Spreading it thick and fast

How Veeba Foods is cashing in on the growing demand for sauces and dips across the country

Be it the new dip that you had at your favourite restaurant or the yummy salad dressing you ordered in last night – you can’t forget what it tasted like and you’re most likely going to be on the lookout for the same wherever you go next. Delhi-based Veeba Foods has a myriad range of dips, dressings, spreads, sauces and much more to ensure no matter which continental dish you try to replicate at home, the output would be closer to where the dish originated from. 

The man at the helm is founder and MD, Viraj Bahl. An affable man in his mid-30s, he developed the right products and adopted a different approach to tap into the sauces market that already sees stiff competition among the likes of Kraft, Cremica, Del Monte and of course Dr. Oetker-owned Fun Foods — Bahl’s previous family business that was sold off to the German company in 2008. But despite being a two-year-old player in the consumer retail segment, Veeba, named after Bahl’s mother has garnered a noticeable market share.   

He managed to pick-up the nuances of the trade during his six-year stint at Fun Foods. The brand found its way into the products of almost every quick-service restaurant (QSR) in India back then. After the acquisition by Dr. Oetker, Bahl tried his hand running a restaurant chain from 2008-2013. The Pocketfull franchise had seven outlets in NCR, but didn’t quite perform the way Bahl wanted it to. By then, the non-compete clause signed during the sell-off had lapsed and Bahl was eager to venture back into the sauce and condiments business. But instead of starting with the retail segment right away, he envisioned entering the B2B trade and becoming a top supplier to leading brands of India’s burgeoning QSR market. 

Experimenting with flavours
The first year was a tough one for the budding entrepreneur. “All I would do is drop by every QSR company’s office and wait. Apart from stress, they gave me nothing!” he recalls. But he kept visiting his prospective clients and nine months later that persistence paid off. Pizza chain, Domino’s handed out the food start-ups first order of 50-60 tonne of emulsion sauce and that’s when Bahl heaved a sigh of relief, “I said to myself, ‘Ab toh company chal jayegi’.” To save time on product development and commercialization, Bahl purchased a manufacturing facility spread across 2.5 acre in Neemrana, Delhi, for $3 million. The existing facility was adapted for Veeba’s utility, an ISO certification was secured, six food scientists and over 10 chefs were signed on and the fledgling brand was in business.  

“Within six months, we were carrying out commercial trials. We needed volume to justify the investment so we went after signing on more clients,” says Bahl. And this is where Veeba did things differently, it made product innovation the centre of its approach and its QSR clients seemed to be more than happy with it. For example, when KFC wanted to launch a strawberry-based beverage, it faced trouble in transporting frozen fruits in a timely manner. In order to eliminate the need for the fruit itself, Veeba created a strawberry sauce instead. “Such solutions help build trust in the minds of the customer,” says Bahl. Precisely, why customers are also willing to pay its asking price. “We can’t compete with the biggies on price. We were very clear, we will solve a problem for our customers and that’s what will get us business,” he adds. Something Jagmeet Singh Sabharwal a PE veteran and founder of TagTaste, concurs with, “Suppliers are critical to the success and growth of QSR. That’s what Veeba has exploited well”.

While Veeba succeeded in creating a niche for itself in the B2B trade, Bahl always wanted to see his products along the aisle of the supermarkets. He conducted his research on the retail segment and concluded that there was a lot of modern trade dependence and skewed regional sales in case of existing brands. To achieve a wider reach and a national presence, Veeba entered the consumer retail market through multiple channels in 2016. Mayonnaise and similar sauces sell more easily from modern trade counters but an attempt was made to push through general trade as well. “You will be surprised to know that today, 70% of retail sales are generated by general trade kirana stores and 30% are from modern retail,” he informs. “I don’t have a clear answer for the reason behind our good performance at the consumer retail end in such a short period of time,” he wonders out loud on being prodded further. Prateek Srivastava, co-founder, Chapter Five Brand Solutions attempts an answer, “This [sauces] continues to be an infrequent purchase category, and it has not come to a stage where you have brand loyalties. Customers do not know much about the products as not many of them have been explored.” This, he believes, helps Veeba since consumers are open to trying new products.

In fact, Srivastava explains that there are other triggers for the growing appetite for western sauces, dips, and dressings in India. “At QSR outlets you tend to taste new sauces. When you taste something new outside, the in-house consumption also picks up. The second factor is the popularity of recipe videos on platforms such as YouTube. When you experiment with international flavours, you are not going to make a dip or a sauce yourself. Third, Indians have a preference to combine familiar local dishes with continental flavours, for example, paratha with cheese or mayonnaise. Mothers are also more than willing to re-invent home cooking and condiments like mayonnaise and pizza sauces come in as a saving grace,” says Srivastava. 

And another reason why Veeba gets attention on a crowded shop shelf is its packaging. “I was astonished to find that no other brand offered flip-top caps. We introduced that with our bottles,” says Bahl. He believes modern packaging has helped the brand get noticed. “Some stores initially started placing our products on shelves reserved for exotic products. We had to tell them we are an Indian sauce company so keep the bottles on that side,” he laughs. Whether it’s modern packaging or a well-travelled customer base that’s open to new products, Veeba’s retail revenue contribution has gone from 10% within six months of the launch to 30% of Rs.101 crore today. “The market for these new sauces has not yet matured to a level of evolution where it becomes a market share game, it’s still a category creation game”.

Covering the base
However, for Bahl, rising customer attraction also means Veeba can be liberal with pricing. “While developing products for India, we thought we will give them the best products of global quality. We didn’t think of pricing them cheap — our products are 20-30% more expensive than competition,” he reveals. Veeba’s sauces are currently available in more than 350 cities and these include A, A+, B and B+ shops. In smaller towns, Veeba sauces are available in A & A+ shops. Like several other consumer businesses, Delhi and Mumbai are top cities for its products. As for products, Veeba has a total of 40 SKUs but its eggless mayonnaise is its best selling product contributing 22% to the total revenue. The sauce market is reported to be a Rs.2,000-crore market, of which mayonnaise makes up for a substantial Rs.1,200 crore worth of share. Dr. Oetker is the market leader in this space. Other sauces are still a developing category. Bahl claims the consumer portfolio is growing at over 100% every year. The overall sauce volume has gone up to 500-600 million tonne annually over the past three years.

But Veeba is confident that as Indian consumers find new ways to mix these condiments up with their regular fare, the demand is only set to rise. That explains why Veeba organises usage and training camps across the country. “We were surprised that even in smaller towns, consumers are keen to know how to use and eat sauces,” says Bahl. The company also launched its first TV commercial last year spending Rs.20 crore. It has managed to gather about Rs.100 crore in investments over the past five years from three investors — DSG Consumer Partners, Saama Capital and Brussels-based Verlinvest. Ash Lilani, managing partner, Saama Capital, says, “Our rationale to invest in Veeba was driven by Viraj’s focus on innovation to create premium quality products. We believed the market potential is huge and is currently ripe for disruption.”

Bahl considers all three of his investors more like partners. The company is in a growth phase and not making any money yet. “Our focus is not on profitability right now but on growing the category,” he affirms.  “We want to remain India’s fastest growing, and most loved-foods company.” The target is to touch Rs.500 crore in sales over the next five years and Bahl asserts that it’s a realistic target.