BUSINESS OPPORTUNITY – TABLE SAUCES

Table sauce is a common condiment for a number of products such as bakery, Chinese food and fast food. It is typically used to add flavour or texture while cooking or dipping. Broadly, there are four categories of sauces

  • Tomato Ketchup & Sauce
  • Chinese Sauces
  • Pizza, Pasta & Barbeque Sauces
  • Mayonnaise and other bread spreads

Industry

The table sauce category in India, estimated to over INR 1000 crores is growing at over 20 per cent per annum[1]. Tomato sauce accounts for over 65% of the table sauce consumption, other categories (such as Chinese sauces, Mayonnaise), while relatively smaller in size are also growing rapidly.

Innovation in variants and packaging is the key driver for the growth of this industry. For example Nestle has introduced a number of variants of its tomato sauce (no onion tomato sauce, hot and sweet tomato sauce, masala sauce, tamarind sauce) over the years. The company has also launched pichkoo, where the sauce is packaged in flexible packaging material, thus allowing it to be squeezed easily. Similarly, Dr. Oteker, India (manufacturer of Fun food brand of products) offers a large variety of products including mayonnaises, sauces, spreads, salad dressings, cakes, dessert toppings. For its mayonnaise range alone, the company sells 8 flavours.

Sauce manufacturers have two business models: Business to Business (B to B) and Business to Consumer (B to C). Small and medium enterprises typically start with supplying to businesses and then go retail. For example, Fun foods has been associated with subway in developing customized variants of sauces. Veeba foods, a recent entrant in the market which supplies sauces and dips to restaurants and fast-food chains, recently raised $6 million and forayed in retail segment through its own VEEBA brand[2].

[1] http://www.hindustantimes.com/business/catch-up-with-ketchup/story-aGK6GS2v14sgCWbQEb3t7O.html.

[2] http://www.livemint.com/Companies/caIm09B3bTK9bLkVuhppKI/Veeba-Food-raises-6-million-from-Verlinvest-otheINRhtml.

Why is table sauce manufacturing an attractive opportunity?

Increasing customer appreciation for western cuisine has resulted in a growth of sauces, dressings and condiments industry. International cuisines such as Italian, Mexican and Thai are gaining popularity which in turn act as demand drivers for specialised sauces and dressings.  Given the market growth, many multinational fast food chains (Wendy’s, Taco bells) have entered India in the past five years.  India is the second largest market for Domino’s Pizza after the US.

Besides consuming the sauces as part of eating out, consumers are also purchasing these sauces to use them for food preparation. The cooking sauce (soya sauce, pasta sauce) category makes up around 33 per cent of the sauce market. Supermarkets and convenience stores have become popular channels for purchase of such products.

Where is the table sauce manufacturers located?

The industry can be categorised into two types of players: large FMCG multinational companies such as HLL, Nestle that dominate tomato ketchup market and other players (see Table 1) such as Dr. Oetker, Delmonte specialising in specific category of sauces. Most of the manufacturing units are located in Maharashtra, Haryana and New Delhi.

Down south, post bifurcation, both Andhra Pradesh and Telangana have been focussing on developing food processing sector by offering financial incentives to the food processing industry and developing industrial infrastructure. Although these two states together account for almost 20 per cent of food processing factories in the country, they don’t have many table sauce manufacturing units, thus making it an attractive opportunity to set up a sauce manufacturing unit here.

Table 1: Manufacturers of Table Sauces (other than ketchup)
S. No.Company NameBrand and Product RangeRemarks
1Field Fresh foods Pvt Ltd, Gurgaon, HaryanaDelmonte:Pasta Sauces, mayonnaise & Ketch upA joint venture between Bharti enterprises (Telecom major) and Philippines-based Del Monte Pacific Limited, turnover over INR 500 crores
2Capital Foods Limited, Mumbai, Maharashtra.Ching’s Secret & Smith & jones: Soups, pastes & saucesManufactures Chinese sauces, revenue of around INR 500 crores[1]
3Dr. Oetker India Pvt Ltd, New DelhiFun foods: Mayonnaise, Italian sauces, sandwich spreads, Chinese sauces, salad dressingsA German company that acquired Fun Foods, an Indian manufacturer of table sauces in 2008, current revenue of over INR 150 crores [2]
4Cremica Food Industries Pvt. Ltd, Ludhiana, PunjabCremica: Ketchup, Pizza & pasta sauce, salad dressingsStarted as a homebased enterprise, current turn over more than INR 200 crores[3].
Source: FineTrain Research

[1]https://timesofindia.indiatimes.com/business/india-business/capital-foods-targets-rs-500-cr-revenue-this-fiscal/articleshow/57250985.cms

[2]https://brandequity.economictimes.indiatimes.com/news/business-of-brands/dr-oetker-eyes-rs-1000-crore-sales-by-2020/55659035

[3]http://www.livemint.com/Companies/Hac0C64hqGcuBbGmzuU40N/Cremica-Food-Industries-raises-15-million.html

Manufacturing process and capital requirements

Sauces can be prepared from varied range of items such as eggs, vegetables, fruits, beans, milk etc. as shown in Figure1.

Figure 1: Sauce Manufacturing Process

In addition to the processing machinery discussed above, the manufacring facility needs to have infrastructure including cold storage, waste water treatment facilities and a strong R&D team. The budget required for an entry level capacity of around 1 tonne per day would be over INR 2 crore.

Key Success factors

Critical success factors for this business include:

  • Nimbleness in identifying variants
  • Good relationships with exiting suppliers and customers
  • Building up a niche segment
  • A strong R&D team that can develop new products
  • Adequate financing to meet large working capital needs

How we can help you

If you are interested in setting up a table sauce manufacturing unit, we can assist you in the following:

  • Competitive landscape
  • Financial viability
  • Location analysis
  • Market entry strategy
  • Regulatory issues and government incentives
  • Detailed project report preparation
  • Support in project execution

Call us/reach us

Call us: 800 888 4932

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