Sizzling business of French fries in India: Sales up 30% and fat margins

A market that's growing 30% annually, and can grow even faster, a business big enough to accommodate giant western MNCs and small Indian startups, a supply chain that allows mouth-watering margins to all players and a product that many consumers, adults or children, find addictive — selling frozen French fries in India is a sizzling business that's set to sizzle even more.

That's why Canadian giant MNC, McCain Foods, that sells one out of every three fries in the world, is so big on India. McCain sees a huge market. "Only 5% of Indian households and 20% of food service operators are currently buying frozen French fries. So we see a huge potential as in-home snacking grows by more than 20% among high-income households," said Vikas Mittal, MD, McCain Foods India.

Mittal's optimism is based on urban consumers happily buying frozen fries for Rs 180-200 a kg. Buying fries is part of regular shopping for 33-year-old Shivani Arora, for whom 1 kg of McCain fries is a must on her weekly shopping. "Snacks mean French fries for my kids," she said.

Arora and her ilk are in a market supplied by a wide variety of companies. McCain rules with a market share of over 90%. Other leading brands, from Sumeru to Pagro to Al Kabeer, get their labelling done from either McCain or regional players such as Coimbatore-based Golden Fries and Agra-based BB Foods. New players in the frozen foods category, from Premier to West Coast, are importing French fries from Belgium.

The Canadian company, catering to major food chains such as Kentucky Fried Chicken and McDonald's, plans to investRs 350 crore in setting up its third line for frozen processed foods in Gujarat. "We target to expand to cover 50,000 outlets spread over 80 large cities in the country by the year ahead," said Mittal.

The business is lucrative for every intermediary — from the farm to the table. Potatoes are Rs 7-30 a kg. It costs a small company Rs 50-60 to make a kg of fries, which it sells to large players for Rs 80; and customers happily buy good-quality fries at Rs 200 a kg. "From blanching a frozen French fry to serving it takes five minutes. So it makes sense to pay more to get a quality product which is crispy, 12 mm long and good to taste," said Prem Kumar Pogakula, chef at The Imperial, Delhi, who buys Lamb Weston fries.

And unless consumer taste changes radically, hundreds more tonnes of crisply cut frozen fries are destined to fly off retail shelves over the next few years.