Cremica Food Industries Limited
1 MAbout Cremica Food Industries Limited
A Comprehensive Overview of Price & Journey
Understanding Cremica Food Industries Limited Inception and Growth
Overview
Rajni Bector started launching a home ice cream business in Ludhiana in 1978 with Rs. 20,000, and it turned into Rs 1000 food conglomerate. Few years down the line, in 2015 Rajni’s two sons divided the empire in two distinct entities – Anoop Bector undertook biscuits and bakery to public listings and Akshay Bector took over condiments and sauces to build CFIL that became preferred condiments and sauce for partners like McDonald’s, Pizza Hut, Starbucks, KFC, Domino’s, subway and others. And now CFIL is going public.
How does CFIL make money?
CFIL makes money by selling condiments and sauces—3/4 of its revenue comes from long-term institutional supply relationships with QSR giants such as McDonald’s, Pizza Hut, Domino's, etc. It provides stability and a sustainable revenue stream, while 1/4 of the revenue comes from a growing direct-to-consumer retail business.
Revenue Stream 1: Institutional/Food Service (B2B)
CFIL manufactures proprietary recipes, custom packaging for sauces, bulk packaging for restaurant back-of-the-house use, and specialized delivery logistics to restaurants. Some of its institutional clients include McDonald’s, Pizza Hut, Starbucks, KFC, Domino’s, and Subway, among others. This vertical makes the revenue predictable since the partnership is long-term with volume commitments. Growth of this segment is passive, and Cremica does not need to increase its marketing expense to grow; this segment grows with increasing store count and order volumes of institutional investors.
Revenue Stream 2: Retail/B2C
This vertical of Cremica constitutes 1/4th of the revenue of the company. It includes 700+ distributors and 4000+ retail outlets. CFIL has pioneered the vegan (vegetarian mayonnaise) and includes tandoori mayo, salad dressings, sauces, ketchup, syrups, and other condiments. This is the higher margin segment with a gross margin typically between 40% and 50%.
Who are competitors?
CFIL competes in two different arenas—the institutional/food service condiment market, where it faces competition from MNCs, and the retail condiment market, where it competes with both MNCs and Indian FMCG giants; however, its strength lies in the institutional arena.
Institutional Condiment Competitors
- Del Monte India
- Cremica’s own QSR client competition
- Veeba Food Services
- Funfoods (Dr. Oetker India)
Retail Condiment Competitors
- Kissan (HUL)
- Maggi (Nestle India)
- Heinz
- Hellmann’s (Unilever)
CFIL Positioning
- CFIL’s institutional revenue is structurally protected due to long-term relationship/contract, custom formulations and high switching cost.
- CFIL’s retail vertical is where it faces cut throat competition deep pocketed and vast network players such as Nestle, Dr. Oetker, HUL and others.
SWOT Analysis
Strength
- Cremica enjoys decades-long brand recognition and strong legacy of Cremica in North India
- Extensive distribution network across Indian states and across general trade, modern trade, QSR, hotel, restaurant and cafes.
- It offers a wide-variety of products that make it suitable for all sort of needs
Weakness
- CFIL has a deep and strong presence in North India but is less known in the southern, eastern, and western parts of India
- A significant business portion of CFIL depends on the HoReCa segment
- In the B2B segment, operating margins and debt coverage further squeeze bottom line of the segment
Opportunities
- CIFL is leveraging its existing B2B network to grow its B2C and retail market share
- Growing demand for premium and healthy foods
- Rapid growth in quick commerce
- Export Market Expansion
Threats
- Fierce competition from deep-pocketed FMCG giants and global brands
- Profit margins are vulnerable to price fluctuations in agricultural raw inputs
- Constantly changing consumer preference and low brand switching cost is a threat
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Overview
Rajni Bector started launching a home ice cream business in Ludhiana in 1978 with Rs. 20,000, and it turned into Rs 1000 food conglomerate. Few years down the line, in 2015 Rajni’s two sons divided the empire in two distinct entities – Anoop Bector undertook biscuits and bakery to public listings and Akshay Bector took over condiments and sauces to build CFIL that became preferred condiments and sauce for partners like McDonald’s, Pizza Hut, Starbucks, KFC, Domino’s, subway and others. And now CFIL is going public.
How does CFIL make money?
CFIL makes money by selling condiments and sauces—3/4 of its revenue comes from long-term institutional supply relationships with QSR giants such as McDonald’s, Pizza Hut, Domino's, etc. It provides stability and a sustainable revenue stream, while 1/4 of the revenue comes from a growing direct-to-consumer retail business.
Revenue Stream 1: Institutional/Food Service (B2B)
CFIL manufactures proprietary recipes, custom packaging for sauces, bulk packaging for restaurant back-of-the-house use, and specialized delivery logistics to restaurants. Some of its institutional clients include McDonald’s, Pizza Hut, Starbucks, KFC, Domino’s, and Subway, among others. This vertical makes the revenue predictable since the partnership is long-term with volume commitments. Growth of this segment is passive, and Cremica does not need to increase its marketing expense to grow; this segment grows with increasing store count and order volumes of institutional investors.
Revenue Stream 2: Retail/B2C
This vertical of Cremica constitutes 1/4th of the revenue of the company. It includes 700+ distributors and 4000+ retail outlets. CFIL has pioneered the vegan (vegetarian mayonnaise) and includes tandoori mayo, salad dressings, sauces, ketchup, syrups, and other condiments. This is the higher margin segment with a gross margin typically between 40% and 50%.
Who are competitors?
CFIL competes in two different arenas—the institutional/food service condiment market, where it faces competition from MNCs, and the retail condiment market, where it competes with both MNCs and Indian FMCG giants; however, its strength lies in the institutional arena.
Institutional Condiment Competitors
- Del Monte India
- Cremica’s own QSR client competition
- Veeba Food Services
- Funfoods (Dr. Oetker India)
Retail Condiment Competitors
- Kissan (HUL)
- Maggi (Nestle India)
- Heinz
- Hellmann’s (Unilever)
CFIL Positioning
- CFIL’s institutional revenue is structurally protected due to long-term relationship/contract, custom formulations and high switching cost.
- CFIL’s retail vertical is where it faces cut throat competition deep pocketed and vast network players such as Nestle, Dr. Oetker, HUL and others.
SWOT Analysis
Strength
- Cremica enjoys decades-long brand recognition and strong legacy of Cremica in North India
- Extensive distribution network across Indian states and across general trade, modern trade, QSR, hotel, restaurant and cafes.
- It offers a wide-variety of products that make it suitable for all sort of needs
Weakness
- CFIL has a deep and strong presence in North India but is less known in the southern, eastern, and western parts of India
- A significant business portion of CFIL depends on the HoReCa segment
- In the B2B segment, operating margins and debt coverage further squeeze bottom line of the segment
Opportunities
- CIFL is leveraging its existing B2B network to grow its B2C and retail market share
- Growing demand for premium and healthy foods
- Rapid growth in quick commerce
- Export Market Expansion
Threats
- Fierce competition from deep-pocketed FMCG giants and global brands
- Profit margins are vulnerable to price fluctuations in agricultural raw inputs
- Constantly changing consumer preference and low brand switching cost is a threat
Fundamentals
Financials
All values are INR Cr except per share value
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