Premji-backed iD Fresh Food bets big on its coffee decoction biz

Azim Premji-funded iD Fresh Food India Pvt. Ltd has an ambitious plan. The company’s founder and chief executive, P.C. Musthafa, believes his newly-launched coffee decoction business has the potential to grow to ₹100 crore in a year.

The company, which test-marketed the coffee decoction products in the last three months of 2018, expects the business to generate about ₹2.5 crore in revenue in February itself.

“We’re getting good feedback. The products are getting sold out on almost the same day; the travel pack especially is doing wonders for us. We got the product and the packaging right,” said Musthafa in an interview. He added that launching a ₹10 travel sachet pack was the “right decision”.

The company began operations in 2006 as a small store in Bengaluru selling fresh, branded, good quality idli and dosa batter. It is following the same strategy with coffee too. Rather than giving consumers a ready-to-use powder, it is retaining the freshness of its coffee by wet-grinding beans into a decoction.

About 8-9 months ago, the company had also launched vada batter in a pack that allowed consumers to make traditional doughnut-like South Indian vadas with ease. That has not been performing as well as expected due to supply chain issues, Musthafa said, adding that he is working to rectify the issue.

iD, according to Musthafa, used more than ₹100 crore of the ₹150 crore that it raised from PremjiInvest, the family office of Wipro chairman Azim Premji, in March 2017 to expand production capacity. While it currently has the capacity to make 1.3-1.4 million idlis per day, with the expansion, that number will go up to 4-5 million a day.

As for coffee, the company’s decoction has been test-marketed in 2,000-2,500 outlets across the country so far. Its overall distribution reach across products is around 10,000 outlets. Musthafa plans to launch all the company’s products in Delhi, Kolkata and Gujarat and also plans to introduce its decoction in some international markets.

The startup’s other new products include vada batter and an expanded superfoods range. This, along with geographical expansion, is expected to help the startup’s revenue to grow 45% in 2019-20, according to Musthafa.

He expects overall revenue to grow between 19% and 25% in the current 2018-19 financial year to around Rs220 crore.

But are the expectations too lofty? Devangshu Dutta, CEO of retail consultancy Third Eyesight, believes there are a bunch of people today who are not able to brew their own coffee—whether it is for lack of time, good raw materials or the know-how.

He concludes, “The challenge is of ensuring freshness and penetrating deeply. iD has the capability to penetrate fairly deep, and they’ve built up a reputation and a momentum for their products in the market. Based on the platform that they’ve built, it is not an unthinkable target.”