When MNCs are deep-freezing yogurt brands, home-grown start-ups are churning it up big

Home-grown frozen yogurt start-ups, including Cocoberry and Yogurt Bay, are preparing to raise fresh capital at a time when MNC brands are on the verge of putting their Indian operations into the deep freeze.

Indian players have been able to sustain business through lower costs by local sourcing of raw materials and equipment, unlike MNC brands, such as US-based Pinkberry and Red Mango, which rely on expensive imports.

As a result, market leader Cocoberry with 31 stores is all set to receive its second round of funding of about ₹6 crore from US-based Henry Klein’s fund — Cherry Capital.

Rahul Deans, CEO, Cocoberry Retail, said, “Henry Klein invested in Cocoberry in 2011 and is now ready to infuse fresh equity and increase his stake to 74 per cent with a second round of about ₹6 crore through a special purpose vehicle in Mauritius. We are cash positive and profitable at the store level today after starting out six years ago.’’ The balance stake in Cocoberry is owned by its promoters (GS Bhalla and his family), Brand Capital and certain HNIs (high net worth individuals).

Yogurt Bay, promoted by entrepreneur Robin Chatterjee, is getting ready to invest more before approaching PE funds for fresh funding. Last year, the Mumbai-based family of Pittie Group picked up 50 per cent in Yogurt Bay.

Aditya Pittie, belonging to the Pittie Group and now CEO of Yogurt Bay, said, “In the next three-six months, I would be increasing my stake by another 10 per cent and investing another crore into the company. Roping in PE funds would happen only after we have reached about 20-25 stores. For the next round of funding, we have valued Yogurtbay at ₹10 crore.” Of the 20-odd frozen yogurt brands, most of the MNC ones have been forced to scale down operations. US-based Pinkberry and Red Mango as well as Korea’s Yogurberry have reduced their store count due to high costs.

However, it is local sourcing of ingredients and equipment that has made players like Cocoberry survive and even acquire assets of some of the distressed players.

“MNC brands depend on imported raw materials that are subject to high duties. They believe in American costs and Indian revenues which does not work,’’ said Deans.