Distribution expansion top priority for Godrej Tyson in FY25

Bengaluru: In the upcoming financial year, farm-to-fork joint venture company Godrej Tyson Foods will largely focus on expanding its geographical reach, informed the company’s chief executive Abhay Parnerkar, speaking to DH’s Shakshi Jain. He, however, neither confirmed, nor denied, claims of recent media reports which stated that the company’s promoters are eyeing a minority stake sale in the joint entity.

Edited excerpts.

How big is the frozen snacks category in India and what is your market share currently?

The India retail industry in this category would be valued at about Rs 1,500-2,000 crore. The B2B is also roughly about the same size, about Rs 1,500 crore. Out of India there is a sizable frozen snacks export business too. 

If you only take the India retail business, we would be close to a 10-11% player. Both vegetarian and non-vegetarian put together, potato based products being the leader. A few years back, we were predominantly chicken snacks based. After significant investment in our Ludhiana plant (Punjab), which is vegetarian only, we’ve steadily increased our share in the vegetarian segment.

How has demand for frozen snacks in India changed since the Covid-19 pandemic?

There was definitely a very big spike in demand during the pandemic. It felt like an inflection point for the industry because many new households, which otherwise were not consumers of frozen food, entered the segment. Since then, a lot of those consumers who are otherwise eating out or ordering in from restaurants, some of their behavior has come back. So obviously the same percentage growth, compared to what we saw during the Covid-19 period, has not been sustained. But what has happened, and what we really like, is that it has not dropped. We are now also finding a lot of avenues to grow, (such as) supply to restaurants and QSRs (quick service restaurants).

How would you describe your target audience?

The homemakers, moms, are our biggest shoppers because typically through them is how we enter the household. Many of our products like nuggets and potato-based products, the kids love them. So that's a very strong segment for us. Otherwise, the youth, younger adults, people living in smaller households, couples, are our number 2 segment from a consumption point of view.

Elaborate on the latest consumption patterns in the frozen snacks category, and the break-up of your portfolio between vegetarian and non-vegetarian products?

We had launched a report on snacks consumption in India, about a few months ago. To give you a few snippets from the report, about two-thirds of the consumers prefer vegetarian snacks. Within the vegetarian category, samosa and potato-based products were the most preferred frozen snacks. 

Our portfolio was earlier absolutely the other way around. It was ⅔ non-vegetarian and ⅓ vegetarian. Now, progressively in the last couple of years, it's come to about 55:45 - 55% of our sales is coming from non vegetarian products and about 45% from  vegetarian products. Ultimately, over time, we would like to mirror consumer habits. 

How is your customer base divided between your B2B and B2C operations?

Godrej Tyson Foods operates in the B2C space through value-added business products such as Real Good Chicken and Godrej Yummiez. The current split in Yummiez business is about 80% B2C while balance is B2B. While for Real Good Chicken, our B2C is around 15% while 85% will be B2B operations. Overall for Godrej Tyson, B2C is at 33% while B2B stands at 67%.

What is your distribution growth target for FY25?

We service about 60 cities/ towns in the country, but only about 25-30 towns are where I can say the presence is substantial and meaningful.  So in the 30 cities where we have a peripheral presence such as Vizag, Vijayawada, Mysusuru, we will have a more substantial presence. We will deepen and strengthen our presence. Then on top of this, we will add around 30 - 35 additional cities beyond the 60 that I mentioned, which will be completely new. 

In terms of outlets, a year back, we were reaching, like literally 5000 outlets across the country, which is nothing in a country like India. By the time we end this financial year, we should cross about 7,500 - 8,000 outlets with active coverage. Our aim is to cross 10,000 to 12,000 outlets within FY25.

State the top challenges in this line of business.

One of the challenges we face exists within the cold chain due to the lack of freezer infrastructure in India. To address this challenge, we are investing in freezer infrastructure to uphold the quality of our products in retail.

There are myths around frozen foods having preservatives which are purely incorrect. All frozen foods are made using individual quick-freezing technology which is a flash freezing mechanism ensuring zero preservatives. We are creating awareness around the same through above the line and below the line campaigns.