Doughnuts go desi
A growing Indian middle class that discovered pizzas and burgers is now taking to the soft, moderately-priced Western snack. International chains are promoting the category, and giving it a local twist. Himani Chandna Gurtoo reports.business Updated: Aug 06, 2012 00:52 IST
For 33-year-old financial planner Ritesh Khurana, the jalebi is passe.
“I shifted to chocolate first and now I buy doughnuts when I am in a good mood. I value new taste experiences,” he says.
This is welcome news for Dunkin' Donuts, the US-based eatery chain that recently launched its first two Indian stores in Delhi.The humble, ring-shaped fried cake, spelt "donut" in the US, is catching the fancy of Indians, aided by overseas visits that kindle new tastes.
Dunkin' Donuts, a division of Jubilant FoodWorks, plans 80 to 100 outlets over the next five years in India, starting out with metros and then fanning out.
Industry executives say there is no financial size but a middle class that runs into hundreds of millions and gorging everything from burgers to pizzas and cakes offers huge potential for a new category. The growing popularity of coffee, doughnut's mate, is also considered a good growth sign.
“The response to the product has been excellent,” said Dev Amritesh, president & chief operating officer of Dunkin’ Donuts India. “The brand in India occupies a sweet spot between cafés and quick service restaurants, as it offers elements of both.”
The US chain spells competition for Singapore-based Mad Over Donuts (MOD), dubbed India’s first doughnut chain. Set up in 2008, MOD has thus far enjoyed a monopoly, though Swiss-based Donut Baker in Bangalore and Mumbai-based SH Donut Empire in the west have a presence.
“Our same store sale is growing 20% year-on-year and we see this improving further. But for us, journey was not very easy. That was the time when people literally asked what a doughnut is,” said Tarak Bhattacharya, COO, Mad Over Donuts.
MOD promoted doughnuts as a product, and after a very cautious 12 outlets in the first two years, it has tripled presence across India in the past 15 months.
Pratichee Kapoor, associate vice-president at consulting firm Technopak, said the doughnut market was growing at 20% per year and the growth rate was expected to double in a few years.
“The reason for the latent demand for doughnuts is the sweet tooth of Indians, surging disposable incomes and their exposure to western snacks,” she told HT.
Anika Verma, a 19-year-old college student, said moderate pricing was a draw.
“Unlike the costly pizzas and burgers, a doughnut is priced at R30-50,” she said.
Donut Baker and SH Donut Empire have also drawn up aggressive plans, while Singapore-based Donut Factory is planning a re-launch.
But the biggest brand challenge to them all could come from US-based Krispy Kreme, which flagged off India plans barely a week after Dunkin' Donuts set up shop.
“Coffee and doughnuts as a category has huge potential in India and we expect the market to grow quickly over the next few years,” said Purwa Sinha, managing director of Bedrock Food Company,
Krispy Kreme's franchisee for northern India.
Like pizzas and burgers, the donut could also be going desi to woo Indian taste buds.
“There are a host of products that have been developed specifically for India,” said Dunkin' Donuts' Amritesh.
Local bakeries are not unduly worried because the category is growing.
“We are doubling our sales volume every year,” said Irani, whose Pune -based Donut Magic bakery plans to add five outlets outside the home base.