Veeba Foods aim four-fold jump in sales by 2017-18

Veeba Food Services Pvt. Ltd, the condiments supplier to fast food chains including KFC, Starbucks, Pizza Hut, Burger King, Taco Bell and Domino’s Pizza in India, aims to increase revenue by as much as fourfold to ₹ 400 crore by the year ending March 2018, Veeba founder Viraj Bahl said.

Veeba Foods, which raised about $6 million from venture capital firms Saama Capital and DSG Consumer Partners in April, has started tapping the consumer retail market as part of the plan to fuel growth. So far, the company was supplying to fast food chains, hotels and restaurants. About half of its revenue comes from fast food chains and about 45% from hotels and restaurants.

“The consumer business is new, and it accounts for just about 5% of revenue at present. Considering the scale of opportunity, the consumer business will overtake sales from business-to-business segment by 2018-19, if not earlier,” Bahl said.

Veeba is likely to go for a fresh round of funding over the next 18 months, Bahl said. “This will be a bigger round. However, we are yet to decide how much.”

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 products segments such as ketchups, spreads and jams over the next few years.

The earlier round of funding was used to expand capacity at its factory in Neemrana in Rajasthan. The plant makes about 2,200 tonnes of condiments a month, running at about 65% of capacity. The capacity can be doubled when required, or the company may even consider setting up a new plant, Bahl said.

“The next round of funds will be essentially used in boosting retail presence and marketing, besides capacity expansion,” Bahl said.

The current owner of Fun Foods, Dr Oetker India, is also targeting to reach ₹ 500 crore in revenue by 2020 by expanding the reach of its products such as mayonnaise, Italian sauces, sandwich spreads and salad dressing, Oliver Mirza, managing director and CEO, said in an interview.

Several fast food chains such as Burger King, Wendy’s, Carl’s Jr, Fatburger and Johnny Rocket have entered India in the past couple of years and they aim to have a nationwide presence. Meanwhile, existing chains continue to expand their presence. All fast food chains rely on third-party suppliers and vendors for raw materials, including buns, sauces, dips and seasoning.

According to estimates by retail consultant Technopak Advisors, the Indian food service market will be worth $92 billion by 2020, up from $48 billion in 2013. Of this, the $3 billion chain restaurant segment is expected to see the fastest growth (15%) and be worth $8 billion by 2020.