Bakery Biz, January-February, 2022

It is time for a deep dive into the long-term business dynamics and get to a realistic situation

SUMIT JHA

Growth and innovation are the all time favourite buzzwords in any market. Growth in terms of business and innovation in the offerings. Individuals and organisations have been trying to move ahead and create a positioning for themselves by way of their product range and offerings.

So what is it that makes the businesses tick? What makes a select few carve their niche and separates them from the mediocre ones? It is their attitude and their futuristic thinking, be it for products or processes, that makes them strive for a better future and sustain in the competitive market scenario in India. Many international brands have entered, or are waiting for the right opportunity to enter this large scale, dynamic, and diverse market, and yet make a brand stand out and be noticed. Huge investments are being made in the market in the hope of a positive outcome.

The magnitude by itself can be overwhelming. Is it the time for the players in the industry to be wary? A word of caution for all those wanting to enter or step up in this sunrise industry. While this industry holds so much hope, and there is definitely that light at the end of the tunnel, there is also going to be a shakeup which is going to leave a few too many gasping for survival.

The ever increasing number of bakeries, cafes, and lounges mushrooming across tier 1 and 2 cities has been a cause for concern. Would it be wise to go all out and spread the brand reach across the city and cities? Many brands have shown growth by increasing their presence in pockets which are already crowded with bakery outlets, most of them choosing the franchise route. Just like the bubble burst that one saw in the IT market, the bakery segment could also be facing a similar situation, in the near future.

Large cities today have multiple bakeries within walking distance of each other. While such concentration could lead to customer walk-ins in the restaurant segment, the bakery business has its limitations. If every area has sufficient number of bakeries (all sourcing their raw material with barely any difference, from the same set of wholesalers) claiming to offer the best to their customers, how long will those bakeries survive, that make a move just to be present in a market space that is already crowded, considering that most of them have exactly the same products on their menu/shelves. There are specific areas in cities like Delhi, Mumbai, Bengaluru and Chennai which have more bakeries than the grocery stores in the region.

Will special deals and offers lure the customer? How essential is it to have USPs that separate the rest from the banal? There is going to be a time soon when bakeries will need to start thinking about what to do with their excess products whether in display or in stock. What happens if they produce less and aren’t able to meet the demands of the customers? How many can afford buy-one-get one offers, attractive discounts or advertisement spends to woo their customers?

It is time for a deep dive into the long-term business dynamics and get to a realistic situation, where there is win-win, with the business ethos at the forefront, and intact.

FSSAI has made their rules clear on quality and saleability of products which are past their shelf life. It is time to redefine some rules and policies which would save a lot of bakes from going into the dumps, and prevent bakeries from pulling the shutters down.