This week, Future Startup caught up with Tanvir Haider Chaudhury, CEO of Kazi Food Industries Ltd, one of the fast-growing CPG companies in Dhaka, about Kazi Farms Kitchen, the frozen and fast food brand of Kazi Food Industries, and the future of frozen food and ready-to-cook food market in Bangladesh. We talked early days of Kazi Farms Kitchen, how it has grown from a tiny operation to the undisputed market leader in the frozen food market within a few years and built the largest fast food restaurants chain in Bangladesh, the dynamics of frozen and ready-to-eat and cook food business, Kazi Farms Kitchen’s ambition and much more.
Thank you for agreeing to this interview. First of all, could you please give us an overview of your frozen food business as well an overview of the industry? How big is the market, annual growth etc?
Tanvir Haider Chaudhury
We started our frozen food business about four and a half years ago with processed meat products like sausages, nuggets and meatballs and so forth. At that time, our understanding was that this is a nascent market - it was about 150 crore for the entire market - and there is an opportunity to build a consequential business. Although we started with meat products, very soon got into other flour-based frozen food items like frozen parathas, samosas, etc.
We now have a comprehensive range of SKUs ranging from meatballs and sausages to various types of samosas, singaras, dalpuries, alupuries, keema parathas, and so on. We have also expanded into shrimp based products such as shrimp nobashi and a long range of other items.
At Kazi Farms Kitchen, we’ve also franchised out the brand to small franchisees who have small fried chicken shops using our brand. Just about four years ago, October 2014, we launched our first franchise outlet of fast food, basically a small scale QSR, quick service restaurants, which serves basic fried foods like fried chicken, drumsticks, and same sausages, meatballs and nuggets as our frozen line. But they are fried and served to you. You can also buy frozen food and our ice-creams from these outlets.
We now have about 130 active outlets across 20 cities in Bangladesh. 60% of those in Dhaka. 21/22 in Chittagong. Rest is in other urban areas.
We went from basically zero in 2014 to 41 crore in sales in 2017. This year (2018) we are expecting to do somewhere north of 60 crores. The growth rate for us is about 43%. As of now, we are outpacing the industry growth by a good margin.
The industry is also growing very fast. Our understanding is that the industry is growing 15-16% yearly. There are other players in the industry obviously. Many of them have a comprehensive range of SKUs as well. But there was no clear category leader at that time. We took it is as an opportunity to be a category leader. The way coca cola means soft drinks and honda means motorcycle etc. There was an opportunity for a brand to come and be synonymous with frozen food. That's what we’ve tried to do. We already had the infrastructure from our ice cream business. We had depots and cold storage arrangement across the country. We could piggyback on that and make our products widely available. It worked to our advantage.
We consciously named it Kazi Farms Kitchen after our parent company. The parent company itself is one of the largest companies in the poultry and poultry-feed sector in Bangladesh. It is also one of the most respected companies in the market. People trust the brand and we wanted to leverage that and take it further.
As I said, we launched in 2014. Within a couple of years, we overtook other players who were dominating the frozen food market at that time. By 2017, we have become the undisputed number one in the country. This year we are leaving the competition far behind. We’ve also entered into dry fish, jams, jelly, and few shrimp items.
We also grew the franchise business pretty quickly. It has been a huge success. No other Bangladeshi company has been able to grow its network quite so fast. The only other company that has done well in terms of growing their network quickly is obviously CP. CP has done well. There was a point of time when they had over 270 outlets. Right now what we hear is that it has come down to 182 outlets because of various issues. I mean it is difficult for many franchisees to sustain themselves because they come into this business without knowing what is expected of them. There are various things happened in terms of city development authorities closing down certain outlets because they did not have proper validation and so on.
If we continue our growth at the rate we are growing now, we should be the biggest franchise network in terms of the number of outlets in Bangladesh very soon. That's where we are.
If you look at the entire market, it should be north of BDT 260 crore by the end of this year. Still not a huge market but it is growing at a very fast rate.