iD Fresh eyes US relaunch and possible M&A in the region – DigitalSevaa.Com (Follow us for latest Digital Marketing Trends,Tips,Products and More)

Bengaluru-based ready-to-cook brand ID Fresh Food is looking at strategic acquisitions in the US as it plans on re-entering the market with improved product and packaging. The company, most known for its ready-to-cook batters, is also on the lookout for a country head for the US to oversee its expansion plans in these markets.

“We are looking at acquisition targets in the US market which can offer us manufacturing capability, technical know-how, access to market and a team,” PC Musthafa, Founder and CEO of iD Fresh Foods, told YourStory.

He added that the company was evaluating target companies with revenue of $5 million to $10 million with product adjacencies. This would include brands in the US known for their ready-to-cook range.

The company is set to announce a country head for the US soon who will drive the expansion. “We thought that we needed an experienced entrepreneur to lead the market. A person who is of Indian origin, has worked in the US for a while, built a business from zero to X, and now wants to become an entrepreneur..They can hire their own team for the US market,” says Musthafa, adding that this would be the right approach before the brand targeted the market at scale.

The Premji Invest-backed company—which has raised $119 million across multiple rounds of equity funding—is looking to fund its expansion from its books, with the target of clocking Rs 700 crore in revenues for FY2024 as compared to Rs 420 crore in FY2023.

Registering a global footprint

The company, which has a strong presence in India, UAE, Saudi Arabia, and Oman, is also planning on starting operations in Qatar, Kuwait, and Bahrain by end of July. Apart from its relaunch in the UK and the US, it is also planning to launch in Southeast Asia with its entire range in Singapore over the next year and half.

“Expansion for us has three aspects–one is to penetrate existing markets, launch new products and geographic expansion,” says Musthafa.

For these regions, iD fresh will launch more packaged food products like parottas that have a longer shelf life, as per Musthafa.

It operates five batter manufacturing plants including one in the UAE and four in India, across Anekal (Karnataka), Delhi, Mumbai, and Hyderabad. The company plans on opening manufacturing facilities in other global markets over time.

Back home, iD Fresh is also expanding into North India where it does not have a strong presence yet, starting with Delhi and expanding to Chandigarh and Agra.

The brand also launched a clean-labeled bread in Bengaluru, apart from its offerings of batter for idli-dosa, vada, paneer, curd, parotta, chapatis among others.

According to an estimate by global professional services firm Alvarez and Marsal, the branded packaged batter market is estimated to be between Rs 600 crore to Rs 700 crore as of FY2023, making up less than 10% by volume penetration of the overall batter consumption in the country.

So for iD Fresh, expanding its market beyond India will help increase its total addressable market or TAM.

“Categories of fresh packaged food like batter and parotta are transitioning from unpackaged to packaged, and it is a sustainable long-term story. We have previously seen brands like MTR, Haldiram catering to the Indian diaspora and growing in international markets,” Rishav Jain, Managing Director, Consumer and Retail Lead at Alvarez and Marsal told YourStory.

Transitioning from family run to fully fledged business

For iD Fresh, expansion also equates to evolution—as the company progresses to becoming a professionally managed entity from a family-run businesses.

“Previously it was mostly me and my cousins…with Premji Invest coming on board in 2017, we decided to bring in a more professional team. Over the last few years we have built a strong CXO team and a CHRO is all set to join us soon,” says Musthafa.

The key appointments iD Fresh has made at the leadership level include Pavan Kumar BVS, Chief Business Officer appointed in 2019, who joined the company from dairy company Danone; Rahul Gandhi, Chief Marketing Officer, who joined the company in 2020 from HT Media; and Jaipal Singal, who joined as CFO in 2020 from online furniture brand Urban Ladder.

The company also appointed GLN Murthy as the Chief Manufacturing Officer in 2021, Siddharth Saxena as Chief Product Officer in 2023 and Enakshi Dasgupta, Head of New Product Development in June, 2023.

“We have kept a reasonably good pool for ESOPs–close to 12.5%–and we are using that to recruit, reward and retain the right talent,” says Musthafa. He adds that most of the CXO appointees join as founder-employees as they see potential in the company.

By the numbers

iD Fresh Foods clocked in losses of Rs 70.37 crore on a consolidated basis for FY2022, as per filings with the Registrar of Companies. The company is yet to file earnings for FY2023.

“If I were to cut down on marketing spends from 14% to 8%, that itself will give me a double-digit EBITDA. For core products in core markets like Bengaluru and Pune we are double-digit EBITDA profitable. However, we are yet to turn profitable in our new markets,” says Musthafa. He adds that the company is funding its expansion from profits from other markets and follows a negative working capital model with its cash-on-delivery business.

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