iD Fresh Foods is looking at Rs 250-cr revenue in coming year

Delhi is the biggest city on iD Fresh Foods map

For the thousands of Indians living in Gulf countries, something as simple as fresh homemade idlis and dosas were a luxury. Finding the right ingredients, grinding them and letting the batter ferment was too arduous a task for many, but all that changed when Bengaluru-based iD Fresh Foods made an entry into the region.

The ready-to-cook food maker’s idli and dosa batters had been a hit in urban households in India where both husbands and wives worked, and even among single men and women living away from home. If people in south India, where batter is normally made at home, were opting for iD’s solution, why wouldn’t Indians living abroad do the same?

iD is now targeting a Rs 250-crore revenue in the coming year, fuelled by the demand for its ready-to-cook parathas, dosa and idli batter, and even paneer (cottage cheese). While the company’s success has so far been in southern India, it plans to expand into Delhi and Ahmedabad, as well as to countries where there is a large Indian community.

The beginning

iD Fresh Foods was started in a 50 sq ft room with an idli/dosa batter grinder, a packaging machine and a TVS Scooty. Chief Executive Officer P C Musthafa, was introduced to the idea when a kirana store run by his cousin constantly complained to the local vendor about the quality of dosa and idli mixes he was producing.

“I was doing my MBA in IIM Bangalore at that time, and most people used to make dosa and idli batter at home. We did market research and figured the market for ready mix was 2,400 kg per day. In nine years, that has grown to around 35,000 kg per day,” said Mustafa.

With a focus on quality, hygiene, packaging and above all retaining complete home-brewed recipes for its products, iD soon moved beyond the 20 stores it used to stock at. Today, the company distributes products to 21,000 stores directly, ensuring they stay fresh, and plans to open manufacturing facilities in Bengaluru, Mumbai, Delhi, Kolkata and Ajman in the Gulf.

The opportunity/challenges iD estimates the market for fresh ready-to-cook products in India is as big as Rs 5,000 crore. While most of its products today cater to the palate of south Indian eaters, it is planning to expand north as soon as next year. Delhi is the biggest city on iD’s map, but for now it has begun running trials in Ahmedabad to get a feel of what customers think of it. Mustafa says the challenge is to get people to opt for ready batter. “From a marketing perspective, my biggest issue is when I talk about my brand USP, which is 100 per cent natural, no preservatives, people don’t believe me. It is considered to be just another packed food item that is unhealthy,” adds Mustafa.

iD says it will put significant effort into changing that perception. The other big challenge is distribution, especially since the company directly distributes to retailers. It says refrigeration plays a big role in the freshness of products, but with constant power cuts, products often spoil. For this, it has been extremely picky in getting retailers on-board.

Way forward

With a $25-million investment from Premji Invest, iD plans to grow its base beyond south India. A profitable business from a unit economics perspective, iD says all the money it has raised will be pumped into setting up new manufacturing facilities and creating awareness of the brand through advertising and other campaigns.

“If you see the story of ethnic foods, it has always been dominated by Indian brands. Whether it is the Haldiram success story or MTR. We believe there is space to build at least five or six Rs 1,000-crore revenue companies in India,” said Rahul Garg, partner and co-head at Premji Invest and a member on the board of iD. “Each of these could have a valuation of $1 billion”. Garg said 

Premji invested in iD due to the company’s track record for maintaining quality and its focus on distributing directly to retailers. While there is no high-technology used in the manufacturing of any of iD’s products, the technology it has built to track sales across the country is far better than many consumer goods giants.

Expert Take: Unlimited demand pan-India to help in expansion

B S Bhat

Co- founder of Beekays Food Products, Bengaluru’s largest bread maker

The biggest challenge in the ready-to-cook segment is distribution. Manufacturing is not a problem because there is no higher technology involved in making these products. I feel iD Fresh Foods has been able to do this very well, especially in Bengaluru, where they started.

One of the things that got them initial success was that most supermarkets in Bengaluru are run by Muslims, especially from Calicut. With the founder a Muslim from Kerala himself, he has been able to develop a very good rapport with them. This has allowed iD to build a very good network but it could be a little harder for them to crack the market in North India.

That said, even in the north, in places such as Gujarat, people are increasingly consuming idlis and dosas. Their diets, usually of fried puris or parathas, take a lot of time to make, and are also now being seen as unhealthy. They, too, are now eating idlis and dosas. So, the demand is definitely there pan-India, and iD could introduce new products for those markets. 

Due to all these, iD will be easily able to expand. There is really no competition and demand is practically unlimited.