Veeba raises $6 million from Saama, others
- Livemint" target="_blank">Livemint
- June 1, 2015
New Delhi: New Delhi-based condiments supplier Veeba Food Services Pvt. Ltd, which counts KFC and Starbucks as its customers, has raised $6 million in a round of funding led by venture capital firms Saama Capital and DSG Consumer Partners.
The company plans to use the money to triple its manufacturing capacity, build a portfolio of packaged foods it can sell directly to customers, and take its products to more premium stores over the next 12-18 months, said founder Viraj Bahl in an interview on Sunday.
“We’ve just launched a range of 14 sauces and salad dressings in modern trade stores in Delhi and Mumbai. These are largely targeted at premium Indian households that are more exposed to western cuisine,” said Bahl, the former head of packaged foods firm Fun Foods that is now part of German food company Dr Oetker. The range launched under the Veeba label includes dressings in flavours such as Thousand Island, Honey Mustard and Ranch.
Veeba is opening a new plant in Neemrana in Rajasthan to cater better to its institutional clients such as Pizza Hut, Burger King, Taco Bell and Domino’s Pizza. Proliferation of fast food chains in the country over the last decade has benefited home-grown third-party vendors and suppliers such as Veeba.
Over the past year, four of the world’s largest burger chains, including Burger King and Wendy’s, have invested in India, opening stores across metros, while existing chains continue to scale up.
All fast food chains rely on third-party suppliers and vendors for raw materials, including buns, sauces, dips and seasoning. “The specialty food ingredients sector in the country is under-developed and poised for significant growth in the near term,” said Ash Lilani, managing partner of Saama Capital, an India-focused fund based out of Silicon Valley that has previously invested in companies such as Sula Wines, Shaadi.com, Snapdeal.com and Chai Point.
The presence of larger competitors remains a challenge for Veeba and other smaller condiment suppliers.
“It’s a low-margin business and is highly competitive,” said a top executive at a large fast food chain, whose company works with many food ingredients providers in the country. The supplier business runs on a margin of 10-12%, with investments in manufacturing and distributor network.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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