Interviews

In an exclusive conversation with Dr. Varun Chaudhary, Executive Director, CG Corp Global

Ans.  With a prolific history of over 140 years, CG Corp Global is a multinational corporate operating out of Nepal. Despite its humble beginnings, it is today the largest business enterprise of Nepal. Today, we are proud that CG Corp Global is present in over 30 countries, a conglomerate with 76 brands, 122 companies, and an employee base of over 10,000 people; we are genuinely a transnational company. Our business verticals include foods, hospitality, banking, cement, education, real estate, and clean energy to name but a few. Beyond these, we care deeply about improving the livelihood opportunities and health and social conditions, which we do through Chaudhary Foundation, where we run numerous projects.

CG Corp Global’s products range from our famous Wai Wai noodles to clean hydro-electricity to luxury hotels around the world.  Our services cover an equally broad spectrum. CG Remit allows thousands of Nepalis, who work hard overseas, to send money home to their families; CG Education provides world-class schools and colleges in Nepal and abroad and; our telecommunications network will change the lives of millions. Our vision of creating Nepal’s first billion dollar corporation, producing world-class products and services, has been finally realised!

Ans. The Indian snacking food industry is an emerging and booming arm of the FMCG category, thanks to the evolving consumer consumption patterns. The future of the Indian Snacks Market can be judged from the fact that this industry is expected to grow with a double-digit CAGR for the time frame of 2018 to 2024.  Brands are ceasing and capitalizing on this opportunity through their product offerings, bringing the goodness of healthy food items to Indian consumers in different formats suited to their lifestyle, taste and convenience.

The 2020 events have contributed to a change in the ambitions of Indian customers, including a demand for a healthier and wholesome quality of life in a more prosperous environment, with an emphasis on wellbeing, safety and more family time.

What buyers expect and why, illustrates that it is possible to ignore these seemingly small goals and subtle improvements in market behavior, but they can have significant impacts on brand strategies individually and cumulatively.

As consumer purchasing habits are shifting, and both productions of products and other market processes have been affected, the global health pandemic and epidemic has led to a mountain of problems around the food and beverage market.

Challenges

Lack of effective product distribution system

In India, the food market is largely composed primarily of unbranded products, which, as a result, ends up creating havoc and confusion in the supply chain. The chain contains many small stakeholders like raw material producers, research and quality testing units, suppliers of ready to eat manufacturers among others. Among many such options, silo & storing units are making the food distribution system a complex one and then there are third party distributors, who have been plugged into the supply chain, leading to additional operational cost.

Increased health concern                     

Consumers have been motivated by the growing prevalence of food-related diseases to make crucial improvements in their diet and lifestyle, making them more health-conscious than ever. The line of mind is immediately redirected to buying foods without additional preservatives that could hamper one's health. The demand for goods not carrying the 'safe' logo is then bound to decline and the need to remove artificial constituents from products has come to remain at the top. 

Today, one of the food and beverage industry's greatest obstacles is for suppliers to come up with balanced goods that have enough nutrients; but, at the same time, they do not take away from the brand's aesthetics. This has culminated in a number of nutrient-rich foods, called 'gluten-free',' dairy-free',' sugar-free', and the like, making it to supermarket aisles. A suitable example justifying the above is the widespread growth of the demand for food supplement ingredients.

Key trends

Focus on nutritious packaged foods

Many families still compel their younger members to have home-cooked meals, due to the lack of trust in ready to eat foods. This is causing many RTE companies in India to focus positioning their products as having high nutritional value. For instance, frozen foods manufacturers, though relatively new to the Indian market, provides its customers with a range of delicious frozen foods, including French fries, aloo tikki and cheesy bites.

Convenience reborn 

The world is going through a demographic change. Solitary living and smaller households are more common now. The process of purchasing convenience food and beverages is quickly growing and changing. Gone are the days when convenience food meant unhealthy fast food. Consumers want their need for convenience to harmonize with their desire for an eco-friendly existence. We are likely to see innovative ways to push eco-friendly alternatives like paper-based cartons offering easy routes to recycling to tap into the continued desire for convenience.

Personalization

Consumers understand the value of their personal data and expect organizations to be more transparent on usage of this data and also expect to get something of value back, in exchange for sharing it. This makes it important for brands to give consumers the information needed to enable informed choices. 

Additionally, the trending attitude of exploring India’s traditional cooking traditions is paving a new way of food preparation. Modern methods of preparing and packaging traditional foods are slowly penetrating in the food industry. The restaurant industry is also harnessing every tactic in these discoveries to meet the expectations of the modern dining appearance.

Ans.  With the current pandemic completely changing both the business ecosystems and the consumer behavior, various changes in the food industry are visibly setting in. We are convinced that the convenience foods industry will come out stronger in the post Covid era. Noodles as a market has been growing in double digits and we expect it to continue the same, if not more. We expect the penetration of the category to increase faster across Urban as well as Rural India and with that comes the responsibility of delivering safety in the noodles.

Wai Wai is actively and passionately complying with all the safety regulations formed by the Food Safety Standards Authority of India (FSSAI). The new regulations are aimed at bringing in more clarity in the quality standards for instant noodles and so far there has been one common standard for various kinds of ready-to-cook products including noodles which Wai Wai proudly meets.

Ans. The noodle industry in India is dominated by about 5 major players including ours.

In India, Wai Wai enjoys close to 25 percent market share with some states having a share in excess of 60 percent. Its robust market share is owed not only to its unique taste but also its fierce fight for markets in urban and tier-2 India. Growth rate recorded for Wai Wai was 16 percent in 2019 while the India industry growth rate is 10-12 percent.

Owing to the growing consumer demand in India for WAI WAI, we have set up 10 manufacturing lines across strategic locations in India which prior to the lockdown utilized 90 percent capacity. As a result, we recently added another manufacturing line in Purnia, Bihar. After the market leader in the instant noodle category, the maximum number of company owned manufacturing plants belong to Wai Wai in India. The capacity utilization is a testimony to the acceptance of the product in the Indian market.

Ans.  As the effects of COVID19 are felt around the world, the Consumer Products Food and Beverages industry is no exception. Among many lifestyle changes, our at-home consumption habits are also changing.  As lockdown has confined us in our home, anxious and waiting for ‘what next 2020 holds for us’ could result in boredom, which in turn is associated with a greater energy intake. That’s where the ready-to-eat savouries become our instant companions, offering instant hunger solutions as well as satisfaction. 

This new condition has accompanied the new concern for maintaining a healthy and varied diet. For example, limited access to daily grocery shopping may lead to reduce consumption of out-of-home, in favour of highly processed ones, such as convenience foods, junk foods, snacks, and ready-to-eat cereals. The requisite measures taken to manage the pandemic have not only disrupted the global economy, but have also altered consumers' priorities, expectations, and purchasing behavior. Within India, a survey revealed that over 70% of urban consumers will prefer to purchase items from retailers that offer home delivery services, with 78% disposed more towards digital payments. Considering the impact of increasing demand for packaged snacks, many companies are now building liaisons with popular online food delivery service companies, with a view to target the increasingly ‘at home’ customer segment.

CG Corp Global, maker of the popular Wai Wai noodles, is gearing up to make up for the losses owing to disruption in the supply chain on the back of COVID-19 lockdown. COVID- 19 and the resultant lockdown has given rise to a shift in consumer preferences and one of the emerging trends as rightly mentioned is the growing demand for Convenience Foods.  Given WAI WAI noodle is the only ‘ready to eat’ noodle of the country, it perfectly fits the requirement for consumers at home today who are increasingly looking at easier snacking/meal options. However, it is important to note that we are also an essential goods provider and we recognise our responsibility during these difficult times.

We have implemented stringent measures in our plants. All employees are being trained to adapt the required measures such as wearing masks, social distancing, regular hygiene and sanitisation. In some of our factories we have made provisions for the factory workers to stay as well. At least one unit in our 7 manufacturing plants in India has started functioning and we are running at 60 percent capacity utilization.

Traditionally, Indians are snack-loving people, and eating snacks is considered to be a habit, even before Covid-19. A huge section of the young population was already switching from the regular three-meals-a-day to many small meals. The snacks segment is the obvious gainer.

Ans. The fast-moving consumer goods segment is the fourth largest sector in the Indian economy. Transformation and disruption have been primeval actors in this sector’s journey, yet it remains one of the few which was fast to climb up the recovery ladder during Covid-19. The growth of the economy always gets reflected in the performance of the FMCG industries and the pulse of the economy can be determined by the efficacy and functioning of the major players in this category. Simply put, these are just two sides of the same coin if one performs well, the other is bound to hold its momentum in place and vice versa.

The pandemic has proved as a game-changer on the organisational front, it completely toppled the entire system but also taught how to overcome and evolve with the new normal. With convenience foods increasingly becoming a way of the new lifestyle, we as a company are carefully strategising a holistic business approach to capitalise on this trend and thereafter eye a larger slice of the market in India.

With an investment of Rs 120 crore, we are expanding the production capacity of the FMCG vertical CG Foods in India for catering the growing demand for its Wai Wai noodles in the next one year, a company official said. After the proposed investment, the production capacity at four plants of CG Foods would increase by 35 per cent which have almost reached their full capacity utilisation. The expansion would be able to create over 1,100 job opportunities and therein lies the opportunity for both businesses and individuals to create meaningful careers.

Ans.   CG Corp Global is investing in expanding the production capacity of its FMCG vertical CG Foods in India for catering the growing demand for its Wai Wai noodles in the next one year, a company official said. After the proposed investment, the production capacity would of four plants of CG Foods would increase by 35 per cent which have almost reached their full capacity utilisation. The expansion is expected to create over 1,100 job opportunities.

Since the pandemic has given the digital sector a new dimension, the company is aggressively pushing its online presence as e-commerce has seen phenomenal growth due to a major shift in the consumers purchasing pattern, as it is more convenient and safe. The company has witnessed an increase in demand for instant noodles and has increased its focus on online and modern trade platforms to cater to it. To cater to the growing demand for WAI WAI, CG Foods is initiating a region-wise capacity expansion based on its strong markets as well.