The ‘magic’ in Hindustan Unilever’s Knorr Soupy Noodles and some of the ‘yum’ in Pizza Hut’s pizzas have their origin in homegrown and still anonymous enterprises.
For a few years now, small and medium enterprises (SMEs) have played a key role as suppliers to retailers who largely depend on private labels to drive margins. But more recently, in a reversal of roles, some major brands have also hired private label suppliers.
Retailers such as Big Bazaar, Reliance, Aditya Birla etc are targeting at least 35 per cent sales from private labels and contract out manufacturing to SMEs. Recently, HUL roped in Magic Foods India as a supplier for its Knorr Soupy Noodles in the southern market. Magic is a supplier for private labels owned by Big Bazaar, Aditya Birla, Reliance, Spencers and others. “HUL is a new client, we joined them two months back, however we have been supplying them for the last 18 months on a trial basis,” said Anita Gupta, managing director, Magic Foods India.
Yum Brands (which operates Pizza Hut, KFC and Taco Bell), and The Global Green Company (the foods division of Avantha Group), roped in Indira Foods, which first started supplying tomato-based products to Big Bazaar, to supply tomato paste.
“Our quality is on a par with any other supplier,” said Vijay C, partner, Indira Foods.
Increasingly, companies are spending more on building brands. “We have people who have worked with companies like Marico and Coke, and are able to add value to our vendor partners in setting processes that enables them to move up,” said Devendra Chawla, head, Private Brands, Future Group.