The current contribution from in-house labels is in single-digits but can be doubled or even tripled from the current levels, said Arvind Mediratta, Metro's India MD and CEO
Bengaluru: Wholesale retailer Metro Cash and Carry Pvt. Ltd, plans to aggressively promote its own brands to the hotels, restaurants and cafés (HORECA) industry, its fastest-growing customer base, as it targets doubling of revenue contribution from in-house labels.
The current contribution from in-house labels is in single-digits but can be doubled or even tripled from the current levels, a top executive said.
“Earlier it was not the thrust area for the sales force. Now we are telling our sales team that they should first take orders for our own brands or supplier brands. That’s a big shift. We’re also appointing distributors for our own brands," said Arvind Mediratta, Metro’s India managing director and chief executive officer.
The Indian arm of the German company earned revenue of €798 million for the financial year that ended 30 September. It follows an October to September calendar.
Metro’s in-house labels exist across categories ranging from ultra-fresh food produce to fast-moving consumer goods and even cutlery under six main brands—Aro, Fine Life, Metro Chef, Sigma, Metro Professional and Tarrington House. It plans to launch another brand later this year called Rioba, under which it will sell coffee, tea and café solutions.
Of Metro’s registered user base of about 25 lakhs, the HORECA segment currently accounts for over 1.1 lakh and is growing rapidly. While kirana stores and small independent supermarket chains are also key targets for own brands, it is the HORECA segment that is its ideal target.
“If our quality is the same and the prices are 50% lower (than other brands), then for the HORECA segment food costs come down dramatically. For papad, ketchup or even vinegar, why do they need to pay extra for brands? So in HORECA our own brand makes a lot of sense," he said.
Hotels, restaurants and cafés also prefer striking up fixed-rate contracts to regulate their food costs and that is easier to draw up with in-house brands, he added. Within its own brands, Metro’s focus for the segment will be on ultra-fresh food (seafood, meat and cold-cut deli products), dairy, exotic fruits and vegetables and frozen items.
But other companies have also been following this strategy for a while now, including online grocery store BigBasket (Supermarket Grocery Supplies Pvt. Ltd) that set up separate warehouses to supply to the HORECA segment in 2017.
“Metro has had a fairly good standing with HORECA for a long time now, particularly when you look at meat, fish and other products like that they’ve done a good job of managing their supply chain. From an institutional consumer’s perspective, (confidence in the product) and price are primary measures and not the label on the packaging and Metro has managed to build that over time with HORECA," said Devangshu Dutta, chief executive of retail consultancy Third Eyesight.
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