Finally, India has got its first
Krispy Kreme Doughnut Inc.
(
KKD
) franchised outlet in the city of Bangalore. The latest opening
came in the wake of the signing of a development deal between
Krispy Kreme and Citymax Hotels Pvt. Ltd in June 2012.
Per the deal, over the next five years, Citymax Hotels will
unveil 80 outlets across the southern and western part of India.
Apart from Krispy's signature menus, the Indian outlets will be
offering some local variations to cater to the Indian population.
Citymax Hotels Pvt. Ltd., a branch of Dubai-based Landmark
Group, boasts superior local market knowledge. The company has a
proven track record of venturing into the premium retail industry
as well as has the expertise to operate food and beverage
companies within the Indian and the Middle East market.
Armed with the strong know-how of Indian food habits, the
franchisee is also hopeful of collaborating with a global brand
like Krispy Kreme and expects to spread its menu offering
successfully among brand conscious consumers.
We believe Bangalore is a strategic fit for entering the country.
It is India's 3rd largest city and home to many IT firms, well
known universities and research institutes. This city, because of
its extreme contribution to the IT sector of the country, is
often regarded as the Silicon Valley of India.
However, the Citymax deal followed Krispy Kreme's earlier pact
with the franchisee Bedrock Food Company Pvt. Ltd. which was
signed a month before, focusing on expansion in Northern Indian.
These alliances reflect Krispy Kreme's intent to make India one
of the prime markets for international expansion considering
stepped up economic growth and under-penetration of quick-service
restaurants in that country as against the saturated North
American countries.
According to a report by the U.S. Commercial Service, the middle
income population in India is burgeoning and will grow 10 times
by 2025. Indians arguably have a sweet tooth.
The café market in India is growing at a compounded annual
rate of 25% over the last five years with Café Coffee Day leading
the segment followed by Barista Lavazza and UK-based Costa
Coffee, according to an October 2011 report by Technopak Advisors
Pvt. Ltd, a Delhi-based retail and consumer goods consultancy
firm. This along with the growing income of the larger populace
makes India a lucrative investment proposition for Krispy Kreme.
However, the Indian market is not free from competition.
Following the growing demand for coffee products, another U.S.
coffee behemoth
Starbucks Corporation
(
SBUX
) entered the market in Oct 2012. Yet another peer,
Dunkin' Brands Group Inc.
's (
DNKN
) Dunkin Donuts also ventured into the market In May 2012.
There is also
Mondelez International Inc.
(
MDLZ
) which is operating in the Indian market through Cadbury branded
chocolates. Apart from these industry equivalents, there are also
local confectioneries and brewers currently serving the market.
Krispy Kreme currently retains a Zacks Rank #1 (Strong Buy).
Other restaurateurs currently performing well include
Bob Evans Farms Inc.
(BOBE) which holds a Zacks Rank #1 and
AFC Enterprises Inc.
(
AFCE
) which carries a Zacks Rank #2 (Buy).
AFC ENTERPRISES (AFCE): Free Stock Analysis
Report
DUNKIN BRANDS (DNKN): Free Stock Analysis
Report
KRISPY KREME (KKD): Free Stock Analysis
Report
MONDELEZ INTL (MDLZ): Free Stock Analysis
Report
STARBUCKS CORP (SBUX): Free Stock Analysis
Report
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