Market insight and opportunities - Bakers Circle
Dev Lall, CEO, Bakers Circle, India discusses why he started Bakers Circle and how after living in US and Europe he moved back to India and saw a space for food technology to overcome multiple barriers in supply chain, costs and quality.
Transcript
Part 1
>>Dev Lall: The Bakers Circle is in the frozen bakery and confectionery segment, more specifically into frozen dough. We also have a section of confectionery that makes desserts. We primarily supply business to business operations; we aren't a retail player. We develop the IP for the products, we develop products, show them to different customers and have them get them on the menu and work with them to get it out into their restaurants.
>>So we started this project in 2004, 2005 where we decided we wanted to take this approach of business. It took us a few years to gestate the product, understand it, get the production facilities running and then start convincing customers to hop on board.
>>We opened our new factory in 2007 where we had one customer, which was Subway Restaurants, buying frozen dough - they had about 50 stores. This was in 2007. Today in 2013 we have... we are servicing roughly about 2,200 restaurants spanning about two dozen customers on two different continents - India and the Middle East. But we've stayed with the same core philosophy, product, a specific product technology and a specific quality.
>>So we have an R&D team and myself who just travels looking at ideas and concepts globally whenever we are on a visit, listening to customers, understanding the pulse of the market. We then come back with a taste profile of a product and we come out with an execution style of the product because if you put a good product in plain Jane packaging it's not going to work, so we have to get all of that put together.
>>To put it into perspective, we develop roughly about 200 products a year, of which 20 make it to acceptability internal and probably two or three hit the market.
>>At least when you launch the product it's really important. Over a period of time you can climb the price up but the launch price is extremely important in a price sensitive market like India.
>>We started off with 500 kilos a month, now we are bringing in roughly about 150 tonnes a month of flour, milled in Australia. So that's the prime involvement in that. However, if you convert that 150 tonnes, that's roughly about three million sandwiches a month in India that we're supplying out of grain out of Australia, and essentially if you ask me the sandwich market in India, almost 50% is owned by Our Bread in the organised sector and that means by the Australian flour.
>>We make frozen dough. It needs to be a very steady quality, a very steady type of flour and a good quality one that is sustainable in our system. By not only going to Australia but also going to a single farming community over there we manage to achieve both.
>>There is no one single culture in India. If they're dealing in Bombay it's extremely cosmopolitan, extremely modern, much more what they expected too. Delhi is modern but it has a more laid back approach with a lot of creamy layers on top that they have to sift through. They go into the south, Chennai, Bangalore, etc, they tend to be more steeped in tradition; people are more quieter there as far as doing business, they won't be so vocal, they might take offence easy on certain actions, which in the north really won't happen. So there's no single one thing to put in there but in the end it still boils down to pennies and dollars and cents, that's what it is.
>>It is important to visit your customer frequently. You cannot expect your walk through to the market to give you that information. You have to visit your customer, you have to understand how much he is in touch with what is going on. If he is cushioning some of the things, you need to understand your customer and then the market.
>>With Flinders University we have just interacted primarily with Ashley with TAFE school. They have done a lot of R&D for us. They have given us a lot of support in products, they have given us a lot of direction in products. They have assisted a lot in deciphering some of the technical roadblocks that we ran into. So they have been very helpful, very important.
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Part 2
>>Dev Lall: Change is always good. I have never seen anything change for the worse anywhere. What is happening slowly is there is a new generational shift coming in. I think nothing really has gotten worse in India, it's just as I said, it's now being highlighted; people's movements have come in front; you're hearing the media scream and yell about certain things, jump the gun on certain things.
>>But overall if you ask me, reality is creeping into India. We were living a bit of an unreal life in the last 10 years with the kind of growth we had, easy money coming in - that always creates its own set of problems. That easy money has gone away in the last year or so; we are seeing it in our customer, we are seeing it in our people who work for us, our vendors. People are working harder for it. So if you were to ask me things are changing for the better and they will change very rapidly in the next 8-10 years.
>>Well if anybody thought India was a low cost model for operating from a labour or a real estate point of view, I think that has been put to rest; they are no longer low cost in that area. I think India, however, is an extremely large consumer market with a huge appetite and the advantages of operating over here are that some amazing synergies and technology and experience might come out because you might adapt certain technologies and experiences to get a better quality or a cheaper product in here and then suddenly you realise you can take it on a global basis.
>>So I think working in India, putting boots on the ground, putting technology and development here to address a market that is very thrifty and is slowly moving up the quality chain might result in really good benefits on a global basis for somebody. Economies of scale, some new technological advances could come out of here, purely because it's a consuming society. The same thing that happened in the United States in the '50s and '60s that so many developments came out from there because customers were asking for it. I think that is what India holds the most potential.
>>If anybody thinks operating out of here, like in the call centre era, to handle cheaper costs in the west, I think that's a thing of the past. For the first three hours when we were driving from Adelaide up to Waroo we saw no human beings and that's different for us and when Peter came here from his drive from the airport to the hotel, he saw only human beings and no road. So that was different for him, so it's fun comparing those notes.
>>Interviewer: Yeah, it's the opposite.
>>Dev Lall: That's just how it is in India, you have to grab an opportunity and go with it. But there was one very, very strong policy I always wanted to... We've always stuck in the company and we do that with all our products and that is nobody remembers the second person on the moon. So there is no point getting into me also and we always stick to that. If somebody comes to us with a product that somebody else is making we politely turn it down 'cause it's not competitive enough. Ours is on a mass scale, mass volume, we want the whole cake, we want to be the first in it. And that's what we got into because that was a space that was wide open that time for us.
>>Yes, there's a lot of health and safety involved over there, especially because of the temperature zones we're working in. So that's one of the main safety issues, that somebody doesn't get stuck in the freezer. We've upgraded a lot of the machinery, so what you're seeing back there is the old factory. We've just put in about $8 million worth of capital expenditure last year and gone to robotics. So that has removed a lot of the safety issues we were having and the health, such as the flying of the flour and all of that has all gone away, so that's helped a lot.
>>Interviewer: And where has most of the machinery come from?
>>Dev Lall: We have the bulk of the machinery, depending on line wise, either from Canada, the US or Europe. The case patients don't feel ... See we all hear stories, especially when you're in a country where there is not that much... that high level of corruption. Let me put it this way, I've lived in the west long enough, it's equally corrupt but at a different level, not at the day to day life but at a much higher level. So we can't mince words about that too. But in the same token the kind of corruption you hear about say that in some sub-Saharan African countries or central African countries where a simple task of walking down the road you have to pay for; that kind of corr... [CUTS OUT]
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