Indian conglomerate Future Group is planning a major push in food manufacturing as part of its drive to increase sales to INR10trn (US$154.2bn) over the next six years.
Speaking during a conference for Future Group's partners and suppliers, founder and CEO Kishore Biyani said that the company believes investments in food manufacturing and small format stores will drive compound sales growth up by 25% from current levels of INR2.2trn. Additional growth is also anticipated from Future's digital strategy, the executive added.
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Biyani said that Future has already started its push into the Indian food sector. Nine months ago, the company inaugurated a food park where it will manufacture products across a variety of categories and build a manufacturing base.
Biyani continued: “We ventured into a frozen food business… we ventured into dips and sauces through a brand called Sanjay's kitchen. Our biscuit factory, out rice mill, our flour mill, our spice mill are getting into production. We are launching a brand in the next 15-20 days… where we want to offer hundreds of varieties of flours, 26 variants which we are starting with. We are looking at creating a brand around vegetables and fruits. We have launched our vegetable brand called So Fresh in the southern part of India. We have launched a brand on bananas, called Go Bananas, in the southern part of India. We are now looking at how we can create a market for apples and citrus fruit.”
Another area that Future has “bet big” is processed oats, Biyani continued. “We are setting up a huge plant in Sri Lanka to process oats. We really looked at food and searched, it came out to be a food that mothers would love to give to their children because it is a very filling food, a very healthy food that can be mixed with other food items. We will be launching a brand here and probably in the next 4-5 months we want this oat brand to be a part of every kitchen household in the country.”
Elsewhere, Future entered into a partnership to bring Sunkist juice to India and the company is now looking at extending the Sunkist brand into confectionery in the market. Future is also stepping up its presence in bakery and dairy. The company entered these sectors via its acquisition of Nilgiris and Future intends to roll the dairy brand out on a national basis. Future is also working to expand in the frozen dessert and ice cream sector and the company is looking at joint ventures in the space to fuel growth, Biyani revealed.
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By GlobalDataAccording to the Indian businessman, Future Group has a numer of advantages over its rivals as it works to grow in India. In particular, Future plans to leverage its relationship with Indian consumers.
He explained: “Food is all equal to culture and we have to create a palate that Indians like. I always thought it would be an Indian company not a multinational that will create the Indian food palate.
“Each of these brands and categories have been chosen after decades of watching and learning from our customers both in and out of our retail stores. Over time we have created specialist teams in consumer insights, brand development, packaging and design, which can help us to create production brands much faster than anyone else.”
As part of the drive into food and other FMCG areas, Future also revealed that it has entered into a tie-up with Patanjali Ayurved. In addition to Patanjali's existing line-up, the firm intends to launch instant noodles to take advantage of the space in the market created by Nestle's temporary withdrawal of Maggi noodles.
While Biyani conceded that the group's plans to expand in food manufacturing will require significant capital expenditiure, he insisted that the company is eyeing “profitable growth”. He continued: “We are not going to pursue mindless growth we are going to pursue good growth, profitable growth…T he disproportionate allocation of capital is only going to be put where we can grow profitably. We are not going to increase debt but use our cash flows.”
Future believes that expanding its food production business will go hand-in-hand with growing its food retail interests. The company said it will increase the number of small scale outlets that it currently operates from 500 to 4000. The group is targeting 70% of sales through its food stores, which include the Big Bazaar format, to be own label.
