Dr Oetker Eyes A Slice Of India's Growing Love For Cakes
The Indian arm of Germany’s Dr Oetker, known for its sauces, mayonnaise and spreads, has acquired Spycy Fast Food Pvt. to expand in the fast-growing packaged cake market.
The company will take over Noida-based Spycy’s brand Kuppies, its manufacturing facility with a capacity of 1.5 lakh pieces a day and an innovation centre, Oliver Mirza, managing director and chief executive officer of Dr Oetker India, told BloombergQuint, without divulging financial details of the transaction. The firm targets generating Rs 300 crore in annual sales from the new segment in seven years.
“India remains an exceptionally important market for us. This acquisition will enable us to present Indian consumers a range of innovative and exciting eggless offerings that match the taste experience of European cakes,” Mirza said. “Our foray into this new category is a decision backed by extensive consumer research.”
The deal also marks Dr Oetker’s foray into the Rs 2,500-crore market for branded cakes. The category contributes 50% to its global portfolio.
Since India lacks a “baking, self-made culture”, like many other Asian countries, the market potential lies in the ready-to-eat and served cakes segment, according to global research by the Boston Consulting Group. The Covid-19 pandemic and subsequent stay-at-home orders, Mirza said, have created a strong demand for packaged branded food products like cakes, prompting consolidation in the sector.
In the past three to four years, consumer goods makers like Mondelez India and ITC Ltd., among others, have launched packaged cakes. But Mirza doesn’t see them as “near peers”. “All Kuppies cakes from the house of Dr Oetker will have a no-egg recipe with international flavours such as banana walnut cakes, dark as well as white choco chip brownie, peanut butter brownie and red velvet brownie.”
Kuppies will be Dr Oetker’s second acquisition in India after FunFoods—the maker of mayonnaise, spreads and Italian sauces. In FY21, the brand netted around Rs 400 crore in annual sales, up from Rs 13 crore in 2008 when it was taken over. The company, also a supplier of condiments to KFC, Subway, Pizza Hut, Domino’s and Burger King in India, is tapping the consumer retail market to cross Rs 500-crore mark in sales by 2022-end, Mirza said.
And Dr Oetker hopes to replicate its success in the eggless mayonnaise segment. “Today, 80% of the packaged cake products available in the market contain egg, which means these can’t be consumed on any given day given by those who don’t consume non-vegetarian dishes,” Mirza said. “There are certain days, such as festivals and pujas, when people can’t devour a brownie just because it contains egg. We aim to serve that segment, too. I expect the eggless cakes to become a strong lever of growth for us.”
Currently, Kuppies cakes are available in QSR chains, cafes and restaurants in the Delhi-NCR region. Before taking the brand pan-India, the company will focus on penetrating deeper in the Delhi-NCR and northern regions. It will also tie-up with the online retailers BigBasket and Amazon.
Mirza said pricing will be “slightly on the premium side”. There are two variants as of now—a 37-gram pack at Rs 15, while the bigger 125g will come at Rs 59.