A quick answer without the arithmetic of FA:
The path is well established with ample opportunities. Right now, they are into snacks and fast food (newly introduced) categories:
- Western snacks – chips, rice puff based, cakes
- Indian snacks – namkeens
- Simple drinks – glucose based
- Noodles, biscuits
The potential options from here seems to be the following:
- Indian snacks – Increase the spectrum of namkeen offerings
- Indian sweets – Playing on the turf of Bikaji, Haldirams and Snactac (Reliance Retail)
- Indian pickles
- Different ethnic foods – Tomato ketchup (keeping it neutal since I do not know where it originated), Chinese foods – soya sauce, schezwan sauce etc., Mexican foods – salsa (big opportunity South America’s taste palette matches Indian taste palette), American – mayo, cheese blends, Italian – pasta etc.
- Daily consumables – Bread and buns via contract manufacturing
- Drinks – low-cost energy drinks on the lines of Varun Beverages’ Sting, fruit juices
See all this getting played out in Reliance Retail’s Snactac brand. BTW, I have not seen Reliance selling their products in small shops. It is exclusive to Jiomart and Reliance Retail.
Geographical distribution
Right now, they are primarily located in eastern India, and in the process of expanding into north and north-western states like UP (recently contracted Gopal Foods, Mathura to manufacture snacks for them), Delhi and parts of eastern Rajasthan (to keep distribution competitive). Thus, just from the geographical distribution perspective, the company presents an opportunity that is only going to grow bigger from here-on.
Management
- The management seems to be of high quality and so far, has walked the talk.
- Given their size, they are already having some names from the giants like Nestle, Parle, etc. on their payroll. That means the management has challenges to keep them engaged and are conscious about the quality of talent walking in the door. Also, not shying from hiring senior management from good companies shows they want to grow smoothly yet aggressively.
Disclosure: Invested
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