Panetteria Foods will be bigger than any of the existing businesses in Balwa Group portfolio: Umar Balwa and Mohammed Selia

Panetteria Foods is a newly launched venture by the over a century old Balwa Group that has interests in hospitality, realty and engineering. What's interesting about the foods foray is that for the very first time, the company will be introducing into the Indian market 'frozen bakery' products conforming to global standards. In an exclusive interaction, Umar Balwa and Mohammed Selia, directors at Panetteria Foods Pvt Ltd, spoke to Ashish K Tiwari about the unique aspects of their foods business brand, current spread and plans for taking it global. Edited excerpts...

Foods is a very new business for the group, what led to this foray with Panetteria?

Umar Balwa (UB): My grandfather started the restaurant business in 1906 after our family migrated to Mumbai from the interiors of Gujarat. Bombay (now Mumbai) was booming with activities then and after doing some odd jobs in the city he launched an Irani restaurant named Cafe Yadgaar located opposite Novelty Cinema at Grant Road. It was operational till the 1970s and then we converted the place into a different establishment. That's where the foundation was laid for our association with food and business in general for the entire family.

Mohammed Selia (MS): The idea for Panetteria happened in 2015 after visiting international exhibitions related to frozen foods. What particularly got our attention was frozen bakery and we started doing our research on the Indian market and realised there was nothing of that quality and caliber really available for people here. We worked further on developing an understanding of how to develop the same technology and here we are in 2017 with first few products coming out of our manufacturing facility at Mira Road, an extended north Mumbai suburb.

How has frozen bakery as a concept worked overseas and how are you going about launching these in India?

UB: If you see globally, a lot of food items are now made available to consumers in frozen format across markets like the US and Europe for the last few decades now. In fact, frozen has replaced fresh as it is much more fresh than fresh can be. Blast freezing ensures the food remains in its original form in a much more hygienic condition than most of the fresh foods that are consumed in the market. Over a period the frozen technology has been extended to food, vegetable, bakery and so on. So we have Indianised the foreign (bakery) recipes making it more palatable and appealing to consumers here. Interestingly, all the products on offer is 100% eggless and we are also using multiple grains to give customers variants under a specific offering.

Could you take us through details about the manufacturing facility, capacity, product range under the brand Panetteria?

MS: It's a 25,000 square foot facility that we are occupying currently. We also have additional space for capacity addition in the near future. We operate four major product lines viz. encrusting, cake, lamination and bread. The machinery is all imported from Switzerland, Belgium, Germany and other such European countries.

UB: While we have earmarked Rs 45 crore for this project, we'll be invested in this business for the long term and make further investments as and when required. We wanted to be very flexible and agile from day one to be able to respond to any kind of a market demand that would come our way going forward. We are expecting a huge demand for frozen bakery products and will soon double current, daily production capacity from 5 ton to 10 ton. In fact, the capacity addition will also call for another Rs 45 crore investment which will be funded internally. Of the total daily capacity, approximately 2.5 ton is for lamination line and the balance is between the other three product lines. Though we have started with selective products initially, the plan is to launch at least four to five products every two or three months. In fact, we will soon be launching frozen cakes too. These can be picked off the shelf for home consumption and will have a shelf life of one year.

How much has been invested in creating this brand identity?

UB: Approximately Rs 10 crore is getting invested for creating and marketing the identity Panetteria, which basically means in a bakery in Italian language. We own the trademark globally for this brand. The look and feel of Panetteria was done by foreign consultants and the entire concept has come out from Netherlands. We are working with Tonic Media which is handling all the digital marketing aspects. Dentsu Aegis is handling our marketing activities in the print media space. There will be a separate agency for electronic media that’s yet to be finalised.

When will brand Panetteria hit the market with its frozen bakery range?

UB: The product has already been tested three months ago with over 300 consumers across the city. The feedback has been very encouraging and we are now ready to launch in the first week of October itself.

MS: Initially, we are launching an array of delicious savoury puffs. These are easy to bake/ air fry and can be ready for consumption at home within minutes. The puffs have been prepared in a hygienic, 100% bacteria free environment using the culinary expertise of internationally trained chefs. There are four variants available in a pack size of 400 grams priced at Rs 230 (pack of flour-based product with eight pieces) and Rs 290 (pack of whole wheat product with 10 pieces). These products have a shelf life of nine months and needs to be stored in a deep freezer. We have tied-up with companies that have expertise and experience of distributing such frozen food products in the country. The Panetteria range will be available across all the modern trade chains like Big Bazaar, Reliance, Star Bazaar, D-Mart, HyperCity, Chheda, Neelam, Society etc. This apart we will also sell through as general trade outlets. In fact, anyone with a deep freezer will be able to sell our products across the country. And Mumbai being a large market, we will launch in the city initially and gradually take it national.

UB: By end of December or early next year the products will be available pan India. The distribution channel (cold chain) is already established and available for us to leverage on as other player selling prawns, fish, meat, patties etc. have done a lot of work in this space. We have tied-up with very experienced distributors like Chic in north Mumbai. While there is no product available in the market for a like to like comparison, the Panetteria range has been priced very competitively. The unique selling proposition is the products are much healthier, hygienic and easier to make in a microwave oven.

Would you also be supplying to standalone bakeries and branded chains like Birdy's or Monginis?

UB: I would rather not because our energies will get consumed in just trying to meet the demand for products being offered under the Panetteria brand. Launching own branded products is the model we are working on. While we are introducing four products at the moment there are another 24 products waiting in the queue. The idea is to keep the consumers engaged with Panetteria for a very long time.

What kind of revenue targets have you set for the first year of operations of Panetteria?

UB: In the first fiscal we are aiming at Rs 45 crore in turnover only from the Mumbai market. When we go all India the number will be higher at Rs 200 crore. We will not restrict our distribution to only the top 8 to ten cities. We will also be selling on emarketplaces like BigBasket, Grofers and the likes so customers will be able to easily access our products offline as well as online. Over the years, we see the foods business growing multifold and becoming bigger than any of our existing businesses in the portfolio.

How soon will you start exporting?

UB: Immediately, we have already tie-up with a few distributors in the US, Canada and UK who are doing ethnic products. We are also looking at the Middle East market but that will happen later. The frozen bakery products will hit the American shores in January – February 2018. Revenue from exports will be in the 30% range with 70% coming from the domestic market.

Is setting up Panetteria stores for your bakery products range also in the plan?

UB: We have some plans in that area for sure. We have created additional brands like ‘Daily Bakery’, ‘Bakersfield’ and ‘Trigo’ for setting up a chain of retail stores for bakery products. The concept, designs, look and feel and menu is all ready for Daily Bakery which will be a proper sit-down outlet with a bakery attached to the eateries. Trigo will be 100 square foot takeaway outlets all over Mumbai that will offer a healthy meal at very affordable price points. We are planning to roll-out the retail formats sometime in 2018.

You will be setting up more manufacturing facilities once a national footprint is in place?

UB: We have already acquired six acres in Naigaon, which is around 15 kilometers from the current manufacturing unit in Mira Road. We have another 20 acres available in Gujarat for future expansion. Considering the food business, we have already invested in the infrastructure right from day one.

A lot of private equity (PE) investment firms are targeting food businesses. Would you be looking to raise money from them?

UB: The business has been funded by the family and there is no debt on the books. The food business has caught attention of PEs in the past few years and we have already had a lot of interest from them. If there is a win-win proposition from financial investors we may explore it for sure. We could close an investment may be in the next three months or so.