The article is contributed by Mr. Shubham Khanna, Founder & CEO, Liquii Beverages Pvt. Ltd.
With a growing population, there is also a rise in concern over healthy foods and drinks. People are now more aware of the food and drinks they are consuming. This has led to Food and Beverages companies working on their toes to deliver the best product they can. Consumers these days are well aware of the products they are consuming, they are in regular touch with the health factors of the food delivered to their doorstep. Food and Beverage companies not only have to look out for their competitors but face other challenges too. Some of the challenges that these companies have to go through are listed below.
Innovation
To retain their position in the market or to sustain the cut-throat competition, it is likely that companies have to go through innovative ideas. The market is full of Food and Beverage Companies offering products that are tempting enough for consumers to go for. In this rush to get creative, food and beverage companies have to come up with something new. With so many different products available for purchase across a multitude of channels, product innovation and differentiation is getting increasingly important. For one, plant-based and fresh Products disruption will continue to increase. Demand for Fresh substitutes has rocketed recently, and consumers are consuming more plant-based and Fresh alternatives. The key to longevity is the need to accelerate new product development and adapt & improve products in correlation to thorough R&D.
For any company to achieve success and growth, it has to check all the boxes of striking the right concept. Most of the Food & Beverage companies fail because of the lack of awareness about the concept. Nearly 60% of the startups fail around the first year of their inception. But if you have done the right research about the market, and focus on disruptive ways to integrate the right balance between functionality and long-term brand vision, you will succeed. Products are bought and not sold, and consumers have now become aware of the social and lifestyle impact of the brands. It’s important to build a strong community of loyal customers who not only like the product but also align their values to the brand’s vision.
Customer Centricity
With the internet playing a dominant role in everyone’s life, consumers are well aware of what they are being offered on their plates. Consumers are becoming savvier, more informed, and are demanding change. To that end, customer-centricity has to be at the heart of every F&B company. The companies should not only keep the safety of consumers in mind but also their mindset regarding the environment. To better meet the demands of the target market, it is imperative to tap into customer insights like behavioral segmentation and product preferences and centering the innovation efforts around them. That doesn’t just mean the product itself, but also the end-to-end customer experience from shopping to eating, to delivery to the doorstep
Waste Reduction and Sustainability
Reducing food waste is imperative not just to cut down on unnecessary costs, but also to reduce planetary impact and optimize organization sustainability. In addition to that, the consumer is also becoming more aware and concerned about the planet, so they are opting for sustainable options. Sustainability issues must be brought to the forefront. In particular, addressing the food system to eliminate food waste and build a better food system for everyone. One of the key pillars of sustainability is to fight food waste by finding a home to “bad-looking but not bad-quality ” fruits that otherwise get discarded. Through years of research, it’s been proved that it’s not the food that’s bad but it’s the food system.
Pandemic has turned the world upside down. No one has ever expected the scale of impact the pandemic would cause. The Food and Beverage sector has faced the worst burn of the coronavirus. Not only has consumer demand decreased but it has also hit the manufacturing and supply chain. Ingredient sourcing with farming and agricultural activities have also seen a great loss due to pandemic. Consumers still refrain from ordering food from outside. While the onset of vaccination helps reduce some of these challenges, the aftermath of the pandemic is likely to remain.
Your favorite carbonated sugary beverage and 6th largest military in the world? What? It sounds pretty unusual. Doesn’t it? It all started in 1959 with the then Soviet leader Nikita Khrushchev going gaga over a cup of Pepsi offered to him by the Vice President of the Pepsi company Donald Kendall as a marketing tactic. And after decades, this resulted in the Soviet Union’s trading Pepsi Company military equipment in exchange for huge stock of the sugary beverage worth $3 billion. It made Pepsi the sixth largest military in the world. Now it’s believable, isn’t it? But what led the Soviet leader to taste a sip of Pepsi?
How Pepsi Became The World’s 6th Largest and Powerful Military
How did Pepsi catch the attention of the Soviet Leader?
American President Dwight Eisenhower and Pepsi
In 1959, American President Dwight Eisenhower wanted to spread and display the American culture and the powers and blessings of capitalism to the entire Soviet Union. So on the 24th of July, 1959, the American Government arranged the American National Exhibition in Sokolniki Park in Moscow. This exhibition was an attempt to display American art, culture, fashion, and futuristic technologies. This way, it was also a method of promoting its products. The then-American Vice President Richard Nixon and Nikita Khrushchev, the leader of the communist Soviet Union, attended the function.
At the opening ceremony, a heated argument took place between Nixon and Khrushchev about capitalism and communism. It came to be known as the very famous Kitchen Debates. This event became a matchstick to light the sparks of the cold war between the U.S. and the Soviet Union. To cool things down and as a guerilla marketing gimmick, the Vice President of the Pepsi Company, Donald Kendall, stepped in and offered Khrushchev a cup of the thirst-quenching sugary goodness.
The taste of the refreshing beverage took the leader aback. So, he wanted to make a deal when the introduction of soda to the Soviet Union would be carried out. This argument was a carefully contrived plan put in execution by Kendall and Nixon to publicize Pepsi soda and make the Soviet leader drink it. The night before the exhibition, Kendall had a conversation with Nixon about staging an argument regarding whether he could use that opportunity to promote his company’s product and get it popular among the Soviet nations. It was a brilliant marketing gimmick that resulted in the widespread popularity of soda among the people of the USSR. That is how Pepsico stepped into this new market and was the first-ever western product to be introduced in the eastern bloc.
After decades of discussions and negotiations, deal finalization took place between capitalist America and the communist USSR But, the Soviet money was useless outside the Soviet Union and was not a recognized currency during those times. The value of the currency was under the domination of the Kremlin.
The business was decided to be conducted in an old-fashioned way following the barter system. Pepsi agreed to carry out business through the barter system by accepting a universal currency- Vodka! This deal proved beneficial for both parties as to the government-owned vodka. It was available in huge quantities. This way, it also made way for Pepsi, a non-alcoholic beverage set its foot into the alcohol industry as the sole importer of vodka into the States. Pepsi soda became a barter for Stolichnaya vodka, which became extremely popular in the States. In 1972, the establishment of the first Pepsi bottling plant was in Russia.
The business between Pepsi and the Soviet Union was booming. As a result, the palate of the Soviets had already made Pepsi their favorite carbonated drink. The demand for soda rose exceptionally in the Soviet Union. By the second half of the 1980s, the Soviets per year had consumed consumption of billion servings. In 1988, Pepsi became the first company to have received the payment for making a television commercial in the USSR. One such iconic commercial even starred the king of pop, Michael Jackson. More and more people started consuming delicious carbonated drinks. As a result, the demands were even increasing. Pepsi had, by now, about 20 bottling plants in the Soviet Union to keep pace with the ever-rising demand.
The Soviet Union attacked and invaded Afghanistan in 1979 and started a war that continued for ten long years (1979-1989).
The Soviet-Afghan War turned America cold and bitter towards the USSR, and the Americans started discarding and boycotting Soviet products, including the Stolichnaya vodka.
Its sales dropped extensively in America. Seeing this, Pepsi no longer wanted to supply its product to the USSR in exchange for vodka. The economic and political conditions in the USSR during that time were grim and not so pleasant.
But the Soviet Union was desperate to hold on to the deal and continue the import of Pepsi. They started thinking about how they would cover the total cost of $3 billion required to buy the stock of Pepsi soda.
After the cold war, the USSR had accumulated a vast amount of military equipment. So, they decided to forgo 17 submarines, a cruiser, a destroyer, a frigate, and some oil tankers and merchant ships in exchange for the $3 billion worth of Pepsi. It had no other option than to accept the deal because Pepsi did not want to suffer losses and lose the Soviet market.
Pepsi acquires a military status
It became a historical event that made Pepsi the sixth largest military in the world, during that time with all its newly acquired military equipment. But all this military equipment was in poor condition, making Pepsi not prepared for any war or battle. So, it was useless. The submarines were damaged and covered with rust. They needed immediate repairing. The ships were not in good condition. Also, the American government was not very supportive of the fact, that a beverage company was the sixth-largest military in the world. Puzzled with the thoughts of keeping this useless military equipment, Pepsi navy sold all of them to a Swedish scrap recycling company to cover the cost of their soda shipment to the Soviet Union.
Conclusion
It was a very brief and short-lived moment for the Pepsi company but a very historical one. However, the USSR disintegrated in 1991, which gave rise to 15 different countries. And it became difficult for Pepsi to conduct business with so many countries instead of one, like before. Seeing this, Pepsi’s rival Coca-Cola swooped right in and entered the beverage market. Pepsi’s sales started dropping. It lost its number one spot in Russia. As a result, Coca-Cola emerged as a replacement. Which gets us to think what would have happened if the Pepsi navy still had the military equipment instead of selling them? Would it have waged a war against Coca-Cola?
In 1989 Pepsi got the 6th largest military in the world.
Did Pepsi own submarines?
Pepsi owned 17 submarines, one frigate, one cruiser, and one destroyer in 1989.
How did Pepsi have the 6th largest military?
In 1989, Pepsi and the Soviet Union signed a remarkable deal. The Russians gave Pepsi 17 submarines, one frigate, one cruiser, and one destroyer for $3 Billion worth of Pepsi. This made Pepsi the sixth largest military in the world.
Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved byDevyani International.
RJ Corp, the Indian billionaire Ravi Jaipuria’s company, owns Devyani International, which was founded in 1991. Jaipuria’s net worth is $3.5 billion, and he named the company after his daughter.
KFC and Pizza Hut franchises account for the majority of Devyani International’s revenue. Despite the once-in-a-century epidemic, these two franchises have helped the company grow.
As of May 2021, Devyani International, the world’s largest franchisee operator of global restaurant franchises Pizza Hut, KFC, and Costa Coffee, has filed for an initial public offering (IPO) to generate close to INR 1,400 crore, joining the QSR IPO craze.
The offer, according to DRHP, includes a fresh issuance of INR 400 crore and an Offer of Sale of up to 125.33 million equity shares by Investor Selling Shareholder Dunearn Investments (Mauritus) Pte. Ltd, a wholly owned subsidiary of Temasek Holdings, and Promoter Selling Shareholders RJ Corp Ltd.
About Devyani International and How it Works
Devyani International Limited, an associate company of RJ Corp, PepsiCo’s largest bottler, with interests in beverages, food, dairy, healthcare, real estate, and education, is the fastest rising, most financially viable player in the Indian retail F&B sector, with 500+ restaurants across the Indian subcontinent, Nepal, and Nigeria.
As of March 31, 2021, Devyani International is India’s largest Yum Brands franchisee and one of the country’s largest network of quick-service restaurant operators, with 655 locations in 155 cities.
DIL has created its own brand Vaango – a world-class south Indian QSR chain with intentions to expand across India, based on its illustrious track record and competence in the QSR category. DIL also operates Food Courts and Lounges at the airports of Delhi, Mumbai, Hyderabad, Raipur, Srinagar, Lucknow, Trichy, and hospitals and shopping malls. The Grid Bar, Katism, Foodies Bar, Delhidare Devils, Tea Cups, Masala Twist, and other ‘Own Brand’ restaurants can be found in the Food Courts.
Devyani International – Name, Logo and Tagline
Ravi Jaipuria, the founder of Devyani International, named the company after his daughter, Devyani.
Devyani International Limited’ s Company Logo
Devyani International – Mission and Vision
Devyani International Limited’s mission and vision statement says, “To be a people centric, customer focused and process driven operations, striving for excellence day in day out with a beat year ago and turnaround mentality”.
Devyani International – Founders and History
DIL is a non-govt. corporation that was founded on December 13, 1991 by Ravi Kant Jaipuria.
Ravi Kant Jaipuria, Founder of DIL.
In 1991, Ravi Jaipuria founded Devyani International Limited, which is an Indian food and beverage company, based in Gurugram, Haryana. There are 1420 people working at Devyani Internationals.
Devyani Internationals is one of Pizza Hut’s largest franchisees in India. In June 1996, Pizza Hut opened its first location in India, in Bengaluru. This was the first multinational restaurant chain to join this sector, and it is recognized for helping to establish the Indian pizza market.
With the opening of its first Pizza Hut store in Jaipur in 1997, Devyani International began its partnership with Yum. It had 297 Pizza Hut locations, 264 KFC locations, and 44 Costa Coffee locations in India as of March 31, 2021. Between March 2019 and March 2021, the number of core brand stores increased by 13.58 percent, from 469 to 605. According to DRHP, the company employs 9,356 people.
Through an association with Whitbread Group UK, Devyani Internationals brought a fresh gust of coffee aroma into the country in 2005. Costa Coffee has become a darling among India’s coffee connoisseurs. Despite being a relative newcomer to the business, Costa Coffee has established a strong presence in the NCR, Bengaluru, Jaipur, and other cities, with over 80 locations.
It is designated as a ‘company limited by shares ‘ and is a public unlisted corporation. The authorized capital of the company is INR 12500.0 lakhs, with an 84.933334 percent paid-up capital of INR 10616.67 lakhs. The DIL’s most recent annual general meeting was held on August 10, 2017. According to the Ministry of Corporate Affairs, the company’s financials were last updated on March 31, 2017.
Devyani International Limited has been in the Manufacturing (Food products) company over the past 30 years, and the company is still operational. Rashmi Dhariwal, Vishesh Shrivastav, Varun Jaipuria, Som Nath Chopra, Virag Joshi, Ravi Gupta, Raj Pal Gandhi, Ravi Kant Jaipuria, and Devyani Jaipuria are the current board members and directors.
Devyani International – Revenue and Growth
DIL presently owns and runs 297 Pizza Hut outlets. As of March 31, 2021, the company was also a Costa Coffee franchisee, with 44 Costa Coffee outlets and 264 KFC stores. DIL owns Vaango, Food Street, Masala Twist, Ile Bar, Amreli, and Ckrussh Juice Bar, and has 692 outlets in 26 Indian states, as well as Nepal and Nigeria.
DIL’s core brands (India and global) amounted to 94.19 percent of its operations revenues in FY21, while delivery sales amounted for 70.20 percent of revenues, an increase from 51.15% in FY20. Despite the epidemic, the company has worked to expand its shop network, with 109 new locations opening in the previous 6 months across its core brand business.
The core brand stores grew 13.58 percent from 469 to 605 shops between March 2019 and March 2021, and the firm credits its success and continued growth efforts to its 9,356 workers. Devyani Internationals is the largest QSR firm in India to be featured on Swiggy and was one of the top QSR companies in India to be registered on Zomato in 2019 and 2020.
"India’s 100 Best Workplaces for Women 2020" by the Great Place to Work Institute, India
2019
Pizza Hut and KFC were recognised among the “Most Trusted Brands” in Food Services category in Brand Equity Survey conducted by The Economic Times.
2018
“Great Workplace” by the Great Place to Work Institute, India, Costa Coffee (T3 International Departure Pier) was awarded the Certificate of Excellence for “Outlet of the Year- F&B (International)” by Delhi International Airport Limited at the IGIA Awards 2018, Grid Bar (T3 Domestic Departure Food Court) was awarded the Certificate of Excellence for “Outlet of the Year- F&B (Domestic)” by Delhi International Airport Limited at the IGIA Awards 2018.
Devyani International – Competitors
Top Competitors of Devyani International are as follows :
The business’s DRHP, which was filed with SEBI, clearly reveals that COVID-19-related concerns are the most pressing for the sector and the company. Due to a considerable drop in footfalls as a result of COVID-19 regulations, Devyani International permanently closed 61 locations under its major brands in FY21.
The Devyani Iternational revenue has also suffered as a result of falling footfalls, with in-store dining revenue falling to 29.8% from 48.85% in FY21. The impact of COVID-19 is expected by the company to persist, as footfall and sales are still being impacted by the second wave of COVID-19. As the company explains in its DRHP, COVID limits have had a direct impact on the business’s capacity to manage product inventory, resulting in considerable inventory write-offs, with the majority of the inventory consisting of perishable components for direct purchase.
The firm also notes that if the second wave worsens or is not controlled in a timely manner, it may be unable to meet the increased development obligations, further adjust these arrangements, or operate our stores economically, if at all. This might have a variety of repercussions, including the termination of Yum’s different agreements, which would have a material negative impact on the business, results of operations, and financial condition if they are unable to renew them.
Devyani International has filed a draught red herring prospectus (DRHP) with market regulator SEBI to undertake an initial public offering (IPO) of INR 1,400 crore (IPO). KFC, Pizza Hut, and Costa Coffee are the company’s major franchisees. Investor Selling Shareholder, Dunearn Investments (Mauritius) Pte. Ltd, a wholly owned subsidiary of Temasek Holdings, and Promoter Selling Shareholders and RJ Corp Ltd would issue new equity shares worth INR 400 crore, as well as an offer-of-sale (OFS) of up to 12.5 crore equity shares.
The losses indicated from FY19 to FY21 were mostly attributable to increased operational expenditures incurred as a result of the company’s store network development. DIL, on the other hand, has not been able to recoup these costs. In FY20, their total revenue from operations climbed by 15.7 percent year over year.
In FY19 and FY20, Devyani International had negative cash flows (cash outflows) of INR 17.29 crore and Rs 13.47 crore, respectively. In FY21, the company received INR 26.73 crore in cash. The company states in its DRHP that it may experience negative cash flows in the future, which could have a detrimental impact on its operations and growth objectives.
Devyani International intends to maintain its growth potential in the future by building new stores every year. In the future quarters, this will result in a further increase in operating costs and other expenditure. As a result, DIL anticipates losses until the new stores reach maturity. The net profits from the IPO will be used to pay down a major percentage of the company’s debt. This would allow them to use their internal accruals (or operating profit) to fund investments in business sustainability and diversification.
Devyani International – FAQs
When was Devyani International Limited founded?
DIL is a non-govt. corporation that was founded on December 13, 1991 by Ravi Kant Jaipuria.
Where is Devyani International Limited headquarters?
Devyani International Limited is headquartered in Gurugram, Haryana, India.
Is Devyani International Limited a private company?
Yes, DIL is a private company.
What sector does Devyani International Limited operate in?
Spokesperson Mr. Mihir Mehta, SVP of Ashika Capital shares his insight on the Product Development and Innovation for F&B Industry as follows –
In one of my previous articles I had mentioned that “Roti, kapda aur makaan” are probably the most basic human needs and in the order as well, Roti takes precedence over other needs. Since centuries, the F&B business has been conducted in various forms, shapes & sizes and has seen significant phases of evolution in the last few decades. In my humble opinion, the business of food is quite interesting because not only is it a renewable/incessant business, it is equally dynamic and challenging and mostly on a daily basis. Some recurrent challenges like maintenance of quality & hygiene, product storage, supply chain management etc. are a part of the daily challenge diet of a F&B entrepreneur. That being said, F&B as an industry has seen considerable experimentation & implementation when it comes to aspects like products, distribution models, business models, supply chain management & storage etc.
In terms of product development & innovation, the F&B industry offers an extensive opportunity especially in a country like India wherein the diversity of cultures, cross-cultural practices, cultivation & inclusion of diverse raw materials, rapid adoption of novel products etc. propel the need and pace of product development.
Mihir Mehta, SVP, Ashika Capital
In my humble opinion, F&B players could look at some of the under-mentioned thoughts in order to focus on consistent and sustainable product development –
Discovery of unexplored cuisines at scale
Undoubtedly, India is a land of many cultures, practices & food cuisines. At the time I invested in an emerging food services entity The Bohri Kitchen, I was pleasantly surprised to see the reception garnered by the brand in a short time. One tangible reason behind the virality of this brand was the resurgence of a cuisine that had been limited to the households of a specific community. The conceptualization and scaling of Bohri food products created a whole new ecosystem of raw material vendors, kitchen staff, food experts etc. for this cuisine. In the past as well, the growth of brands like Rajdhani, Soda Bottle Opener Wala etc. is a testament to the success of a novel or latent cuisine when built to scale.
Creating a robust R&D ecosystem within the organization
While the larger F&B operators do spend considerable resources on creating and strengthening their R&D teams, most mid-sized players have not been able to supplement their R&D in the most effective manner. More often than not, we see that newer entrepreneurs and entrepreneurs who have achieved a comfortable scale, are focused solely on optimizing their supply chain for the existing products and achieve a competitive cost profile. Quite obviously, it is a necessary and the prudent thing to do but de-prioritizing new product research & innovation in product development has long-term consequences in form of plateauing demand, decline in brand recall, slower inorganic growth etc.
Implementation of an actionable customer feedback channel
Well, this may sound like a normal thing to do in order to spur efficient product development but we are often surprised to see inaction & unorganized processes on this front. Yes, it is true that different customers carry different opinions about the products as well as processes and it may get difficult for F&B operators to identify & assimilate the right feedback. However, it is essential that companies follow a streamlined process to receive and implement customer feedback in order to maybe run trials of new products and have a set of customers who could be the right sounding board when it comes to new product development. The significance of a customer sounding board is undebatable and having a consistent & reliable sounding board is critical to ensure that the product development process does not suffer slowdown at any point.
Jeenal Jain
