Veeba Food Services Pvt. Ltd, which supplies condiments such as sauces and dips to fast-food chains including KFC, Pizza Hut, Burger King, Taco Bell, Domino’s, Starbucks, and to restaurants, on Wednesday said it closed its Series B investment of $6 million from venture firms Saama Capital and Verlinvest.
Veeba, which in 2015 raised $6 million in its Series A from DSG Consumer Partners and Saama Capital, will use the fresh funds to strengthen its distribution and product portfolio for its consumer-facing retail segment, started last year.
Rajiv Wahi, former president of Cadbury Asia Pacific, has joined the board of the company.
“Over the last three years, we have worked in partnership with our key clients to build and operate an innovation-centric product development process that ensures we meet all of our clients’ needs. This same process was the key strength that allowed us to launch the Veeba brand in the retail market in 2015. I feel confident that our investors will provide us invaluable support through the company’s growth stages” said Viraj Bahl, chief executive officer of Veeba in a statement.
The current size of the Indian food service industry is $48 billion and is projected to grow to $78 billion by 2018, according a report ‘India Food Service’ by PricewaterhouseCoopers (PwC).
As new fast food chains continue to enter the Indian market and existing chains including Burger King, Wendy’s and KFC expand their presence, suppliers such as Veeba are expected to see sustained growth as all fast food chains rely on third-party suppliers.
Through its retail portfolio, Veeba currently sells dressings and sauces. In an earlier interview, Bahl, the former head of packaged foods firm Fun Foods, which was sold to German food maker Dr Oetker in 2008, said Veeba Foods will also explore entering new product segments such as ketchups, spreads and jams over the next few years.
“This is a trend we’re seeing, where suppliers and vendors are becoming brands themselves or opening up stores for direct retail presence. It shows the maturity of the sector, and the opportunity these companies are seeing. Mrs Bector, which was only a supplier earlier, also launched their own brand,” said Harminder Sahni, managing director at consulting firm Wazir Advisors.
Investors said they believe there is great scope for growth in the retail category.
“We believe Veeba’s innovative range of ‘better for you’ sauces, dressings and condiments is highly appealing for the new-age Indian consumer and will help grow adoption of the category in India. This is a rare venture-stage investment for Verlinvest as we typically look at larger deals in the $50-100 million range in India and globally,” said Nicholas Cator, executive director, Verlinvest, whose other investments in India include Sula Wines, Future Consumer Enterprises, Burger King India and Drums Food.
“Since our initial investment, Veeba exceeded our expectations and has made great strides in establishing a leadership position in the specialty food ingredients sector and we continue to believe that India is poised for continued growth in this segment,” said Ash Lilani, managing partner, Saama Capital.