Reliance Industries may enter QSR business with ‘Chicken Came First’, to take on KFC in India
Posted by: sparrow_advisor1 in Research, April 17, 2015
Source TEAM VCC
This would mark yet another consumer facing business for the energy giant which already runs India’s largest organised retail firm Reliance Retail.
Mukesh Ambani-led Reliance Industries Ltd (RIL) plans to open a quick service restaurant (QSR) chain called ‘Chicken Came First’ in India in partnership with a UK-based company, as per a report in The Times of India.
The firm through its retail venture Reliance Retail has picked 45 per cent stake in an Indian joint venture with UK-based food service company 2 Sisters Food Group Ltd (2SFG). The JV, Two Sisters Foods India Ltd, will initially be a supplier of chilled and frozen food at its food and grocery outlets in the country and later set up its own QSR chain under the brand Chicken Came First, the report said citing sources.
It is said to be setting up a plant to process chicken, fish and meat products.
The venture would initially compete with frozen food brands like Venky’s and Godrej Tyson’s (which is a joint venture between Temasek-backed Godrej Agrovet and Tyson Foods) Real Good and Yummiez. When it opens the QSR chain, it would take on chains like Kentucky Fried Chicken (KFC) as also new homegrown players in the business.
This would mark yet another consumer facing business for energy giant Reliance Industries, which already runs India’s largest organised retail firm Reliance Retail.
The majority stake in the venture is held by the foreign partner 2SFG. Headquartered in Birmingham, privately held 2SFG was established in 1993 by Indian origin businessman Ranjit Singh.
Over the last two decades it has evolved from a small scale frozen retail cutting operation to a cross-country business as a diversified food manufacturer with strong market positions in poultry, red meat, chilled, bakery and frozen categories. Its UK customers include Aldi, Asda, British Airways, Costa, Co-op, Harrods, KFC, Lidl, Marks & Spencer, Morrisons, Sainsburys, Tesco and Waitrose.
It has 47 sites in the UK and Ireland, six in the Netherlands and one in Poland. The group employs around 24,000 people and annual sales are now over £2.3 billion following the acquisitions of Northern Foods and Brookes Avana in 2011.
Although predominantly a private label manufacturer, it has a number of branded products, including Buxted, Devonshire Red, Fox’s Biscuits, Goodfella’s Pizza, Matthew Walker Christmas puddings and Green Isle vegetables.
The Indian foods market is growing 30 per cent annually and global brands enjoy 63 per cent of this market. Annual spends on eating out at QSR chains in non-metros are expected to surge 150 per cent to Rs 3,750 per household over the next three years, according to estimates by CRISIL.
The firm is also looking at other ways to reach the consumer and is also planning to extend its sales network by adding an e-commerce channel to the retail business.
Entry of “Chicken Came First” into India proves the existence of a large growing market and seems an interesting move as the fried chicken market is currently dominated by KFC. The involvement of the largest company in India, Reliance Industries Limited in the joint venture provides “Chicken Came First” the right partner in India and an opportunity to capture a significant market share.
Earlier in the month the billionaire owner of RIL, Mukesh Ambani apparently took this decision after demands were made from his shareholders who claimed that Reliance’s ‘non-vegetarian’ business hurt their religious sentiments.
Sparrow Advisory’s comments
At present, according to the National Restaurant Association of India, 50 per cent of Indian consumers are eating out at least once every three months, and this shift is proved by the growing presence of QSR concepts, among them many global QSR players. “A younger population, higher rate of urbanization, larger disposable incomes, higher protein consumption, increased participation of women in the workforce, and exposure to western lifestyles are leading to the experimentation with, and adoption of, new dietary habits and more occasions to eat out for all levels of Indian society,”
The non-entry of Chicken Came First would prove a blessing in disguise for some other chain. The search is on…Tags: Mukesh Ambani, QSR, Reliance