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S U P E R M A R K E T

B U S I N E S SFoodFood

It is often said that big successes can come from amazingly humble be-ginnings. Daily Bread, an equal joint venture floated by Café Coffee Day (CCD) and Arjun Sekri, an ex-invest-ment advisor in Hong Kong in No-vember 2003, created ripples last year when Britannia Industries acquired a strategic stake of 50 per cent in the company. Currently Daily Bread Gourmet Foods India Pvt Ltd, which runs branded retail chains like Daily Bread and Deluca’s Frozen Dessert, plans to storm the national bakery and confectionary market by launch-ing 250 Daily Bread outlets and 100 Deluca’s Frozen Dessert outlets in the next three years.

In less than four years, the Banga-lore-based Daily Bread has grown into a Rs 15 crore entity, and is targetting revenues to the tune of Rs 30 crore by fiscal 2008.

“We want to establish Daily Bread as the leading brand in the bakery and confectionery sector in India and

The success of its bread brand paved the way for the launch of its own bakery chain. Today with the QSR industry booming, and the demand for quality bakery products rising, Daily Bread

Gourmet Foods is set to transform Indian bakery and confectionery retailing.

By Vishnu Rageev R

Bread &

Better

position it as the country’s first world-class purveyor of premium bakery, confectionary and speciality food products for wholesale and retail cli-ents,” says Arjun Sekri, founder and CEO, Daily Bread Gourmet Foods (I) Pvt Ltd.

The originsTo an onlooker, setting up a bak-

ery business sounds more like long hours and hard work than fulfilling a creative need, but Sekri says they have researched their ideas thoroughly and are sure they have the necessary blend of business sense and flair to make it a success.

“The reason I smelt this opportu-nity was because the market was really fragmented (as it is even today). There were no pan-Indian brands in the spe-ciality bakery and confectionary cat-egory. Well, opportunity was calling – here was the space to create India’s first world class nationwide bakery re-tail brand,” Sekri informs.

Daily Bread’s fresh-baked ideas can set off a chain reaction

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When asked about his research about the Indian baked goods seg-ment, Sekri says: “First, the qual-ity of bakery products has been very poor and the variety is quite limited. Surprisingly, I notice that there have been no innovations in terms of pack-aging, presentation and ambience since 1947! In India, bread has been treated like a commodity item. Bakers bake the atta bread (white bread) and simply dump it on the shelves. So I thought to myself: Why does an In-dian consumer not have a choice of a world class product presented in a great ambience and packaging.”

Daily Bread began commercial production in November 2003. Even

though the beginnings were humble, its bread swiftly achieved great popu-larity in the local market. Asked about the initial business setbacks, Sekri says: “Frankly, I didn’t face too many issues in the beginning. The only setbacks were the routine bottlenecks of doing business in India, which are project related. Unlike other nations, here ev-ery project just takes more time.”

Currently, Daily Bread has over 200 employees across its corporate, retail and production units. The company’s production staff compris-es skilled professionals from 5-star hotels. The manufacturing units are located in Bangalore, Hyderabad and Delhi.

Baking brands

While its primary brand remains Daily Bread, the company’s branded retail formats like Daily Bread, De-luca’s Frozen Dessert and Daily Brew retail a wide variety of bakery and confectionary ready-to-eat items such as breads, cakes, pizzas, salads, ice-creams, rolls, European-style loaves, cookies, chocolates, gourmet special-ity foods, sandwiches, veg/non-veg snacks and the like.

“We were the first brand to launch 100 varieties of “Stone Baked” breads, 100 types of speciality gateaux, cheese cakes and mousse cakes, and over 25 specialty gourmet pizzas made with recipes from all over the world. Daily Bread was the first brand to introduce products wrapped in attractive, interna-tional quality packaging and displayed in imported baskets,” says Sekri.

Daily Bread later extended itself to launch Deluca’s Frozen Desserts. “With a sub-tropical climate like In-dia’s, there has always been a natural leaning towards frozen desserts, a re-cent draw being the gelato. This was perhaps inevitable with the meagre premium ice cream brands present in the country,” Sekri states. Daily Bread imports the raw material and manu-factures the product.

The company created Deluca’s Frozen Desserts to distinguish from the offerings that it had offered under Daily Bread brand. Range of frozen products includes breads, cakes, sa-vouries, gourmet pizzas, etc. “It’s re-ally tough to sell ice cream under the

name Daily Bread, so we created an faux Italian name – Deluca’s Gelato Italiano,” Sekri informs.

What about the technology and cold chain systems? “Well, as far as re-frigeration of products is concerned we don’t face any challenges. We have in-vested heavily in imported refrigeration systems and technologies. All our deliv-ery trucks are refrigerated as well.”

About launching Daily Brew (the coffee shop format), he says: “Coffee is growing into a great lifestyle cul-ture in India – ask Starbucks! When people walk in for a quick sandwich or a gelato, the aroma of coffee in the background is more or less an expect-ed. Understanding this Indian matrix, with our in-house expertise, we devel-oped a beverage line under the brand name Daily Brew or Expresso Bar.”

Daily expansion At present, there are 17 Daily

Bread outlets in Bangalore (including shop-in-shops), while seven Deluca’s are operational in Bangalore, two in Mumbai and one each in Chennai, Nagpur and Pune.

“We expect to have a total of 50 outlets of Deluca’s, and 15 Daily Bread outlets in the next eight months. The company will also open 30 shop-in-shop Daily Bread outlets across the country in the meantime,” Sekri claims.

The company plans to open Dai-ly Bread outlets in New Delhi and Hyderabad (August), Chennai (Sep-tember) and Mumbai (October). The Deluca’s outlets will operate under two formats – as shop-in-shops in Daily Bread stores and as standalone units. “For Deluca’s we have nationwide ex-pansion plans whereas Daily Bread would expand more selectively across Bangalore, New Delhi, Hyderabad, and Chennai in this fiscal,” Sekri adds. The outlets will be opened under three formats – shop-in-shops, independent outlets and premium outlets. Spread across 100 sq ft, the shop-in-shops would be housed in hypermarkets (as strictly takeaway models), while inde-pendent outlets will be set up in malls or on high streets, occupying between 250-500 sq.ftof retail space. Premium outlets – spread over 1,000 sq ft each – will be set up in select urban locations.

“Premium outlets will be one-stop-shops for families. Each will have bakery, confectionaries, choco-lates, live sandwich counters, De-luca’s and Daily Brew. There will be seats for 25 persons to sit, relax and dine at a time,” Sekri said. At present premium concepts are operating at Sadasiv Nagar, Jayanagar, JP Nagar,

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Indira Nagar and Koramangala – all in Bangalore. The company plans to have eight premium outlets by the end of this fiscal.

Daily Bread recently also set up its first shop-in-shop outlet of Daily Brew at Spencers in Bangalore.

No competitors The bakery business is steaming

but Daily Bread claims to be unfazed by the growing competition.

“We offer a unique USP propo-sition to our consumers and hence we have no direct competitors in the market. Today, no other brand has our quality or range of offerings in the bakery and confectionary segments. However, I know there are a number of people who are trying to compete; the landcape may change in another year or so. But we are prepared to face it,” Sekri says.

What about the indirect competi-tion from unorganised – but cheaper and popular – players? Sekri com-ments: “Sure, there are scores of indi-rect competitors. In fact, some outfits who were giving indirect competition have begun competing directly by set-ting up manufacturing units across cit-ies. As far as I am concerned there are just two or three companies that are trying to emulate our business model. If you ask me if there is a competitor who has the exact business model, product range and quality like ours, I would say a big no.”

Well, it’s a relatively new segment in Indian retailing, and there will be many with similar entrepreneurial ambitions soon. How will this com-pany retain the first-move advantage? Sekri informs: “We will deliver su-perior value to end-users by making available bakery, confectionery and

specialty food products of European selection and standards at competi-tive costs.”

“Also prior to launching our brands across disparate markets we will do our homework – complete market analyses of the location, foot-falls, branding, cost of exit, etc. I be-lieve this will help us to pre-empt and override any future competition.”

Business modelToday there are

a group of institu-tional clients who outsource their food requirements. In a bid to attract institutional clients and retail consum-ers simultaneously, Daily Bread works on two business models, which op-erate in both the institutional and retail segments.

“As of now there are no v e n d o r s e x i s t i n g a c r o s s these cat-e g o r i e s . Our busi-ness plan is to be the vendor of choice for institutional clients across major metros and to be the preferred brand for retail consumers as well. So it’s a two-pronged strategy: Our volumes will come from institutional sales; brand-ing and margins from retail sales,” Sekri states.

The company currently supplies to several top-drawer institutional cli-ents, which include Foodworld, Spen-cer’s, Reliance Retail, Fabmall, Namd-hari’s, Heritage, Daily’s, S-Mart, MK Retail, Big Bazaar, PVR and INOX. The company is in talks with Max Hypermarket and Spencer’s. In fact it launched the first Daily Brew out-let in Spencer’ Bangalore and plans to launch the same concept across all Spencer’s outlets across the country.

“If we have one contract with one company across major metros they will get consistency of supplies and re-liability of quality and transparency of pricing across all the major metros,” Sekri adds.

The company is learnt to be in talks with more hypermarkets and su-permarket chains for setting up shop-in-shops.

Market and marketing

According to Sekri, “Overall or-ganised retail in India is just over 4 per cent; the bakery business would fea-ture similar statistics – it’s miniscule! If you compare the number of bakery products sold in air-conditioned en-vironments against the numbers sold through kirana stores it would be less than 10 per cent of total sales.”

“However the the branded business is growing by leaps and bounds. So that is where we see an opportunity.”

“The Daily Bread brand has so far been marketed through local area marketing tools, which include fly-ers, in-house events and corporate get togethers, and most importantly word of mouth. As we expand, we will invest strategically in advertising (primarily in print media), events and direct mailers,” Sekri says.

The Britannia angleBritannia Industries Ltd (BIL)

acquired Café Coffee Day’s stake in Daily Bread in 2004. The invest-ment was part of Britannia’s strategy to diversify its product portfolio into the fast growing baked gourmet food market.

“Britannia was interested in Daily Bread primarily because it wanted to diversify its portfolio. They were more focussed on mass markets and high volumes businesses, while we were a boutique, niche food business. As it stands now, Britannia has agreed to fund the expansion of Daily Bread. For both of us, the challenges are just beginning...”, concludes Sekri. n

“Our business plan has a two-pronged strategy: Our volumes will come from institutional sales; brand-ing and margins from retail sales.”– Arjun Sekri, CEO & Founder, Daily

Bread Gourmet Foods Pvt. Ltd.