Bengaluru: Premji Invest-backed convenience foods maker iD Fresh is looking to set up four new manufacturing plants in Kerala, Tamil Nadu, West Bengal, and Andhra Pradesh by the end of the current financial year, in a bid to diversify its audience in smaller cities, a top executive told Mint in an interview.
The Bengaluru-based firm, which already has four plants in the major metro cities, is expecting tier 2 and tier 3 towns to drive growth going forward, as consumers are increasingly adopting quick and hassle-free meal options across the country, Rajat Diwaker, CEO of iD Fresh’s India business, said.
The firm already gets half its business from tier 2 cities like Jaipur, Chandigarh and Lucknow, and is hoping to increase the share over the next few years. Two of its strongest products—idli-dosa batter and parotta—are making waves in tier 2 and tier 3 cities as well, thanks to its consistent quality and lack of strong competition, according to the executive.
“We are looking to double our business in the next three years. Expanding the manufacturing capacity is guided by this vision,” Diwaker told Mint.
Without sharing specifics, Diwaker added that the company is planning to invest “significantly” in its manufacturing plants.
Founded in 2005 by P.C. Musthafa and Abdul Naser, iD Fresh shot to fame on the back of the growing demand for ready-to-cook products among young professionals who lived away from home and desired quick meals.
iD Fresh made revenue of ₹554 crore in FY24 and grew five times the industry numbers, according to Diwaker. While the executive did not disclose absolute figures, he said that the margins in the bottomline were in high single digits.
In FY23, it earned an operating revenue of ₹480 crore, while losses narrowed 53% year-on-year to ₹328 crore.
It has raised upwards of $120 million from investors such as Premji Invest and New Quest Capital Partners.
Building a supply chain
Drawing inspiration from the West, the convenience foods category made its way to India more than a decade ago with players like ITC Foods and MTR Foods introducing options like chapatis and curry paste premixes that simply need to be heated before eating.
The ready-to-cook market share in India is expected to increase by $451 million from 2021 to 2026, as per estimates by market research firm Technavio.
But the category is tough to crack, given India’s love for fresh and home-cooked meals. Moreover, the convenience of ordering food online through Swiggy and Zomato has made these meal options an afterthought.
iD Fresh, however, has managed to carve its niche in a tough market, driven by the success of its idli-dosa batter. Now, the company is looking to replicate the playbook for new products.
“While we expect the idli-dosa batter to continue to be the bestseller, we are constantly looking to introduce three new products including tender coconut in the fresh category over the next four to five months,” Diwaker said.
Products having a long shelf-life, like clean-label spices, is also part of the company’s pipeline for this year.
According to an early-stage investor looking closely at the consumer sector, the success of one single product has created immense brand recall and loyalty for iD Fresh. However, it could be tough to recreate the popularity among its other brands, given the rising competition in the space by large and small players like ITC Foods, Tata Sampann, Haldiram’s and MOM.
The firm’s distribution capabilities have been scaled up in a big way over the last few years, According to Diwaker, according to Diwaker. The lack of intermediaries has helped it seek control of quality and improve margins.
Quick commerce, too, seems to be a major growth driver for the firm from which it receives a third of its sales.
“Owning the entire supply chain makes sense for us. Idli-dosa batter and parottas are high-velocity categories in retail outlets which means it brings high turnover,” the executive said.