In an interview, Deepanshu Manchanda says that backend integration, strategic acquisitions, will help build a broader food ecosystem spanning domestic and international markets
Zappfresh parent DSM Fresh Foods is sharpening its omnichannel distribution strategy and expanding deeper into the ready-to-cook and ready-to-eat food space as it targets a four-to-five-fold growth in the coming years. Managing Director Deepanshu Manchanda said the company’s new venture into frozen snacks through Meevaa Foods, alongside backend integration and strategic acquisitions, will play a key role in building a broader food ecosystem spanning domestic and international markets.
In an interview with BW Retail World, Manchanda noted that the company plans to invest around Rs 10 crore over the next two to three years, with a strong focus on expanding distribution across retail, horeca and digital channels while strengthening its cold chain capabilities. Zappfresh is also looking to scale its RTC/RTE portfolio and grow the Meevaa brand in overseas markets such as the United States, Canada, the United Kingdom and the Middle East. Edited Excerpts:
With Meevaa Foods, you are foraying into the frozen vegetarian snacks category. What market trends led to this strategic expansion?
We have always been in the fresh and ready to eat space, we were, till date, white labeling the products. We were not manufacturing our own products. This particular project is going to shape the ready to eat and ready to cook segment for us moving forward. It is not going to be limited to vegetarian. It is vegetarian as of now, but for us, we are looking at food as a whole not in terms of vegetarian or non-vegetarian.
If you look at look at ITC also, it is a similar format where the length and breadth of the food ecosystem is what we are building and ready to cook, ready to eat is a very natural and a very ongoing business for us. We are now more integrated from a backend point of view and the other change is opening the export markets.
With an investment of around Rs 10 crore over two-to-three years, what are your priority areas?
Distribution is the core focus. We are focusing more on distribution because processing, infrastructure and all is currently acquired. We have that capacity and capability. Now, the main focus is building distribution largely, that is how we are looking at it.
What key market trends are shaping DSM Fresh Foods’ strategic priorities for the next two to three years?
The market strategy is that we are developing the international market. In the international market, we will be looking at building the Meeva brand, which will be for ready to eat and as you can probably look at from the name itself, it is more of an international appeal. In domestic markets, we have hotels, restaurants. We are working with approximately 500 hotels, restaurants.
This particular product line will also get added in the overall portfolio which will cater to both domestic market and international market. We are exporting to the United States,
Canada, United Kingdom and Middle East.
What consumer insights are you seeing around frozen food adoption in India, especially among younger, urban buyers? Are price or quality perceptions still barriers in the frozen segment?
India is overall a price sensitive market. You have to keep the price in check always. However, we are not looking at becoming too much of a mass brand. We want to work with the youngsters, new age consumers, who are basically getting a convenient food option sitting at home appreciating quality, hygiene. These are the basics these days. The customers who appreciate standardised product and quality service is what we are focusing upon.
What role do modern retail, offline partners and QSR or Horeca tie-ups play in your distribution blueprint? Going ahead, which distribution channel will drive the maximum growth for the company in your opinion?
It will be difficult to say which channel will deliver because we are working on a omnichannel strategy and that is where we are looking at building capabilities where we add different customers in every angle angle. The growth will be overall and channel-wise is something which we are anticipating retail to grow and also the horeca. Restaurants are something which are absolutely necessary for the growth. We are keeping that channel very active.
What financial milestones are you targeting in terms of revenue growth, profitability and margin expansion?
I would not be able to quote any milestones. I am not supposed to as per the guidelines. However, we are looking at at least four to five times growth on an overall basis in the near future.
With expansion into RTC/RTE and frozen foods, how are you fortifying your cold chain and logistics footprint?
The cold chain is the main bread and butter for us. Whenever we set up any infra, logistic, supply chain, it cannot go without cold chain. Whenever we have to do distribution that is where we have to capture that. We do have vehicles which are temperature controlled which takes care of the last mile delivery to all the customers and it is very well packed, stacked in the best quality.
Are you considering future funding rounds, either equity or strategic partnerships, to accelerate growth?
We are looking at different strategic partnerships, joint ventures. The idea is that we want to accelerate our growth. We have been uh working on building efficiency for the last ten years and as we have hit profitability, we got listed on the stock exchange and post the listing, we are very aggressively moving up the ladder
This is the third acquisition. We have already done two acquisition before that so the strategy is to collaborate, which is to acquire different setups and different capacities and capabilities.
Can you share your approach to potential future mergers and acquisitions, are there specific capabilities or geographies you are targeting?
We look at more integration at the backend. Ready to eat was always the category which was available but we did not have manufacturing with us, so this particular business which we have acquired give us depth in the integration. One way we look at is where we have to create backend integration depth, where we acquire a certain capacity and capability in a particular market or in a particular product category, wherever we are not there. That that adds to the profitability of the business.
Then the other piece from an acquisition point for us is that we look at newer categories which complement the main business. The main business is protein. Overall, food protein, now snacking, ready to eat, everything is part of that basket. Because our distribution channel is online and offline, all of the products can go in the same distribution umbrella.
