India’s annual spice production is valued around INR 35,000 crore and is estimated to be a whopping 14 lakh tonnes in volume. This underlines that there is always space for spice on Indian kitchen shelves, be it households or restaurants, irrespective whatever occurs.
This was reaffirmed during the pandemic. During the lockdowns, cooking was one activity many people indulged in. While restaurants shuttered down, cloud kitchens boomed.
This is when the team at Badshah Masala realised it was time to unlearn their traditional manner of doing business with the HoReCa segment. The spice major’s MD, Hemant Jhaveri, recalled how they started aggressively concentrating on cloud kitchens and restaurants that were focused on the delivery model.
The spice company also quickly relooked its heavy dependence on offline channels, realising that an omnichannel route was the way forward. Ecommerce teams were spruced up and new terms quickly learnt to replace the ones the company was used to. Facing a severe breakdown of the traditional supply chain, the logistics was promptly reinvented.
With the HoReCa segment finding its feet once again, Jhaveri believes things have now come full circle.
Hemant Jhaveri, MD, Badshah Masala
The spice market is expected to grow at 3.78% CAGR during 2021-2027. Given that India is a major spice producing and consuming nation, isn’t this too low?
Indians have always been consuming spices at maximum capacity. The real growth opportunity lies in foreign markets at this time when Indian food is getting more popular than ever before, especially as more people turn vegan. There’s just so much you can do with simple vegetables and pulses when you combine them with spices.
This 3.78% CAGR projection isn’t too low and isn’t surprising. At the same time, Badshah Masala is looking to grow over 100% YoY in foreign markets.
How did the pandemic impact your business in the HoReCa segment?
HoReCa definitely took a hit since it accounts for nearly 35% of our sales. But there was an almost equivalent shift in demand from newer avenues such as home chefs and cloud kitchens. The demand loss from dine-in establishments was offset by those doing deliveries directly or through major food delivery portals.
We spotted this threat-opportunity pair early on, did not panic and simply changed the target audience of our digital ads. Online retail sales increased even though cash flow in people’s hands reduced. But since they had more time at home, the only relaxing thing people could do was cook together with the family.
How did the closing of the hospitality segment for several months dent your overall business in revenue and percentage terms?
It may be hard to believe, but there was a very slight change in revenue. When you think about it, people still needed food, even if the HoReCa and hospitality segments were closed. So, they were simply cooking themselves or ordering on delivery apps. The same amount of food was getting cooked and the same amount of spices was required; it was just different customers. We recognized that earlier on and quickly changed the targeting of our online ads.
Ready-to-use spice mixes have always been a practical option in the hospitality industry. Do you also work with select hotel and restaurant chains to create customised spice blends?
The HoReCa segment relies on our blended spices, which makes preparation easier for them and their customers love the taste of the prepared dishes. The busy foodservice industry always needs quicker cooking solutions and our blended spice mixes for preparing a variety of popular dishes, like for example Paneer Butter Masala, Mumbai Bhaji Pav Masala and Dhanshak Masala have always been serving that segment. They buy the bigger sized packaging compared to retail customers.
For tea lovers, we have launched three 3 varieties of flavoured and spiced Premix Teas mixes. However, we are planning to get into the Ready To Eat category soon, which will interest retail customers as well as the hospitality segment.
What kind of spices is the HoReCa sector currently gravitating towards?
There has been no visible shift in the purchase patterns of HoReCa in recent years, they have been buying more or less the same as before. But our Paneer Butter Masala spice has recently become very popular. We think the hospitality industry has liked the quality of dish that gets prepared with our product. It’s interesting that though we positioned this product as “Hotel Jaisa Paneer Butter Masala Ab Ghar Pe” for home customers, now we find that hotels are also using it!
What kind of regional masala blends is gaining traction in the hospitality business?
Paneer Butter Masala and Mumbai Bhaji Pav Masala have been selling great. These dishes have always been popular in the business but it seems they are seeping into more and more menus across previously untapped cities and regions.
How does your company research regional cuisines and then invoke food technology and R&D to come up with the spice?
Our R&D team regularly visits the biggest spice markets in the various regions of India to gauge the most demanded and valuable spices to pick up on ideas for introducing new products. They have a fine understanding of the local tastes in various regions. They gather customer feedback.
They work very fast and have mastered the art of creating spice blends. Paneer Butter Masala took less than four months from ideation to development to reaching the market.
How do you regularly analyze various purchase influencing factors like drivers, barriers and opportunities for the HoReCa sector and address them?
We have been in the business for over 60 years now, we have developed a keen sense of exactly when sales will go up and down in the HoReCa segment. That doesn’t mean that our marketing guys don’t need to do analysis anymore; they do. But I’m saying that we really don’t need to.
It’s valuable information for us, as a trade secret, but without divulging too much, I’d like to say very simply that Diwali and popular holidays drive up sales across all segments including HoReCa.
And unforeseen events like COVID-19 or calamities like floods can be barriers. But for us, COVID-19 did not prove to be a barrier. It actually proved to be an opportunity to improve our online sales and make cooking at home desirable again. And delivery outlets that boomed along with online portals are still buying from us, even as the restaurants that shut down are reopening. Thus, our market potential has expanded because of this calamity. It’s surprising, but true!
What is your manufacturing network in the country and what is the daily production?
The Badshah Masala manufacturing unit is located in Umbergaon in Gujarat. Our present production capacity is 65 tonnes/day. By 15th October 2021, it became 100 tonnes/day with the addition of a new factory which is located two minutes away from our present factory.
