Dunkin’ to Give Donuts a Desi Dressing.

American chain to roll out donuts such as coconut rasgulla, gulab jamun & motichoor laddoo as part of its localisation drive

This festive season, Haldiram’s and Bikanervala have a completely unexpected competitor. Taking localisation of its menu to a new micro-level, American donuts and coffee chain Dunkin’ Donuts is in the process of rolling out variants of donuts like coconut rasgulla, gulab jamun and motichoor laddoo.

With its franchise owner Jubliant FoodWorks looking to drive volumes and replicate the performance of its other brand Domino’s Pizza in India, the localisation drive is a first for Dunkin’ Donuts in India.

For Dunkin’ Donuts, the world’s largest donut brand which forayed into the country early last year, the move is ambitious to say the least. Dunkin’ Donuts India president and COO Dev Amritesh says the product’s ‘flexibility’ lends itself to a high degree of customisation. “There’s a significant opportunity to customise donuts for consumers — both for those who are used to the product and those who aren’t yet familiar with donuts.” There have been examples of countries customising donut toppings in other markets from time-to-time, but Amritesh says the extent of localisation is probably the highest in India. The donuts are being rolled out in time for the Diwali season, but the fastest-moving ones will become a permanent feature on the Dunkin’ menu.

The idea may also be exported to other markets if they find acceptance, says Amritesh. Abneesh Roy from securities firm Edelweiss Securities wrote in a report last month: “We expect Jubilant FoodWorks’ valuations to remain expensive given efficient execution, sharp expansion and innovation.”

Early last year, Jubilant had inked a master franchisee alliance with Dunkin’ Donuts, an alliance that diversified its portfolio and reduced its dependence on a single brand – Domino’s. Dunkin’ Brands is the world’s fastest largest coffee and baked goods chain with a global sales of $6 billion.

Localisation is critical to MNCs operating in India especially in foods and is a rule rather than an exception. And, everyone from burger and fries chain McDonald’s to cereal maker Kellogg’s to chips firm PepsiCo Foods has been forced to localise.

The American baked foods and coffee chain currently operates five stores in India and it plans to set up 100 over the next five years, encashing the country’s rapidly growing eatingout segment.

Retail consultancy Technopak Advisors estimates the country’s eating-out market to be close to . 33,000 crore, with organised restaurant chains clocking a growth of 20-25%. The organised segment is valued at about . 8,000 crore.
But, in the April-June quarter, Jubilant FoodWorks reported same-store sales growth of 22.3%, down from 36.7% in the year-ago quarter, as consumers cut back on discretionary spends in a subdued economic environment. Jubilant FoodWorks’ other brand in India, Domino’s, is the category-leader in the pizza segment.

Starstruck: Mall Owners Relocate others for Starbucks

Brands that are being shunted to less attractive locations to accommodate the coffee chain are not amused

A joke doing the rounds on Twitter these days is that the wait outside Mumbai’s first Starbucks coffee outlet at Horniman Circle is so long that a smart alec has started selling tea to those standing in the queue.

Starbucks Coffee Logo

Starbucks Coffee Logo

This kind of consumer frenzy is music to the ear of mall owners in India’s big cities. Sensing a huge opportunity, many of them are offering the American coffee chain preferred locations within their malls, sometimes even at the cost of relocating a brand that is already present at the location.

It’s not as if the mall owners are expecting premium charges. They just want Starbucks as an anchor tenant as such iconic brands can bring home the much desired footfalls; and also inspire other quality labels to set up shop in their malls.

Starbucks had said that it plans to open 50 stores by the end of the year in Delhi and Mumbai. That plan may or may not materialise, but the coffee retailer surely is on the fast track to sign up new spaces. “For some international iconic brands, mall developers will be willing to bend backwards as they can improve the tenant mix,” says Jaideep Wahi, director, retail agency at Cushman & Wakefield India, a property advisory firm that helps companies such as Starbucks find store space.

The Ambience group has signed up Starbucks for two of its malls in Gurgaon and Vasant Kunj in the capital. At the Gurgaon mall, a brand that was on the ground floor is being relocated to another part of the mall to accommodate the coffee house.

“I am relocating a brand for Starbucks as we wanted to give them an indoor-outdoor combination,” says Deepti Goel, head of leasing at Ambience. Starbucks is negotiating for space at another mall in south Delhi. Arjun Sharma, the director of Select Citywalk mall in Saket says he would love to move brands around for the iconic brand. “It’s a relevant brand. It’s a great brand. We always seek marquee brands to improve our tenant mix,” he said.

Another developer in Mumbai, requesting anonymity, said he was even willing to compensate an existing store operator if he vacates his current location.
A Tata Starbucks spokesperson declined to comment on queries sent by ET.

The enthusiasm to put up Starbucks has caused heartburn among a few brands that have been asked to relocate. “We were asked to move to a less-attractive location within the mall, even though the mall owner agreed to give us favourable terms. But it still can’t make up for losing a premium location,” says a manager with an apparel brand, who did not wish to be identified for risk of antagonising the mall owner.

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