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VEEBA : A journey from empty restaurants to empty ketchup bottles
Conference Paper · April 2019
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Shyamanjan Bose Sanket Suni Shinde
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VEEBA : A journey from empty restaurants to
empty ketchup bottles
Veeba Food Services Pvt. Ltd, the condiments supplier to fast food chains including KFC, Starbucks, Pizza
Hut, Burger King, Taco Bell and Domino’s Pizza in India is growing its footprint in B2C segment and is
present in 210 towns pan-India with 37 SKUs in retail and 100 plus in B2B. In time span of six months,
Veeba's B2C revenue has grown to 40 per cent from 5 per cent.
Who buys bottled mayonnaise and why do they do it? - generously exclaims Viraj Bahl, Founder and
Managing Director, Veeba about his customers reckoned that one reason for the mayonnaise boom was
the sandwich explosion. As a consequence of various factors – the influence of the fast food menus, the
availability of better bread and fillings etc. – more and more Indians are making sandwiches at home. Kids
don’t necessarily go to school any longer with dabbas full of sabzi and rotis. Their parents pack sandwiches
for them.
INDIAN FOOD MARKET
Indian food market have changed drastically over the past few decades. Unlike their parents, the
Millennials’ food habits are changing. Traditionally, the Indian diet uses less processed ingredients and
more natural ingredients than that of Western countries. Particularly in metropolitan areas and among
younger generations, however, this tradition is slowly changing. The millennials have grown up in the age
of fast globalization which made them more exposed to international fast foods and cuisines. The per
capita income of the Indians has increased, and there are more working people/couples per household,
With more disposable income at hand, they have higher spending power on food. The work-life imbalance
has also been instrumental in changing people’s preference for less-time taking meals. There were the
days when students and working people used to carry tiffin boxes which contained hot paranthas wrapped
in aluminum foil. Today, easy and healthy quick foods like sandwich and salad have replaced the
traditional sabzi and rotis/parathas. The parents pack sandwiches not only for the kids but they
themselves find it easier to make a sandwich to take to the office rather than get up early to cook an
Indian meal for their own lunchboxes. All these new trends has contributed in preparing a fertile ground
for ‘spread sauce’ market in India.
Many processed and convenience foods are now easily available as well as the popularization of Western
foods such as pizzas, burgers and fries. As per Indian Food Services Report 2013, NRAI, “the continuously
evolving economy, societal, and demographic changes have reshaped the Indian consumers profile,
behavior and spending patterns. This transformation is under pinned by a surging economy, rapid
urbanization, and the rise in personal disposable incomes as well as in the number of double income
households, the higher exposure to international lifestyles, and the elongation of individual lifestyles.”
The Condiment Market and Product Innovation in the Industry
The Global Condiment Market
The global salad dressing market is expected to grow at a CAGR of 5.6% during the forecast period (2018 -
2023). The salad dressings market has evolved to a stage that versatile ingredients with clean-label and lifestyle
claims are set to make greater gains to address the health and safety consciousness towards processed food
products. The salad dressing label with organic ingredient panel or gluten-free claim have witnessed significant
increase in their sales growth from past few years. Revenue in the Sauces & Condiments segment amounts to
US$4,951m in 2018. The market is expected to grow annually by 7.1% (CAGR 2018-2021). In global comparison,
most revenue is generated in the United States (US$42,032m in 2018). In relation to total population figures,
per person revenues of US$3.66 are generated in 2018. The average per capita consumption stands at 2.0kg in
2018.
The Condiment Market in INDIA
India has always been known for its rich diversity and food is embodied to be one of the core part of this
diverse landscape. The changing demographics, increase in income, urbanization and growth in organized
retail is driving India’s F&B sector. Brands/ chains of both Indian and MNC brands are still less penetrated
and there exists a large opportunity in this space to create bigger restaurant chains, which in turn, creates
a bigger market for us. Add to that the changing lifestyle of the modern Indian, and a whole new world of
B2C opportunity springs up. Various reports are pegging the sector to grow between 20% to 25%, but all
indications are for a ‘growth recipe’!
Innovative Variants of Salad Dressings are making their Mark as Healthful and Flavorful Indulgence
The liquid salad dressings are exhibiting stronger volume growth over dry and cream-based dressings. The
market is expected to witness greater demands for ethnic-flavor based dressings. The inclusion of flavor
innovations with higher-end ingredients have paved a way for premium salad dressings that shall drive the
value-based growth during the forecast period (2018 – 2023).
Emerging Markets to Support Volumetric Growth of Salad Dressing Market
The health benefits of different salad dressings are increasingly acknowledged by women due to growing
inclination of fiber-rich dietary patterns.
The Indian market exhibits growing demand for international cuisines and convenient food options that are
delicious and healthy, the salad dressings have increasingly penetrated middle-class homes due to their ethnic
flavor profiles and attractive packaging options. Bahl informed that as of now, North India is the largest market
for Veeba and they are looking forward to penetrating more into Jharkhand, Bihar and Orrisa region. “Since we
already have an existing plant in Rajasthan, there are chances that our third plant will come up in South or
West India,” he further added.
Key Developments in the Salad Dressings Market
April 2018 – Kraft Heinz and the Food Network partnered to launch a lineup of salad dressings, cooking sauces
and meal kits. The new grocery product line, called Food Network Kitchen Inspirations, is aimed at inspiring
consumers to experiment with global flavors in their home kitchens.
Competitive Landscape of Salad Dressing/ Condiment Market
Salad Dressing Market Major Players – Best Foods Mayonnaise, Campbell Soup Company, Dr. Oetker,
Hellmann, Kewpie, Lancaster Colony Corporation, McCormick, Mizkan, Remia International, The Kraft Heinz
Company, Tostitos, Unilever Food Solutions, Veeba Food Services Private Limited and Walden Farms, among
others. The global players in salad dressing market are embarking on new product development and packaging
innovation to boost their sales growth.
Distribution Prospect
Having started tapping into consumer retail market in the year 2016, the money raised will also be used for the
retail distribution push across the country. “When I started I was very clear that Veeba is going to be a B2C
company, but it takes time to form as a brand nationally. In time span of six months, our B2C revenue has
grown to 40 per cent from 5 per cent. Right now, our B2B revenue share is 60 per cent and B2C revenue share
is about 40 per cent. We are growing in multiples rather than growing in percentages,” Bahl told.
Bahl also mentioned that out of his total revenue more than 70 per cent comes from general trade and only
30 per cent comes from the modern trade. “Though we are present on all the big bazaars and modern bazaars,
bulk of our businesses comes from the normal pop stores. We have been able to set up the national distribution
business and more revenue comes from the general trade and less comes from the modern trade,” he says.
Since inception Veeba has increased its pricing once and Bahl believes that the uniqueness of its taste is what
keeping the consumers loyal to the brand. “We talk about taste and convenience, keeping health into
consideration,” he added.
MARKETING STRATEGY
Veeba plans to strengthen the company’s position in the institutional segment and build out distribution and
product portfolio for retail and HoReCa (Hotel, Restaurant and Catering) segment. Innovation has been key to
Veeba’s success in this very short journey and we try to give our consumers something new every season.
We constantly innovate with products and ensure to deliver ‘healthier’ and ‘better for you’ products to
consumers and to keep in sync with their changing lifestyles and needs. As such, Veeba’s wide range of sauces,
dips and dressings have all been conceptualized so as to offer products that are highly appealing for the new-
age Indian consumer.
The entry strategy was to first achieve traction and volume by the B2B route. The aim, however, always was to
be a retail company. Eventually, 2015 was when Veeba chose to enter retail. Bahl shares that till about 10
months ago, B2B contributed to 90% of revenue. As it stands currently, B2B now brings in 60% of revenue, as
the company has upped its push for B2C.
More recently, the brand rolled out its first mainstream campaign with the Aaj Kya Khaoge? proposition. The
core target audience is 22- 40-year-old women but with self-cooking becoming more of a lifestyle activity
among urban males, the brand hopes to rope in that set of consumers too.
Growing B2C, emphasizes Bahl, will not be at the cost of B2B even as it is looking to scale B2C at 30% y-o-y.
Typically, for a brand that deals in products of slightly sophisticated or non-native tastes, to achieve traction at
a faster rate, modern trade proves to be beneficial as elements such as packaging and chances to run an in-
store tasting or promotion are higher. However, for Veeba currently, general trade works better, accounting
for 70%.
Veeba dedicates 20% of its revenue towards communication with 80% going towards TV to achieve scale.
Campaigns
With a two-pronged agenda of pushing further into B2C while still retaining B2B, an 11-episode series titled
Veeba Cook-Off was rolled out on Food-Food, TV channel, on January 26. A 60-episode series titled Veeba Aaj
Kya Khaoge? which sees five chefs present various dishes with each hosting 12 webisodes, was also rolled out
on January 25. Plans to bring this property to TV eventually are also on the anvil.
PRODUCT PORTFOLIO OF VEEBA
VEEBA
SANDWICH ITALIAN SALAD
MAYONNAISE SAUCES DIPS MUSTARD
SPREAD SAUCES DRESSINGS
How mayonnaise became a household name!
The French dipped their chips (as in French Fries) in mayonnaise (they still don’t know how to make good
tomato ketchup); the English made a puddle of mayonnaise around hard-boiled eggs and served the dish
as an appetizer: Egg Mayonnaise. But in India, the only places we ever saw it were five star hotel buffets
and the homes of rich vegetarian relatives, where a Russian Salad (disgusting vegetables mixed with
mayonnaise) would be considered a great ‘Continental’ delicacy along with “Baked Dish” (disgusting
vegetables cooked with white sauce).
Surprisingly mayonnaise has become one of the most popular and fastest-growing sauces in India! Later
generations were obviously more exposed to mayonnaise today. And such is Indian ingenuity that this
French sauce, popularized by American food companies, is mainly supplied to the Indian market by two
domestic food companies (Cremica and Veeba) whose sales far exceed those of foreign multinationals
who have tried to flog their bottled mayonnaise in India. What’s more, the Indian market has developed
to the extent that Veeba, for instance, manufactures and markets over 50 different kinds of mayonnaise.
(Yups. Fifty!)
In the 1990s, the global fast food companies arrived in India. If you have eaten a fast food hamburger you
will know that it has three basic tastes: maida from the bun, a hint of meat from the slender patty and
lots of moist, saucy flavour.
Flavouring the mayonnaise offered restaurants and food
companies the perfect opportunity to add new tastes at
minimal cost
Consumer behavior
When people eat a fast food sandwich, they respond most clearly to the wet, sloppy, saucy flavour
between the meat (or aloo patty) and the bun. So, the trick is to get the sauces right because they are the
key to the flavour profile. (Try eating a fast food burger without the sauce. It tastes of cardboard.)
The first fast food sandwiches in the Indian market used mayonnaise and ketchup for their flavouring. For
ketchup, Cremica became a clear favourite: Cremica Ketchup beats Heinz in blind tastings and is much
cheaper.
But mayonnaise was a problem. Fast food companies had already discovered that they did not know how
to appeal to vegetarians, a market segment they had rarely encountered elsewhere in the world. They did
not want to put vegetarians off even more by using an egg-based sauce like mayonnaise even though it
was crucial to the taste of their sandwiches.
Variation to Indian market
Eggless mayonnaise was God’s gift to McDonald’s, KFC and the rest. KFC began using Indian eggless
mayonnaise for its coleslaw. McDonald’s used it for its burgers. All the other giants duly followed suit.
In the process, they introduced a new generation of Indians to mayonnaise. Says Akshay Bector of
Cremica, “there would not have been a mayonnaise boom without eggless mayonnaise. Indian companies
managed what no multinational had done: popularising a stable eggless mayo.”
Plus, mayonnaise had an added advantage. It is a terrific carrier of flavour and texture. Tartar Sauce is
basically mayonnaise with chopped gherkins, onions, etc. Aioli, the great garlic sauce of Southern Europe,
is essentially a garlic mayonnaise. In the West, chefs have long added flavours to mayonnaise (mustard,
tarragon etc.) recognising that it is a perfect vehicle for conveying flavours.
If you break down the cost of a fast food sandwich, you will see that the filling (especially if it is non-
vegetarian) is the largest single component. Next comes the bread. The sauce is the cheapest.
And yet, it is the sauce that conveys the flavours that people remember. So flavouring the mayonnaise
offered restaurants and food companies the perfect opportunity to add new tastes at minimal cost.
The owners of Fun Food sold out and started Veeba, building their new empire on eggless mayonnaise.
Cremica also dominated the eggless mayonnaise segment. Both companies created a huge new market
that had not existed till the start of this century.
The trends noticed by Bahl in sauces and condiments industry?
Consumers in India are seeking variety, innovative products, similar to global trend. There is preference
for healthier products.
We have also been cognisant of the fact that the modern consumer is well-travelled and much more aware
of international trends and tastes, so we have introduced products such as Chipotle style dressing, Harissa
dressing and Sriracha sauce bringing authentic flavours from across the world into our homes.
TOP COMPETITORS
Veeba Funding History
ROUND FUNDING DATE AMOUNT INVESTORS
Series C Oct 2017 $6.1M Verlinvest
Series B Oct 2016 $6M
Series B May 2015 $6M
Total Funding: $18.1M
India condiment Consumer Trends and Characteristics
With an obvious focus on tier I and metro cities, tier II is where the promise of growing the category lies,
says Bahl. The company has recently doubled capacity at its manufacturing plant at Rajasthan, with
around 3000 sq. ft dedicated to research and development. For distribution, depots have been set up in
almost every state, except for say, the North East region, where the depot in Assam is the base.
The problem of reach is currently being addressed by retailing online, as its products are available
on Amazon, Big Basket, Paytm Mall, etc. Bahl believes, pre-Veeba, none of the incumbents had taken on
the onus of growing the category.
Consumers in India are seeking variety, innovative products, similar to global trend. There is preference
for healthier products. We have also been cognisant of the fact that the modern consumer is well-
travelled and much more aware of international trends and tastes, so we have introduced products such
as Chipotle style dressing, Harissa dressing and Sriracha sauce bringing authentic flavours from across the
world into our homes.
While it may seem like educating the tier II consumers about the category, Veeba believes the task is more
about bringing specific tastes to consumers as the ground work has been done by the QSR players over
the years by introducing various global cuisines. Dilip Radhakrishna, research analyst, Euromonitor
International, attests to that, saying, “Products such as mayonnaise and salad dressings are already well-
received. This is expected to continue as consumers are willing to experiment with different flavours and
indulge in preparing dishes at home.” As per FICCI and Technopak’s Indian Food Services Industry: Engine
for Economic Growth and Employment report, QSRs are second only to casual dining restaurants, where
the latter are growing at a CAGR of 16% to reach Rs 1,05,500 crore in 2022, followed by QSRs at 15% to
reach Rs 21,500 crore in 2022.
Latest innovations from Veeba?
The latest addition to Veeba’s product range is our Peanut Butter. Veeba Peanut Butter is enriched with
Calcium, Iron, Vitamin A & D, that is now available in two variants, Creamy and Crunchy.
This is a massive brand extension for us, where we were banking on our goodwill in the ‘savory spreads’
categories, and the product has not let us down. From the early days, we have had a phenomenal response
from the market. We expect the Peanut Butter sales to defy all market estimates and give us a lot of
confidence in the power of the brand.
EXHIBITS
EXHIBIT 1: RETAIL SALES VALUE COMPARISION OF GLOBAL CONDIMENT
MARKET
GLOBAL CONDIMENT MARKET
INDIA
4951
UK
6208
CHINA
7900
JAPAN
9429
USA
42,032
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
*[Link]
EXHIBIT 2: REVENUE GROWTH IN INDIAN MARKET
Revenue Growth
6000 5688
5311
4951
5000 4603
3874
4000
3022
3000 2537
2036
2000 1561
1241
965
1000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
EXHIBIT 3: REVENUE GROWTH IN PERCENT
EXHIBIT 4: GROWTH IN PRICE OF KETCHUP V/S CONDIMENTS
EXHIBIT 5: MARKET VALUE (in Million US$) BY SEGMENTS OF TABLE
SAUCE CATEGORY
2015 2016 2017 2018
Tomato Ketchup 451 535 587 655
& Sauce
Chinese Sauces 212 443 468 514
Pizza, Pasta & 310 450 503 595
Barbeque
Sauces
Mayonnaise and 255 324 652 724
other spreads
*[Link]
[Link]
*[Link]
EXHIBIT 6: TOP CONDIMENT COMPETITORS IN IINDIA
COMPITITORS REVENUE
CREMICA $6.5Mn
A Regal Kitchen Foods Limited $4 Mn
Sams $6 Mn
Tasty Bites $33Mn
Dr. Oetker $11.9Bn
Rich Lite $15Mn
*[Link]
EXHIBIT 7: GROWTH RATE OF QSR CHAINS
FRANCHISE GROWTH RATE
KFC +6%
Taco Bell +7%
Pizza Hut +2%
Burger King +3.5%
McDonalds -2.2%
*[Link]
EXHIBIT 9: SALAD DRESSING MARKET SHARES(INDIA)
Market Shares
Tomato Ketchup & Sauce
27%
43% Chinese Sauces
10% Pizza, Pasta & Barbeque Sauces
20% Mayonnaise and other spreads
*[Link]
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