demand?

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A. COVID- 19 and the resultant lockdown has given rise to a shift in consumer preferences and one of the emerging trends as rightly mentioned is the growing demand for Convenience Foods.  Given WAI WAI noodle is the only ‘ready to eat’ noodle of the country, it perfectly fits the requirement for consumers at home today who are increasingly looking at easier snacking/meal options. However, it is important to note that we are also an essential goods provider and we recognise our responsibility during these difficult times.

We have implemented stringent measures in our plants. All employees are being trained to adapt the required measures such as wearing masks, social distancing, regular hygiene and sanitisation. In some of our factories we have made provisions for the factory workers to stay as well.

At least one unit in our 7 manufacturing plants in India has started functioning and we are running at 60 percent capacity utilization.

Q. What about supply chain concerns?

A. Supply constrains continue with the struggle to meet with market demand. With our traditional supply chains being hampered, we are breaking away from the traditional routes and looking at new strategies to ensure continued supply. CG Foods is deploying new strategies to ensure uninterrupted supply of products to our consumers such as collaboration with e-commerce platforms.

E-commerce platforms are emerging as a solution to directly service consumers without making them step out of homes thereby complying with the rules of lockdown. Recognising this, CG Foods has partnered with popular online delivery service providers of the country namely- Swiggy store, Bigbasket, Dunzo & Flipkart, to make our products easily available.  We have been able to supply about 60 percent of the average in last few weeks and are growing better by the day. Furthermore, we are also looking at introducing new variants to capitalize on the growing demand for convenience foods.

 Q. Are you seeing a uptick is sales volume? If yes, by how much particularly after the lockdown?

A. Overall the demand for packaged foods and snacks has picked up in the last 5 weeks. This is primarily because people have up-stocked due to uncertainties in the continuity of lock-down.

On the other hand supply has been hampered due to strict norms even where production has been allowed. Transportation was also an issue till about a week back. Hence the current demand is much higher than the supply.

As mentioned, we have been able to supply about 60% of our average in the past few weeks and should be able to touch our average production very soon.

Q. In the branded noodles space, big listed players occupy a significant chunk of the market. How is Wai Wai positioning itself differently to take on its competitors?

A. The noodle industry in India is dominated by about 5 major players including ours.

In India, Wai Wai enjoys close to 25 percent market share with some states having a share in excess of 60 percent. Its robust market share is owed not only to its unique taste but also its fierce fight for markets in urban and tier-2 India. Growth rate recorded for Wai Wai was 16 percent in 2019 while the India industry growth rate is 10-12 percent.

Owing to the growing consumer demand in India for WAI WAI, we have set up 9 manufacturing lines which prior to the lockdown utilized 95 percent capacity. We recently added another manufacturing line in Ajmer to cater to the demand in the Western market. After the market leader in the instant noodle category, the maximum number of company owned manufacturing plants belong to Wai Wai in India. The capacity utilization is a testimony to the acceptance of the product in the Indian market.

Q. In which regions of India do you witness maximum revenue traction? Is further geographical diversification on the cards or would you be more focused on strengthening market share in your existing network?

A. Our first manufacturing unit was set up in 2006 in Sikkim and ever since the brand has been a massive success in North East India. We occupy a market share of up to 60 percent in most states of East and North East India. Already having established ourselves as a market leader in most of the North East regions, we were now focusing on expansion in Southern and Western India to increase our market penetration.

Being an easy and tasty snack option, it is loved by people of all age groups and we definitely have seen the demand grow PAN India.  As mentioned earlier our manufacturing lines work at a 95 percent capacity utilization which is a testimony to the India growth story.

Furthermore, we doubled our production for the South & West markets. We recently added a new manufacturing line in Ajmer to cater to the West, while the existing manufacturing plant in Chittoor which earlier catered to both South and West will purely focus on the South.

Q. What change do you expect in the packaged food or the overall food industry considering the current pandemic?

 A. With the current pandemic completely changing both the business ecosystems and the consumer behavior, various changes in the food industry are visibly setting in. We are convinced that the convenience foods industry will come out stronger in the post Covid era. Noodles as a market has been growing in double digits and we expect it to continue the same, if not more. We expect the penetration of the category to increase faster across Urban as well as Rural India and we would like to play a key role in the same.

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Himadri Buch
first published: May 15, 2020 08:19 pm

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