No threat from FDI in food biz: RS Sodhi

Retailer media caught up with RS Sodhi, Managing Director of Gujarat Cooperative Milk Marketing Federation (GCMMF), the largest food company of India, which markets the famous Amul brand of milk, milk products and other food items. In words of Sodhi, the kind of business he deals with is C2C (Cow to Consumer) what differentiates this business from rest is the supply chain which is owned by 3.5 million farmers. They are not only producing milk in villages, but know how to process it and merchant it to millions of shops in India.

Elucidating on FDI policy in food retail, he said that FDI is more than welcomed in this segment until the raw material is sourced locally rather than being imported from elsewhere.

Excerpts:

Government has given a nod for Foreign Direct Investment in Retail. In ligh of this policy change, how do you analyse future of food retailing in India?

From what I have understood, FDI in food market is that anybody can market food product, investments are required. But it doesn’t mean you have to import food products from outside. Foreign brands can come in India; source raw material from India can retail it in India or abroad with their brand name, which is welcomed. Since this will bring investment into the organized food business, it will generate more returns for farmers. From perspective of farmers, it is good. Also, from consumer’s perspective, FDI in food is good as they will enjoy latest products manufactured using latest technologies.

Considering these benefits, we welcome this step. But the only thing is that food marketing or raw material or food products should be sourced locally and not imported from somewhere else.

According to you, what are the latest trends in food retail?

As far as food market is concerned, it is growing at tremendous rate. Because with more disposable income and rising urbanization and people looking for more and more convenient products, we have seen that branded food products are growing at a rate of 15 to 50 per cent on the type of products which we are handling. The potential in food products is tremendous. We have never seen such type of growth and I don’t think there would be any recession.  

What are the important factors in food retailing that one should look at?

What is required in food products is you have to see that the food product has to be tasty. In this segment, taste comes first health comes later. Then you have to see that average Indian is able to afford it. If you operate at a scale such as a coffee for Rs 100 at airport, you will find very few consumers, but if same coffee is sold at a shop for Rs 20 or Rs 30, there will be queue for that. So if you come up with healthy yet tasty product at affordable price, then sky is the limit.

Being a retail veteran, what mantras of success would you like to share with other food retailers?

The first mantra I think of is that one should see if the suppliers and consumers are happy. Then only one can succeed because consumers and suppliers are very crucial stakeholders in any food business.

Second is that one needs to look for efficiency and scale which play as important factors in a country like India when one wants to have sustainable business.