Quantum Brief

How iD Fresh Food, MTR Foods and Gits are betting on convenience and authenticity to increase sales of instant foods

With the popularity of South Indian food, homegrown brands are aggressively looking for new product and marketing opportunities.

By  Kashmeera SambamurthyJan 25, 2023 10:58 AM
How iD Fresh Food, MTR Foods and Gits are betting on convenience and authenticity to increase sales of instant foods
According to market researcher Statista, the revenue earned by the ready-to-eat meals segment amounted to $56.93 billion in 2022. It is expected that the market will grow annually by 9.59 percent between 2022 and 2027. (Stills from ads and recipe videos)

With increasing urbanisation, a hectic pace of life and the spread of Covid-19, household dependence on instant food or ready-to-cook and ready-to-eat meals has increased.

On top of convenience, authenticity and taste, instant food brands like iD Fresh Food, MTR Foods and Gits have added an extra coating of comfort to the daily chores of homemakers.

According to Prerna Tiku, general manager - marketing, MTR Foods, South Indian instant food is popular largely because of the convenience factor. The instant mixes help consumers overcome the challenge of time in putting together various ingredients needed to prepare the dishes. The authenticity also attracts consumers.

Rahul Gandhi, chief marketing officer, iD Fresh Food, cited the popularity of idli and dosa across North India. Idli is quick and convenient to prepare, tasty and light, making it a popular breakfast dish. Consumers prefer the dosa in the afternoons. In the festive season, Malabar parottas are popular.

“If a product offers a good mix of taste, health, convenience and price, they are most likely to do well. From a brand and marketing perspective, iD Fresh Food is trying to recreate traditional food in a modern avatar and cater to the consumers in a preservative-free manner,” Gandhi said.

When South meets North

Gits too has seen good sales numbers for its brand of idli, dosa, rava idli and rava dosa instant mixes in Northern India, especially in the Delhi-National Capital Region (NCR). In the Western region too, the consumption levels are good.

Sahil Gilani, director - sales and marketing, Gits, explained: “With the influx of so many recipe videos on YouTube, it has become easier to prepare (the dishes). But the process is cumbersome. This is one reason why the North Indian market is focused more on South Indian instant mixes.”

To expand its reach across India, Gits is betting on e-commerce, quick commerce, modern and traditional retail and its Direct-to-Consumer (D2C) platform. A few years ago, the brand also started its own e-store where customers could directly access products from the brand’s factory.

Tiku sees strong demand for MTR’s offerings in metro cities across the country. This springs from the cross-pollination of cuisines which has made consumers aware of different tastes.

She also credits the emergence of modern retail and e-commerce channels for making the brands popular.

Through MTR Foods’ D2C platforms, the brand has delivered close to 20,000 pin codes across the country. This even spans Dimapur in Nagaland and elsewhere in the Northeast.

Tiku credits the popularity of the cuisine to the increase in home deliveries and the experience of eating them in restaurants and other outlets.

According to market researcher Statista, the revenue earned by the ready-to-eat meals segment amounted to $56.93 billion in 2022. It is expected that the market will grow annually by 9.59 percent between 2022 and 2027.

In the ready-to-cook and ready-to-eat category, MTR Foods enjoys a market share of between 55 percent and 65 percent. In the parotta category, iD Fresh Food enjoys a market share of between 80 percent and 85 percent.

MTR Foods, which has around 100,00 lakh retail outlets across the country, in September 2022, ventured into the Andhra Pradesh and the Telangana markets with kandi podi, idli karam podi and karivepaku podi to cement its market position in those states.

International expansion

When Gits entered the Indian market in the 1960s, women did not adapt to the concept of instant mixes. But Non-Resident Indians (NRIs) wanted the taste of home. So the brand shifted its focus to the export market from the 1960s itself. The countries to which Gits exported its products initially were the UK, Australia and the US. People abroad got a taste of South Indian products and Western Indian products like dhokla.

Gits today has a product portfolio that consists of snack mixes, dessert mixes, dairy products, open-and-eat packages and spice mixes.

Gilani said: “While idli and dosa are regarded as South Indian products, they are eaten by people belonging to different ethnicities. In the export market, we priced a good quality, convenient product at a favourable price point and broke a lot of ethnic barriers by tapping the factors of convenience and taste too.”

MTR Foods is present in more than 42 countries. The Indian diaspora in North America, Middle East, Japan and South-East Asian countries are significant markets for the brand.

The brand’s South Indian range of products is a key category in the international markets that it is present in. The brand offers pickles, sweets and desserts, beverages, vermicelli and macaroni as well.

iD Fresh Food entered the market in 2005. Its product portfolio has grown from idly-dosa batter and Malabar parottas to Udupi-style idly-dosa batter, Ragi idly and dosa batter, vada batter and traditional filter coffee decoction packs. It also has an organic range of products. The second biggest market for iD Fresh Food after Bangalore is Mumbai followed by the United Arab Emirates.

Gandhi said: “The Delhi market too is catching up with Mumbai and Bangalore. Our brand has been in the market for eight years and we have a factory too. UAE is 30 percent of iD Fresh Food’s business. The country has a very large population of people from Kerala, Tamil Nadu, Andhra Pradesh and Karnataka.”

According to a media report, the brand posted a 47 percent increase in revenue in FY22 Rs 454 crore from the previous year.

Exploring new segments

During the launch of the MTR Minute Fresh range, MTR Foods conducted a study. The study revealed that 60 percent of the batter consumption took place in Bangalore.

The younger generation wanted South Indian food, but did not have the time or skills to prepare it. One of the things the brand wanted to solve was, “How do we make South Indian food accessible to the consumers?”

So in December 2021, MTR launched MTR Minute Fresh—in Bangalore—which marked the brand’s entry into the wet batter segment.

A separate idli, dosa and signature (red rice) dosa batter for each was introduced. This range competes with products offered by iD Fresh Foods.

Tiku says: “Bangalore is a very big market and is a hub for the South Indian diaspora and different ethnicities coming together. Plus, a large population taps convenience. Our entire structure is built to make the cold chain format succeed.”

Gandhi agrees with Tiku. “In Bangalore, the Total Addressable Market (TAM) is so large that multiple players are bound to exist. Much before the Bangalore market ventured into the wet batter segment, Chennai’s market was considered top-notch for batters. Chennai is considered to be very price-sensitive, value for money and traditional,” he said.

According to a Moneycontrol report in 2022, the market for wet idli-dosa batter is valued at between Rs. 1,500 and Rs. 4,000 crore. In another media report last year, Gandhi stated that the branded segment of wet idli-dosa batter was valued at between Rs 400 and Rs. 500 crore.

iD Fresh Food has noticed its customers typically ordered batter thrice a week when they needed it urgently. So quick commerce becomes a very important sales avenue here. Gandhi said: “Traditional business in India still accounts for 60 percent to 65 percent of revenue.”

iD Fresh Food entered the markets of US, the UK, Dubai and Saudi Arabia with its frozen Malabar parotta range. It is yet to introduce wet batter because of the requirement of a local manufacturing facility to be close enough to local consumers to deliver fresh food.

Recently, the brand opened up a idli-dosa factory in Haryana to cater to the Delhi-NCR market. It also plans to expand to other northern markets. At present, the brand operates five factories in Delhi, Dubai, Mumbai, Bengaluru, and Hyderabad.

For iD Fresh Food, Bangalore is roughly a Rs.150 crore market and Mumbai a Rs. 75 crore-Rs. 80 crore market.

With hopes of filing for an initial public offering (IPO) in a few years, iD Fresh Food aims to expand at a compound annual growth rate of 40 percent to 45 percent in the next four to five years and achieve revenue of Rs. 1,000 crore.

In the ‘Minute’ range, MTR has also come up with products like Minute Pepper Rasam and Minute Garlic Rasam. According to a media report, the brand earned revenue of Rs 980 crore in FY22.

Although Gilani can witness a shift to the wet batter category, he points out that from a safety point of view, instant mixes have an edge.

“In India, the cold chain is very hard to maintain and is restricted geographically. In the Northeast region, wet batter (market) is not well penetrated. Instant mixes have much more availability. In the export market, there are also some local players which have begun venturing into this segment. But, moving forward, both the categories will continue to co-exist.”

In the next 24 months to 36 months, iD Fresh Food plans to set up a manufacturing facility in Kolkata due to the market’s vastness.

Asked if there were any plans to expand to the Northeast region, Gandhi replied: “Transportation to the Northeast from Kolkata will be a challenge. So, we have not really thought about that.”

First Published on Jan 25, 2023 9:02 AM