ChefBoss: Decoding Jubilant's entry into the ready-to-cook segment
The News
Jubilant FoodWorks Limited, the master franchisee behind Domino's Pizza and Dunkin' Donuts in India, has announced its FMCG entry with the ChefBoss brand. Their products will span a range of Indian and Chinese ready-to-cook pastes, gravies and sauces, and will be priced in the INR 75-100 bracket. The firm intends to start sales with Amazon nationally, Flipkart Supermart in Delhi, Mumbai and NCR aress, and Milkbasket in NCR.
In order to understand why this move makes sense for Jubilant, let's first take a look at the way we eat. We break it down into broad categories relevant to Jubilant’s audience:
Given the significant topline damage attributable to lockdown, it makes sense for Jubilant to explore categories that are growing in these times. The firm’s current competencies can help it successfully venture into the ‘cook-at-home’ category.
The Market
All the cooking channels will have you believe that cooking is a fun activity and you can turn up a delicacy in a matter of minutes, but anybody who has attempted it will tell you that the process looks something like this - the search for ingredients can take you beyond the pantry and into a grocery store, and preparing the ingredients requires some amount of lead-time. (Not to mention that repeating this ritual three times a day can be taxing on both your physical and mental energies, especially if you are new to this.)
Jubilant’s ChefBoss addresses this customer need by offering convenience and time- and cost-effectiveness. The products are well suited to cater to the needs of office workers now operating from home. The company estimates the market size to be at INR 500 cr, which is small but still significant compared to its annual revenues of approximately INR 4,000 cr in FY2020.
Growth Prospects
Even before the pandemic, the ready-to-eat category had been growing owing to increasing urbanization (and an accompanied preference for greater variety), higher participation of women in the workforce (and a break from traditional gender roles), and the demographic shift towards a younger working population. Competitors like MTR and Haldiram’s already offer a wide range of ready-to-eat products and ITC’s Kitchens of India has been offering such products since 2001. ChefBoss takes it a notch up by going beyond Indian cuisine to include Asian items.
The ‘cook-at-home’ category has also grown (perhaps temporarily) due to employees working from home, effectively cutting into the share of ‘eat-at-work’ and ‘eat-on-the-way’ categories. Quick Service Restaurants are an integral part of the ‘eat-on-the-way’ category (we covered prospects of the drive-thru format in a recent post) but Domino’s caters more to dine-in and order-in categories.
Ready-to-cook products also have certain cost advantages which are hard to replicate for freshly assembled foods. These include:
lower costs for retailers and transporters due to savings on refrigeration,
longer shelf-life, and therefore more lucrative credit policies for retailers/distributors, and,
lower transit damages and transit costs due to higher packing efficiency.
Such cost advantages will drive a long-term favorability for ready-to-eat products throughout the value chain. Of course, there are headwinds too - we have a strong preference for home-made food as it is fresher and considered healthier - ‘ready-to-cook’ does not fit neatly with either of these attributes.
From a spending standpoint, urban Indian households eat out about 4-5 times a month, compared to their counterparts in, say Singapore who eat out 28 times a month. For another example, our expenditure on eating out is less than 15% of that in China and Brazil. And while eating out has little to do with ‘ready-to-cook’, the spending figures give a fair indication of the large headroom for growth.
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