With food preferences reportedly undergoing a global transformation, the demand for frozen food seems to have witnessed a growth in terms of sales. From a customer perspective, frozen foods are considered dynamic with regard to taste preferences, with less cooking time. According to Mordor Intelligence, a global market research company, the international frozen food market size is predicted to clock $453.99 billion in 2024 and is anticipated to secure $555.74 billion by 2029, on the back of a 4.13% compound annual growth rate (CAGR) for 2024-29. One such player in the mentioned market is Prasuma. The company’s revenue from operations rose 35% to Rs 134.91 crore in FY23 from 99.91 crore in FY22, as per regulatory filings accessed by Tofler, a business information and analytics platform. The company’s net profit dropped 98% to Rs 11.61 lakh in FY23 from Rs 5.97 crore in FY22. The company further increased its spends by around 16.3% rise in marketing and advertising expenditure, which recorded an upward trend from Rs 2.84 crore in FY22 to Rs 3.3 crore in FY23. In a conversation with BrandWagon Online, Lisa Suwal, CEO, Prasuma, talks about the company’s frozen food product categories and its plans to expand globally. (Edited Excerpts)
What is your strategy in FY25? How is it going to be different in the frozen food market where there are already a lot of other players?
We do not focus on raw meat. When we started Prasuma and decided to enter the frozen food space, we wanted to enter with a product that people would know us by, which’s the reason why we launched momos. We decided to build the entire Prasuma frozen food range first, establishing ourselves in the momo category and then entering the market with different categories. Even now, Momos are the number one category for us. In terms of Momos, we have around 12-13 stock keeping units (SKUs). We have almost 150 products in our range, which include Momos, kebabs, spring rolls, and samosas, among others. Last year, we launched Baos as well. Our focus, as a company, has always been on how we can double our Pan-Asian range. Apart from quality, we also focus on research and development (R&D). For example, it took us four years for our Momos product and two years for our Baos product to get them right.
Prasuma was available in 72 cities in India through a network of 5000 stores. As things stand, how much has been the increase in the total count for both stores and cities? Have you crossed your target of reaching 100-plus cities?
Currently, Prasuma is available in 75-80 cities. We realised that there is potential in our base of current cities, which led to an increase in our depth of distribution as well as our superstore throughput. Previously, these stores used to sell only Momos but now, along with our Momos, we have our Baos, cold cuts, sausages, kebabs, and the entire range of products. In the last couple of years, our focus has just been to see how we can upgrade our current range of stores and increase the store throughput rather than going deeper in terms of distribution because with e-commerce coming in, it solved a lot of gaps in distribution. I think our strategy changed when we decided to not just look at adding outlets, but also look at how we can increase the throughput per outlet.
Can you give an idea of which are the highest-selling product categories for Prasuma? In which cities do you see maximum sales happening and in a year, how many times does the customer return to buy from the brand?
Momos are around 30% and the second category, which includes sausages and cold cuts, is also around 30%. In terms of the split between offline and online, online constitutes about 30% of the business, and within that online range, over 80% constitutes quick commerce. Furthermore, modern trade comprises about 30% and go-to-market (GTM) is around 30%. We distribute our products in the top 15 cities, which include metropolitan and new-standing metropolitan cities. Since we sell through channels, we don’t get a lot of customer data. However, these channels give us numbers in terms of how much we’ve sold and what we are selling, among others, but from the same customer.
How do you aim to make a profitable business, as sustainability comes from retention and not only from first-time buyers?
Till date, we are bootstrapped. We haven’t raised any sort of funds, which has been possible on account of customers funding your business. We have seen our customers constantly coming back and buying our products, with our focus being laid on how we have grown organically through the ‘word of mouth’. We haven’t had any external investments, as everything has been internal and a lot of it has been through repeats and word of mouth.
Do you pay for placement on quick commerce, in terms of television or somewhere else? How does your advertising budget work?
We don’t pay for television but for quick commerce, we spend an amount of money which is limited in terms of search. Yes, we do have an advertising budget, but it has remained stable. Even though we have grown, our advertising expenses haven’t.
So you said that instead of expanding horizontally across other cities, you now plan to increase your market share in the current cities. Is it a vertical or a depth-based expansion as opposed to a horizontal? Is it also a step to ensure that your cash burn remains stable?
Right now, if I expand into a new city, I would need a new team. It will take time but I think in the current cities, especially in the frozen food business, we have food categories that customers already like. It is available in the semi-premium space. For the time being, I don’t think it’s the cash burn that we’re looking at but at the opportunity, as there have been more opportunities to grow our business in the current stores because of the demand that’s on the back of our hero product, with a lot of customers asking for more products from us. So, that is how we’ve added SKUs in the current stores.
What has been your revenue growth over a year-on-year basis, and has your profit grown or been stable? Overall, what is your vision for Prasuma as a brand?
We’ve grown five times in the last five years, with profit being stable. In some years, it’s been higher, and in some years, it’s been lower. In the next couple of years, we’re looking at growing as a global frozen food brand. We compare our product against products from around the world. For our Baos, in fact, we had a team from Japan that came, which hit one of the biggest convenience stores, and said the Baos that we’re making are better than what is available in Japan. Last year, we started to export. Now, we have expanded to the Middle East, with us targeting another three to four more countries in the current year which include the US, Canada, and Singapore.