LT Foods: Growing Footprint
Q] ‘Daawat Quick Cooking Red Rice’ is the latest addition to the superfoods portfolio which you started building more than a decade ago. Please tell us more about this journey. Q] How is the market for specialty foods, be it convenience or health-based, growing in India? Q] What about ready-to-eat/ready-to-cook? Q] Coming back to superfoods, are there certain geographies or channels that witness higher sales? Q] In our previous interaction three years back, you said that e-commerce accounted for 6-7% of your total India sales. How has the number grown today? Q] Please tell us more about your marketing and advertising strategy. Daawat does a lot of TV and video, but that’s mostly for the everyday rice, I believe. Q] What targets has the company set for itself in terms of growing its market share and revenue?
The move was based on the insight that Indian consumers are becoming more aware and they want to try different products. Primarily, we have seen a predilection towards superfoods and ancient grains. More than 15 years ago when we did our first launch in the segment, which was Brown Rice, our biggest challenge was that it took a lot of time to cook. To solve this problem, we developed a technology wherein the cooking duration was markedly reduced without eroding the nutritional value of the rice. That’s the USP of LT Foods. As a result of that innovation, we are the market leader today with a 55 percent share of Daawat Quick Cooking Brown Rice.
This was followed by the launch of ‘Daawat Sehat’ which is a fortified version of rice. The response to it was also extremely encouraging, given that food fortification is also a focus area for the Indian government. We saw 20-30% growth in that segment since the launch. Last year, we launched the quick cooking black rice, and now red rice is the latest addition to this portfolio. We are evaluating more grains from across the country which tick all the boxes for speciality superfoods.
The superfoods portfolio is a huge focus area for us. It contributes around 5-6% to our overall India revenue. We continue to see a healthy growth rate of 15-20% on the entire portfolio. The relatively new launches are growing at a higher rate, though on a smaller base. For instance, black rice, which is a year old, is growing at around 76%. We hope to achieve similar growth rates for red rice in the coming months.
We have Daawat Biryani Kit, Cuppa Rice and Kari-Kari in that category. All three are performing well in the market, growing at more than 44%. We relaunched Kari-Kari with some improvements and new SKUs. It is available now on Indigo flights for their corporate travellers, and across airports, e-commerce, and modern trade. It is a super-premium snack, so we are focusing on pockets that give us high visibility and a good trial rate. Cuppa is the on-the-go version of it. We are making investments to further grow the capacity line. In India, we’re targeting channels like airports and railway stations where people do impulse purchases when looking for good quality, hygienic food options. The biryani kit is around 18 months old and is giving us good response on all e-commerce platforms, growing every month. Overall, we are trying to become a strong brand in the coming years and we are spending big on marketing to achieve this goal.
Yes, we largely sell through e-commerce platforms, with a focus on the top metro cities. People in these cities are more aware of their food intake and they also want to experiment with different greens and grains.
Presently, the revenue contribution from e-commerce (traditional e-commerce + quick commerce) stands at approximately 9 to 10%, showcasing a noteworthy increase. Of this, quick commerce accounts for about 4 to 5% and the remaining 4-5% comes from traditional e-commerce. The remarkable growth trajectory of quick commerce within its specific category is worth mentioning. We continue to assert our leadership positions mostly across all e-commerce platforms, reflecting our commitment to sustained growth and market prominence.
Digital is the main platform we use to market and promote our convenience and health-based products. We use targeted mediums like YouTube, Instagram, and other social media platforms. We have also started using influencer marketing, and are seeing great RoIs on it. We engage a variety of influencers, ranging from home cooks to regional and national chefs like Sanjeev Kapoor and Kunal Kapoor, and bring them to integrate our products into their recipes. It serves two purposes for us — that of generating awareness about our products, and giving the consumers recipes and solutions around them. Black rice kheer, one of the recipes created by Chef Sanjeev Kapoor with our black rice became very popular on social media. Today we are creating enough content to ensure that anyone searching for a black rice kheer on social media will see Daawat right at the top. We are the only YouTube channel in the category with 2 lakh followers.
Additionally, we do a lot of TV for brown rice and Sehat. The latter was launched with a television campaign and we have done multiple campaigns for brown rice over the years. There’s a certain threshold we target before deploying television as a medium. Until then it’s mostly Digital because it gives us better returns.
We are bullish on the Indian market, conducting multiple consumer researches to identify the next big launch and have a good pipeline of products. You will continue to see at least two or three new launches every year from the House of Daawat, which will focus on health and convenience for the next five years.
Last year, the brand grew in overall market share to more than 30%. In fact, in the last three years, we have consistently grown faster than the category at approximately twice the rate, which has led us to increase our market share q-o-q. With that kind of momentum, we are now targeting to increasing the share by another 4% in the next four quarters. In terms of overall numbers, we are targeting in the range of 17 to 18% growth in the next financial year.
Additionally, we’ve grown our household numbers from 38 lakh to approximately 49 lakhs in the last two years. So, our household penetration is growing at a rapid rate with all the strategies that we’ve deployed to expand and innovate our distribution. Our distribution is completely digitalised today. We are using ML to make faster decisions on how to expand it further. It crunches a lot of data from our salesforce automation tool and helps us focus on the right set of outlets where we can take action to grow further. This also gives us better returns on our BTL spends.
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