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Heritage Foods to expand value-added dairy portfolio; eyes 40% revenue from segment

The dairy company drew over 26 percent of its revenue in the fourth quarter from value-added products including curd, paneer, milkshakes, and flavoured milk.

May 23, 2021 / 12:12 PM IST
In March, Heritage Foods had forayed into the yoghurt segment in partnership with French company Novandie Foods.

In March, Heritage Foods had forayed into the yoghurt segment in partnership with French company Novandie Foods.

 
 
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Hyderabad-based company Heritage Foods plans to further expand its presence in the much-coveted high margin value-added dairy category. Earlier this year, it launched a slew of products in the segment such as cheese and yoghurt, and now plans to further extend it by introducing badam milk and “healthier” variants of coffee.

“We are on one hand looking at innovations in our existing portfolio by bringing in futuristic products with an eye on e-commerce such as spiced butter and spiced paneer, while on the other hand, we also plan to introduce new products such canned badam milk, new variants in coffee,” said Brahmani Nara, Executive Director, Heritage Foods.

In March, Heritage Foods had forayed into the yoghurt segment in partnership with French company Novandie Foods (a subsidiary of Andros). The company had announced the launch of two products drinkable yoghurt ‘Yo Pop’ and stirred yoghurt Mamie Yova. However, due to the impact of the pandemic, it was able to introduce only drinkable yogurt in the Mumbai market at select locations, Nara informed.

“As the second wave subsides, we are looking at scaling up the presence of these products in Mumbai, Pune, Ahmedabad, Pune, and Hyderabad,” she added.

The company plans to target urban middle-class and upper-middle-class segments through its new products and is giving them a premium positioning. Unlike other dairy players, it is only eying a business-to-consumer play for these products.

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“The idea is to focus on B2C channel, where margins are high,” said Nara.

With these product launches, the company is betting that it would increase its sales from the value-added segment to 40 percent in the next two years, as compared to over 24 percent in FY21.

Heritage Foods in 2005-2006, drew only 3 percent of its revenue from the value-added category and while its share dipped during the initial quarters of the last financial year due to the pandemic, Nara informed it came back on track to over 26 percent in the fourth quarter ended March.

It will focus on e-commerce, modern trade, and its franchisee channel of over 850 Heritage Parlours to retail these new products.

According to Nara, the company witnessed 45.5 percent growth in volume terms and a 56 percent growth in revenue in e-commerce year-on-year in FY21. The modern trade meanwhile grew by 15 percent (in volume terms) during the period.

Heritage Foods on Thursday reported its results for the January-March quarter (Q4). The company reported a net profit of Rs. 24.28 crore in Q4 as compared to a net loss of Rs. 209.21 crore in Q4 FY20. Its sales during the period stood at Rs 619.36 crore as against Rs 652.65 crore during the quarter ended March 2020.

Going ahead, the company expects an impact of the second wave on its categories such as ice cream due to the decline in out-of-home consumption. Nara stressed that impact though will be minimal given the fact that the company operates only in the B2C segment.
Devika Singh
first published: May 21, 2021 09:28 pm

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