If perishable items such as milk and bread can be sold at fast moving consumer goods (FMCG) outlets, why not branded apples? Adani Wilmar plans to sell its Farm Pik branded fruits at 200 grocery stores across Ahmedabad as a pilot, before going pan India. It aims to derive better margins from its horticulture business under subsidiary company Adani Agrifresh.
Angshu Mallik, COO, Adani Wilmar, said, “We want to go past fruit vendors into the general trade comprising grocery stores stocking FMCG products. There is no reason why branded apples cannot be sold as FMCG products even at kirana stores. It is a new experiment that we are doing in Ahmedabad.”
Adani Agrifresh has been more of a trading company all these years, importing fruits and sourcing from farmers in Himachal Pradesh and Kashmir. It sells almost 19,000 tonnes of fruits (apples, pears, orange, grapes and kiwi) to wholesalers across 40-odd cities.
Srinivasa Ramanujam, Business Head, Adani Agrifresh said, “To grow big in this business, we have to reach out to the retail trade and become more customer centric with our Farm Pik brand. Today, we want to try out the FMCG model by dealing with retailers directly, but a broken cold chain is a problem since fruits need refrigerated spaces.” The company sells its apples between Rs 40 and Rs 80 a kg to 60-odd fruit wholesalers, while vendors get huge margins charging Rs 130 to the end consumer.
While the company has spent Rs 200 crore towards building ‘controlled atmosphere’ stores from its collection centres in Himachal Pradesh from the time it entered the business eight years ago, providing the same infrastructure to ensure quality consistency for its range of fruits may not be that easy.
As Sumit Saran, Director, SCS Group, a company which delivers food marketing solutions, says, “Unlike FMCG products, fresh fruits are nature dependent and post harvest handling is critical to build brand equity which is based on product and quality consistency. Since fresh products are dependent on the cold chain, it is difficult to sell them like FMCG brands.”
In fact, profitability has not been consistent for Adani Agrifresh over the years. “Last year, we had sales revenues of Rs 160 crore and managed to make money off and on,” added Ramanujam.