On an expansion spree

Monginis plans extensive penetration in India for 2012.
Zoher Khorakiwala

Monginis, one of the leading bakers in India, has planned big in terms of its presence and products in 2012. Monginis offers cakes, cookies, chocolates (gourmet), breads, buns, pizza base, and other bakery products, such as khari, toast, butter, etc.

Zoher Khorakiwala, CMD, Monginis, unveils his plans in a tete-a-tete with Gunjan Piplani.
 
Gunjan Piplani (GP): Please tell our readers a bit about Monginis – its inception, vision, product, price range and rationale behind the venture.
Zoher Khorakiwala (ZK): Monginis, as a brand, traces its roots back to the early 1900s, when it was a favourite with the Europeans in Mumbai. Little excuse was needed for the Englishman to pick up a Monginis cake whenever there was an occasion in his family. Run by two Italian brothers, Monginis was a must at every celebration. In the 1960s, Monginis was bought over by the Khorakiwala family and by 1971, the idea of having a nationwide franchise network and reaching out to customers in their neighbourhoods was born.
Today, Monginis has a 1,20,000 sq-ft ISO certified headquarters, the place where all the stuff is manufactured. It is the nationwide headquarters, to which all manufacturing and cake shop franchisees report. The Monginis headquarters is also a model bakery with state-of-the-art manufacturing facilities designed to produce a wide range of cakes, gateaux and pastries, tongue-tickling savouries and a variety of any-time snacks. 
Monginis headquarters has a well equipped lab and has gained the ISO 22000:2005 certification in the last two years for maintaining and assuring the best of hygiene and quality standards of our products and for our customers. In addition to the two manufacturing facilities in the suburbs of Mumbai, it has manufacturing units at Pune, Nasik, Goa, Surat, Baroda, Rajkot, Ahmedabad, Indore, Hyderabad, Bhubaneswar, Kolkata, Siliguri and Palanpur, which cater to 600 retail franchisees in 37 cities across India. 
Our product range can be broadly classified into short shelf life and long shelf life. The short shelf life products are sold only through the Monginis exclusive Cake Shops and include celebration cakes, pastries, savouries and breads, whereas the long shelf life products are sold in the retail outlets other than the Monginis Cake Shops and include packaged cakes, toast, khari and cookies. In terms of price, it varies from as low as Rs. 380 per kg. to as high as Rs 750 per kg. 
 
GP: What are your expansion plans?
ZK: Our first and foremost plan is to increase our presence in all the major cities in India, which will be our current focus. For this, we have worked out a low investment business model for those who are interested in becoming our franchisees. Growing in the e-commerce space, ie selling cakes online, catering basically to the gifting market, is also going to be our focus area.  
We further plan to introduce “Health Foods”, which is a small segment as of today, but we are optimistic about its future growth. We have already launched whole grain cookies and sugar free cookies. We are planning sugar free cakes as well.
Last but not the least, We plan to enter the higher price point segments with VFM offerings. As consumers are becoming more aware and therefore more demanding, they ask for products that they learn about through their friends, relatives, and colleagues or through the media like TV, print, internet or the ones they tasted while travelling to other cities/countries. The tendency to “experiment” has increased a lot, which was lacking earlier, especially in food products. We have already launched our “Inspiration” range of cakes, which are VFM at a price of Rs 750 per kg. We are planning on a range of cakes costing Rs 1200 per kg. We are ensuring that even at that price point, people find more into it as against the price they are paying.
 
 
GP: What are the business strategies adopted by Monginis to penetrate further into the market?
ZK: For market expansion, we are attempting to grow by increasing the market size for the cakes. Our TVCs are on air currently, propagating a message that even “pure vegetarian” cakes can be “tasty”. This TVC is based on a very strong insight. The TVC therefore revolves around a theme of “Pure Veg. Cakes” and is created in the context of a family celebration, which otherwise would remain incomplete in the absence of “Pure Veg. Cake”. Thus, it very effectively communicates a message to the vegetarian population that they can now enjoy scrumptious cakes without any guilt!
We plan to target penetration by increasing our reach. For this, e-commerce is a blessing in the disguise for Monginis. Retailing is a very tough and time consuming business. It would take years for any brand to cover a vast country like India. E-commerce has made it possible to increase our reach not only in India but in the entire world. Today, we are getting as many online orders for cakes from foreign countries as we are receiving from India.  
 
GP: What companies are you in talks with for the franchise model? Is anything that is on the verge of finalisation?
ZK: We are in talks with potential franchisees from Aurangabad, Kolhapur, Nagpur and a host of other cities to put up a manufacturing unit in each of these cities.
 
GP: What makes you to follow that route? What are the growth prospects?
ZK: Franchising is advantageous because the franchisee is a local; it involves a faster response time and ability to adapt to local tastes. Moreover, in whichever markets/towns we have entered, we have achieved market leadership position by having maximum number of exclusive cake shops.
 
GP: What is the number of stores that Monginis has? Do you plan to grow the number of standalone Monginis stores?
ZK: We have already crossed the number of 600 exclusive cake shops in India. We have plans to increase the tally still further and even have plans to aggressively enter other cities in India. 
 
GP: What are the requirements for opening a Monginis store?
ZK: A sound financial background is a must as the total investment required for a Monginis store is Rs 10 lakh, excluding the shop premises. The initial working capital should be of Rs 1 lakh to finance the stocks of around Rs 80,000 and a market credit of Rs 20,000.
Secondly, a professional background is required, ie an experience in dealing with the retail brands. He/she must have a necessary ability to run retail operations of reputed brands along with an understanding of and respect for the brand, concern for its image and compliances with its policies. Motivation, ability to recruit, manage and motivate staff are also a must, along with the ability to the MIS as desired by the company.
 
In terms of property, it should be well located in a high visibility area – station, market, main road, next to a very reputed crowd puller (like a mall). The dimensions should be having a width of 9 feet (1-2 feet for the back shelves; 2 feet for the CSPs; 2 feet for the counters; 2.5 feet for the customers and 1-2 feet for the self service shelves); minimum depth of 22 feet (8 feet for the cool counter; 5 feet for the normal counter; 2 feet for the normal counter for savouries; 2 feet for cash counter; 2 feet passage to go behind the counters; 3 feet for back storage and washing area); minimum height of 9 feet and a space of at least 5 feet between the shop and the main road.
 
The owner should have with him, all the necessary documents like sale deed, BMC approved plan, NOC from the society, etc and should maintain exclusiveness of the franchise and should display, stock and sell only the products manufactured and/or supplied by the company.  
 
GP: What is your growth plan for this year and expectations for next 5 years?
ZK: We have plans to maintain our current CAGR of 20 per cent per annum and cross a total turnover of Rs 700 crore per annum in the next five years. 
 

 

Zoher Khorakiwala
 
 
 
 
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