Mumbai: It is served hot, in brightly coloured paper cups, with a twist of lime and dash of salt. A cousin of the humble popcorn that is staple fare at the movies, Crazy Cup Corn came into its own five years ago when its founders Tushar Shah and Kevin Marpyres spotted an opportunity in selling the steamed corn snack to a new class of cinemagoer, as they harnessed their fortunes to India’s fledgling multiplex industry.
Demand skyrocketed following the opening of the first counter, emblazoned with its signature red, yellow and green colours, at a Reliance BIG Cinema-owned multiplex in the Mumbai suburb of Mulund in December 2003, and the future looked promising for the entrepreneurs who took just two years to recoup their initial investment of Rs20 lakh. After all, multiplexes typically collect up to one-fourth of their total revenues from sales of food and beverages.
Now, however, the dream stands to turn sour as an embargo on all new cinematic releases due to a dispute between the multiplex chains and production houses wipes out sales and compounds an already difficult year for the duo. Sales this year have crashed 90%, with the company Corns n Cones having already struggled to stay afloat through the terror attacks on Mumbai in November, a dearth of recent box office hits and the difficult economic climate with audiences cutting back on spending.
Contingency plans: Corns n Cones’ Marpyres (left) and Shah say they may diversify into construction since multiplex sales have crashed 90%. Ashesh Shah / Mint
“This cycle between the multiplexes and producers is affecting everyone,” says Marpyres, seated in front of his laptop, in between taking calls from employees with the latest news on sales figures. “It is pathetic. Business has come to a standstill with sales down 90%. These are the peak months for us because it is the summer holidays. So we are waiting to see how long this goes on for.”
In place of the 80,000 cups sold every month in Mumbai, the company is now only selling between 8,000 and 10,000 cups, while their suppliers have been forced to lay off their 12 delivery boys.
“Every vendor at the multiplexes has been badly hit,” adds Marpyres, a bearded man who punctuates his statements with vigorous hand gestures for emphasis. “It is mainly because of the lack of movies, but also because of the economy. Families who come to the movies will spend on tickets, but they will compromise on buying food. And since January there have been no good movies, and business depends on the film. When the films are good, business rocks.”
With their woes set to increase as the corn farmers, who have already been forced to sell the surplus corn at a discount in the open market, increase their prices during the monsoon, Marpyres and his partner Shah are drawing up contingency plans: to invest away from corn, and into the construction industry.
“This is one of the peak periods during the year, along with Diwali and Christmas, and things are bad with everyone suffering,” says Shah, the more reticent of the partners, who have tie-ups with all the national chains, apart from PVR, and ply the steamed corn at 250 multi-screen cinemas across the country. “We believe that it is an ego hassle between the two. Since we started the business, this is the lowest point we have been at. We are waiting until the end of May and then we will take a call on what to do. But we are thinking of diversifying into the construction business.”
Their tale is replicated across the industry, as food vendors, who carved out a business from selling snacks to cinema audiences, look for alternative strategies and sources of income to bridge the shortfall, while the stand-off over revenue-sharing between the multiplexes and production houses threatens to drag on until the close of the key summer period.
“Our business is suffering badly,” says Mahesh Wadhwa, co-founder of A1 Samosa, which retails to all the national cinema chains. “From 20,000 samosas a day, we are now selling about 5,000 samosas. It is getting very difficult to pay our workers. We usually hire temporary workers during this time, but this year we have not. The only reason we are surviving is because we are also selling samosas to other shops. But we can only survive for one more month and if the strike does not end, then I will look to start another business. I think I will open a small restaurant or a hotel.”
Meanwhile, Gourmet Gelato Co. Pvt. Ltd, which sells its Amore brand of ice cream in multiplexes, has pulled out its counters from one multiplex chain, and is looking to hedge itself by supplying to a range of shops and restaurants instead.
“Multiplexes are a substantial part of our business, and we have been affected,” says Charan Narang, general manager of Gourmet Gelato Co. in Mumbai, who insists he is optimistic that there will be a resolution soon. “It has been a difficult year and before this, there were few good movies. The impact on the bottom line and on liquidity have been significant. We have tweaked the model slightly, and we have cut back from a major multiplex and are moving to other distribution outlets.”
With multiplexes garnering up to 25% of their total revenues from sales of food and beverages, the chains claim that they are keen to keep the food vendors on board and defend themselves against accusations from some of the vendors that there has been little communication or support from the chains.
“They are an important source of income for us,” says a spokesman for Fame India Ltd. “We choose our partners after a lot of deliberation and we have had a very long relationship with most of them. They understand the issues we are faced with and we are helping them out by trying to get them into other similar businesses so they can sell in places like retail chains. And once things are normal, we will look for ways to cover them for these losses.”