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INTERVIEW

“Frozen foods’ demand driven by increasing purchasing power ”
Monday, 17 September, 2018, 08 : 00 AM [IST]
Nandita Vijay, Bengaluru

“Consumers are now recognising that frozen food is a healthier option than a lot of packaged products available. Today, frozen food is more accessible to the Indian consumer, because of the increase in number of large format retail stores in the country,” Mithun Appaiah, chief executive officer, Sumeru, Innovative Foods, told Nandita Vijay.

Excerpts:
How would you describe the current scene for processed and frozen food in India and globally?
The processed and frozen food market is seeing a steady growth in demand both in India and the world over, particularly in the developing Asian countries. Globally, the frozen food market is expected to reach $309.98 billion, growing at a compound annual growth rate (CAGR) of 6.15 per cent by 2021. Developing markets like ours are likely experience a higher growth. India’s frozen food market, which stood at $310 million in 2017, is projected to grow at a CAGR of over 16 per cent to reach $754 million by 2023.

Frozen foods are a regular part of the daily diet world over, and India is quickly moving towards that, primarily driven by changing lifestyles and increasing purchasing power. Consumers are now recognising that frozen food is a healthier option than a lot of the packaged products available due to its intrinsic value of preserving nutrition due to advanced technology available. Sumeru, as a brand, is leading this innovation in technology by using most advanced individual quick-frozen (IQF) technology to keep products fresh and lock in nutrition.

What are the visible trends that you spot in the demand for processed foods amongst consumers?
Changing Indian lifestyles, the rise in the number of double-income homes, women in the workforce and young professionals living alone has resulted in a paucity of time. Increasingly, many Indians now like socialising at home, and there is also a growing acceptance of western food, and the need for on-the-move cooked foods. These key factors are driving the increase in demand for frozen foods and ready-to-eat meals/microwaveable meals in India.

In addition to the growing consumer acceptance of processed and frozen food in India, the improved infrastructure and cold storage facilities have contributed immensely to the industry’s growth. Today, frozen foods are more accessible to the Indian consumer, because of the increase in number of large-format retail stores in the country. Smaller retail stores too now have better refrigeration facilities.

More established frozen food markets across Europe and North America are seeing a growing consumer preference for healthy frozen food.

However, the biggest change is in rising awareness around frozen food itself. Consumers are now beginning to see freezing as a way to preserve food, and it is becoming a major factor that is driving them to buy frozen foods in addition to convenience, which was the biggest motivator before.

In your opinion what are the challenges for companies to sustain their growth in this segment?
While the vast processed food industry promises a lot of growth it also brings with its own challenges. These include the following: the retail space has too many brands and a few differentiations. Grabbing the consumers’ attention is always a challenge. It is further complicated by the choices the consumers have as alternatives to traditional home cooking like the food tech start-ups delivering food right at their doorsteps.

Another major problem that the industry faces is that infrastructure development fails to keep up with the consumer demand, thus resulting in a higher pressure on distribution. Cost to serve and space within stores are always a dichotomy, and hence, puts pressure on a fast-moving consumer goods (FMCG) company’s bottom line. Sumeru has built robust systems and processes that ensure these issues are addressed by keeping the consumer at the centre of all decisions

The sector continues to face a shortage of talent. Within FMCG, the frozen business needs differential skills, and hence, the challenge is to hire the right set of people.

Innovation needs to be the bedrock of all consumer companies. The challenge is also to ensure thay innovations are not futile and the right efforts are put to drive it to succeed.

FSSAI launched recently the Eat Right campaign to curb consumption of sugar, salt and fat, to combat negative nutritional fads and lifestyle diseases. How is Sumeru Foods working to achieve this?
Frozen snacks make up a large part of the frozen food industry’s sales. However, meals are always more nutritious and healthier alternatives to snacks. This is  why we have introduced combo meals and a healthy range of parathas which are made from traditional Indian ingredients like turmeric, ajwain, methi and beetroot that are high on nutritional value. Our recently-launched kebab range curated with celebrity chef and MasterChef India judge Ajay Chopra is a frozen food product that is made from fresh ingredients with no added colours or preservatives. These products are a testimonial to our ability to innovate and provide healthier options in a space that is ruled by snacks and to our commitment to provide consumers with better, more nutritious offerings that are healthier too.

Coming to Sumeru brands, which are the categories that are registering impressive growth? Is it the Classiques, the Five Senses or the Wassup range?
We are witnessing growth across the categories, which is a great trend.  We have stepped up our distribution, market focus, innovations and digital marketing footprint to drive growths across all these categories. We have also seen good traction for all our new launches, including the Sumeru Chicken French Fries, Cheese Corn Nuggets, Cheese Pops , the Kebab range and the recently-launched Chicken and Paneer Rolls.

How is the segment for hospitality sector faring?
The hospitality segment, or HoReCa as its known, is a lucrative segment today, since it outnumbers the mom-and-pop stores in India. The HoReCa segment accounts for nearly 1.3 crore consumption points against 1.2 crore kirana stores across the country. This  segment is rapidly growing in India, and its attractiveness is prompting leading FMCG and frozen food manufacturers to set up diversified lines to cater to them.

What are your observations in the export market and which are the countries that are indicating demand?
Between financial year (FY) 2011 and 2016, India’s exports of processed food and related products inclusive of animal products grew at a CAGR of 11.74 per cent, reaching $ 16.2 billion. The main export destinations for food products have been the Middle-East and South-East Asia. In FY 2017, it was reported that  India’s exports stood at $ 1.3 billion. Innovative Foods exports to over 10 countries across the globe and is a brand of choice in all these locations.

We are re-focusing on our export footprint, which has a potential to grow.  Consumers love us in the United States now for over 10 years. We have recently opened up the Middle-Eastern market, and are witnessing a positive momentum for our range. Canada, Australia and European markets, too, are showing good demand for the Indian ethnic food range.

Could you give us a snap shot of the company’s manufacturing plants and the kind of advanced systems that are put into operation?
We have two plants. The first was started in Kochi, and we recently opened our Chittoor plant. We have quality measures in place to regulate the manufacturing process.  While our plant in Chittoor manufactures only vegetarian products, the meat and sea food and a few other products are manufactured in Kochi.

We use the most advanced IQF technology to freeze our products. It locks in the freshness, nutrients and preserves the taste and texture as is at the time of freezing. Fresh vegetables produce enzymes that cause the loss of colour, flavour and nutrients. The process kicks in right after harvest, freezing slows this reaction. But normal freezing just slows this process. However the advantage that IQF has over just freezing is that deactivates enzymes and prevents the formation of large ice crystals in cells of the produce, which is the key reason why there is a loss of taste, texture and nutrients during freezing, it eliminates this. Since  each piece is individually frozen, they do not cohere, and the final product is not frozen into a solid block. Ensuring the produce remains as fresh and nutritious as it was at the time of first defrost, bringing the farm-to-table goodness to the consumer’s kitchen. The process works the same way in the case of meat and seafood.

Our strict quality measures ensures food is frozen under highly regulated and quality controlled environment.

What are the expansion plans and investments envisaged by your company in the area of manufacture and marketing?
Sumeru has already built capacity to cater to its growth plans. Hence, we don’t see immediate investments into manufacturing. However, with the kind of innovations that we are rolling out, we could consider it in the future based on market demand and strategic need.

Our marketing efforts have been focused on promoting below-the-line (BTL) activations coupled with the digital medium.  We want to amplify our presence closer to the consumer by driving value and premium offering across our portfolio.

What is the kind of technology infusion in the company to ensure transparency and easy recall, specifically in supply chain management for track and trace of your products?
Sumeru has state-of-the-art manufacturing set up with advanced technology to ensure quality product delivery.  We have systems in place which would help in detecting any flaws in supply chain. Our supply chain teams now use digital and GPS-enabled technology to check the real-time temperature of the vehicles which transport our stocks across the country.

How large is your team and what is the hiring efforts to spur market reach?
We now have around 550 employees. Hiring efforts are on to support and drive rapid product innovation in the company.

Would you be able to tell us about the company’s  R&D pipeline that could enable unique product launches?
We have launched 10 new stock-keeping units (SKUs) this year that have been well received in the markets. These include Sumeru Chicken French Fries, which is the first of its kind in India; Cheese Nuggets and Cheese-Filled Pops, and Chicken Rolls and Paneer Rolls which are new innovations that move away from the traditional potato and chicken products in the frozen food segment. There  will see some outrageously innovative products coming into the frozen market to dazzle consumer imagination and taste buds. We have been the first to tie up with world-renowned food experts and collaborate with them on innovation in the country in this market segment.

What are the likely future efforts of Sumeru brand to garner growth?
Sumeru is on the way to create a culture of high performance and bias for action. We are in the process of transforming ourselves to be nimble as a start-up and have systems and processes like a sizable FMCG firm. We have already restructured our teams to reduce hierarchy and thereby support faster decision making at the ground level.

We have now re-cast ourselves to focus on the top eight cities rather than go after all towns.  Our focus this year will be on improving sales system process, distribution and seamless availability of products, besides  new product development and in-store activities. Our global expansion plans have shown good results. We are already in  over 10 countries and a leading brand in the United States market. We are also opening up new markets like the Middle-East, Australia and Canada presently. Our vision this year is to double our revenues and distribution width by making Sumeru available at arm’s length of reach. We have made innovation and disruption as part of our core agenda across departments.
 
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