Filter Coffee Gets a Unique iD
PC Mustafa’s idli-dosa disruptor is transforming the
sacred south Indian brew, thanks to unparalleled packaging and distribution
smarts
Next in line is chutneys.” You don’t often meet a
startup founder who’s charged up about that. To be fair, PC Mustafa has other
things brewing on his mind too. Like filter coffee.
“We are excited about our coffee decoction. It has
longer shelf life, and is hence easier to distribute and retail,” says the
cofounder and chief executive of Bengaluruheadquartered iD Fresh Food. “True to
our core strength, it will be without preservatives. We worked on the packaging
extensively, and it was worth it. It completes our breakfast menu.”
From Malabar parotta, ragi batter,
and rice rava batter to paneer — there’s a
lot on iD Fresh’s portfolio of packaged perishable foods Mustafa loves talking
about in his thick Malayali accent. But chutneys, it would appear, are special,
as they haven’t been easy to tame.“We launched chutneys in 2015-16. They didn’t
do well,” he says.
Indeed, food is a deeply personal subject for
Mustafa, 44, the son of a daily-wage worker father from a remote Kerala
village. “Breakfast was a luxury when I was growing up … and three meals in a
day were a distant dream,” he said at the Harvard Kennedy School earlier this
year.
iD Fresh’s slick, smart packaging gives it the look
and feel of a new-age startup, and its rise from nowhere to a $100 million
brand — a household name in southern India and with a growing presence in West
Asia — has made it a Harvard case study.
Mustafa and his cousins started way back, in 2005,
with a capital of ₹25,000 and
50,000 packets of batter. Today, the company produces 50,000 tonnes of batter
every day. Mustafa, who went to National Institute of Technology, Calicut, and
IIM Bangalore, says, “It is very simple. If your grandmother won’t add it
(chemicals) to the food, we won’t either.”
SOLVING A TANGY PROBLEM
Testament to iD’s nous in selling foods with short
expiry windows — without preservatives — is the thumbs-up from seasoned
investors. “We invested $5.7 million for 25% stake in iD Fresh in 2014,” Rahul
Chowdhri, former partner at Helion Ventures, tells ET Prime. “Our
reason to invest was simple. This is a product that Indians consume on an
everyday basis. And iD was making it available in a packaged format with no
preservatives, without compromising on the taste.”
In 2016-17, iD Fresh reported revenues of over ₹110 crore, growing at 37% year
on year. Losses grew nearly fourfold, to ₹22 crore, on account of expansion.
iD sells its products semi-cooked, whether it’s the
wet idli-dosa batter or the coffee decoction. It’s never been done before on
any kind of organised scale.
PACK IT WELL
“In this business, it really comes down to the right
product, right packaging, and the right retailer” Mustafa says. Each pack is
developed after months of collaborative engineering with consumer-packaging
leader Huhtamaki PPL, and is IP-protected.
“We have patents for all our packaging types in all
markets we are present in,” says Mustafa. “(For instance,) if you see packaging
of the coffee decoction, it looks like the tumbler and plate that the authentic
filter coffee is served in. We want consumers to immediately think of
old-school filter coffee when they see our product.”
The other vital leg is distribution. “The strength of
the company lies in the fact that it handles the entire distribution and supply
chain by itself,” says Singh.
iD Fresh’s supply-chain management is based on two
principles. Zero inventory. Everyday shipping. All 55,000 tonnes of idli-dosa batter
produced in Bengaluru is shipped at 5:30 am with the help of 350 delivery
trucks and a staff of 600. The shelf life of each packet is three to four days.
The biggest challenge is that the company needs to
have a plant in each geography it wants to cover. It currently has plants in
Bengaluru, Hyderabad, Chennai, and Mumbai, and one in Dubai, and is investing
Rs 120 crore to expand capacity. Mustafa believes once it has six plants set
up, it can cover 80% of its target audience.
“While zero preservatives and chemicals is great, it
also means they cannot run their business like an MTR,” says Singh. “Hence fast
shipping and delivery is key.”
In March 2017 the company raised $25 million from
PremjiInvest for 25%. A major part of the funding will go in shoring up the
international business. There are also plans to airlift products from plants.
The final pillar of iD’s strategy is its strict
retailer-onboarding process. It works with a retailer only if it has overnight
refrigeration. “I learnt the word ‘fermentation’ for the first time after a
packet of iD batter burst open at a store. Literally all over the retailer’s
face,” Mustafa says with a chortle. “We had a good product but were unable to
make it reach our consumers in the way we envisioned it.”
NEXT ON THE MENU
Chutneys are a natural extension. Mustafa says he has
learnt from his past failures. “Even though we had a great product, since
chutney is always free at restaurants, consumers did not want to pay for it
separately. This time, we are planning to launch chutneys as part of a
breakfast combo,” he says. “Deep inside us, we want to reach somewhere, faster,
and easier,” Mustafa told the students at Harvard. “My sincere request to you
is, avoid shortcuts.”
Leave that job to iD’s quick-and-easy batter packs.
Shabori Das
ET20NOV18
No comments:
Post a Comment