A parrot can figure out her food source, build her house, lay eggs and raise her chicks, weather through rain, dust, storm and disease and she can do it almost entirely by herself. She does all this and deserves no special credit, simply because she is a generalist parrot.

If the same parrot were to learn one or two tricks, like ride a cycle or pick cards or maybe say a few words in English and become a circus parrot – she would be recognised as an awesomely talented parrot, she is fed, taken care of, and literally everything is done for her because she is a specialist parrot.

Without trying to go down the moral road of what a woman should or shouldn’t do or what is right or wrong for a woman, I am simply making observations of a behavioural and societal trend that we, as investors, can possibly make money off.

The generalist parrot to me is more like someone from my mom’s or grandmom’s era and the specialist parrot is more like one of my age. For the specialist parrot to survive, she needs things to be taken care of by others. Initially it can be said, that the specialist has more important things to do, but as she keeps going the specialisation trajectory, she looses a lot of generalist skills and her skills become more and more skewed towards specialisation and is almost completely dependent on others for the generalist activities.

The simplest of simplest examples is the setting of curd. It is bloody simple, yet the curd industry is growing leaps and bounds every year. Hundreds of this little little things are becoming things that we buy, instead of make, simply because of the change in trend.

A generalist is a huge asset to the family as she takes in a very little and gives out a lot. This generalist is absolutely useless for companies and she does almost everything she needs to survive by, herself. In other words, she cannot be exploited by companies beyond a certain extent. That extent was basically, clothes and jewellery. Little surprise then that all old jewellery ads used to celebrate tradition and women of old school values. They did it because they could exploit them.

All other companies could not exploit or rather sell to a woman and they kinda decided that for her to be exploitable, this role had to change. They had to celebrate specialisation and look down at generalisation and I dare say, they have achieved it.

We are largely moving towards the era of the specialised woman, where one after the other, each of the generalist activities will become a multi billion dollar industry, which the specialist woman will buy !!

Idli dosa batter, Ready made Ghee, Curd, Sweets, Namkeen, Dip Tea, Milk Powder Sachets, Crèche, Nanny, Dabur Chawanprash, Frozen foods, Pickles, Spreads and Jams, Papad Industry, and I can keep going on and on.

The point is simple – a joint family household used to make almost everything above and the women either carried out the activity or supervised it. The new trend is that a woman has a career and BUYS things and services, rather than make them. Every time he or she buys something, there is an opportunity for a billion dollar industry just waiting around the corner.

Why Bread and Bakery are gaining ground in India

Everyone wants to eat healthy, without exception. But healthy food has two main enemies – convenience and campaigns of fake healthiness. Despite all the technological advancement in the food tech industry, hardly any inroads have been made into foods that are actually healthy, whereas massive inroads have been made into preserving quality and taste of foodstuff with little or no nutritional value.

All over the world, except India the per capita consumption of pulses(dal, rajma, peas, channa) is falling. The per capita consumption of cereal based carbohydrates and sugar is rising. The nutritional value in pulses largely come from proteins and that of cereals and sugar simply come from carbs. The reason this is happening is purely because of convenience of preparation.

Wheat/Dough is the most flexible food stuff, and as a converted product you can make noodles, breads, and all other forms of leavened and unleavened bakery products. Just add a little bit of gluten and viola wheat is suddenly a magic raw material. Pulses simply aren’t even 10% as flexible as cereals.

Another trend is that sugar which was barely even 5% of daily calorific consumption has now gone beyond 20%. Little points to guess that sugar gets along better with carbs compared to proteins.

The universal retreat of complex carbohydrates has been replaced by a universal growth of simple sugars, basically sugar.

Bakery which in Indian context is bread, pav, roti, pizza, burgers etc has now become completely Indianized. Bhelpuri guys in Hyderabad are selling Garlic Bread and Pizza like there is no tomorrow. At the same time you now have a hazaar spreads from peanut butter to Nutella to flavoured cheese spreads and so many sauces, which need no cooking and just assembly to qualify as a meal.

Foods that give you same calorific value with convenience will prevail. The food processing companies have gone on an overdrive to convince you that carbs + sugar is = Energy. Total bullshit, but it has people believing it.

Baking compared to other forms of cooking is more scientific compared to traditional cooking. Traditional cooking is more of an art whereas baking is more of a science. Definite science is easier to scale. Bakery is thus going to make massive inroads into our country. With so call Digestive Biscuits to Multigrain Bread – We have just begun to become one of the largest consumers of baked products in the world.

Bread + Spread > Chapati + Curry

Mrs Bector’s Business Model

Mrs Bector’s has a simple but a unique business model. On one hand it makes and sells its own products, much like Britannia and on the other hand it makes foodstuff for other companies, much like what Dixon does for consumer electronics and Varun Beverages does for Pepsi or Luxottica does with eyewear

Biscuits – Mrs Bectors make and sells premium and mid premium biscuits in India and abroad. Outside India, it sells on its own name as well as manufactures white label products for some of the largest big box retailers in the world.It is a simple cost + margin business, wherein you will succeed if your brand + quality + price make sense in the market.

Bakery – Mrs Bectors makes and sells Bread and breadstuff under its name English Oven in a few of the metros in India. English oven is a purely premium offering. It also makes burger buns for McDonalds, Burger King, KFC and some other major Quick Service Restaurants and chains in India.

This is also a simple cost + margin business which will again be successful if your are efficient + have the same brand, quality and price attributes in biscuits.While the business model seems almost boring, if you dig a little deeper, quite a few interesting things are happening there.

What excites me

Premiumization of Biscuits – One usually has biscuits with tea/coffee or as a midday snack which is disguised terminology for midday indulgence. As purchasing power increases and exposure increases, I’ve noticed the following substitutions in play.

  • Morning Chai Biscuit – Marie is being replaced by a Digestive biscuit or an Oats Biscuit, very often sugar fee.
  • General Munching – Parle G and Krackjack types are being replaced largely by Bourbon and Cream biscuits.
  • Coffee – Almost always only premium cookies are had with coffee as regular biscuits taste very bland with coffee. Mostly a chocolate chip cookie or an oatmeal cookie with raisins.
  • Mithai Substitute – Laddoos and halwas are slowly getting replaced with Dark Fantasy kinda chocolate biscuit with filling.
Dark Fantasy BURFI — really !!!!!! and this is a new age cookery show. In that case every subway sandwich guy is a chef !

Consciously or subconsciously, the advertisements have changed our behaviour towards this consumption. Almost all the substitutes have completely hacked our taste buds and have done such a great job of it, that it is almost impossible to get back. I for one, have not had a Marie in ages after getting used to McVities Digestive biscuits.

The substitutes are not a little more expensive, they are at least 2x as much as the original and sometimes go up to even 5x. The best part is that, the cost of production does not go up in the same proportions going you massive margin improvements due to scale.

23 % CAGR of bread products till 2025 – When an industry itself is set to grow at such an astounding rate, one has to specifically make blunders to not make money off the same.

Like every other product category, bread too has different classes. Breads like Modern and Spencers falling in the base level, Britannia in the Mid and more niche breads in the premium slot. English Oven, which is Mrs Bector’s premium bread brand is one of the few NATIONAL premium bread brands. Think about it, and you will realise that we are all sticky about bread brands.

20 years ago, bread basically had a few butter, jam and cheese options to go along with it, but today bread has become a PLATFORM in itself, with a hazaar products wanting to get on it.

and more

The single use Butter Chicken Spread is the top of the charts. For a foodie, this is simply a 3G moment.

Given the state of depleting domestic help as we move to wealthier nation, it is but natural that a lot of things will begin to move towards the do-it-yourself mode. I never understood why Joey Tribianni from Friends was so excited about a sandwich – well I get it now.

Contract Manufacturing – At the risk of oversimplifying, contract manufacturing for me is akin to a highly paid internship. You get to learn loads while making money. This knowledge coupled with your existing knowledge can be used to get a job somewhere else or even start your own company.Just look at the range of stuff Mrs Bectors is making for other companies. Trust me, this is just the beginning.

QSR – Buns for KFC, Burger Buns for Mc Donalds, Burger Buns for Burger King, Sandwiches for PVR, Bread and semi processed bread for Faasos and other biggers. All in all they are either the sole supplier or the preferred supplier everywhere.

Biscuits – They make OREO and Cadbury Choco fills. This is really up there in the cream biscuit and filled cookie segment and they make it. In terms of quality you simply can’t beat them. Check out their world class facility that they have come up with. Looks very futuristic.

Food processing is finally making major strides in India. We have to move from just selling agro products to at least one step further in the food chain, and this here is the full circle.

Exports – Cremica is literally approved and authorised to sell to almost all the big box retailers across the US. They can do this under their own brand and even as white label products. For the first time in history Cremica recently supplied Danish Cookies at Rs 200 a kilo.

The Warm Hug – Everyone loves their mom’s cooking. It isn’t just the familiarity of the taste but the warmth that one feels. Quite a few brands have a very warm feeling associated with it. Generally brands take a lot of time for this e.g Amul, FabIndia, Borosil, Fevicol etc. It is not easy to come up with a warm brand overnight. It is possible, but only with a ton of advertisement. The story of Rajni Bector to me is in the lines of Verghese Kurien of Amul. It’s a solid brand.

Mrs Bector’s is now a brand solid enough to outlast her.

Valuation

At 2,500 cr Mrs Bector’s does not seem cheap and it isn’t. The way I look at is simple. Its a heads I win a lot and tails I win a little. If Cremica succeeds in becoming a national brand, the company will be a micro mini Britannia. If it succeeds only in contract manufacturing it will be a mini Dixon. If it does both – its a lollapalooza.

Go Buy.

My previous blog posts on food that kinda did well.

4 replies on “How much can Mrs Bector spread, the culture of bread ?”

  1. Pingback: How much can Mrs Bector spread, the culture of bread ? – Big Investor Blog - FinMedium

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