Across the world, consumers are on the lookout for better-for-you indulgence foods. This trend around permissible indulgence has seen a significant uptick globally, especially post-Covid as consumers increasingly focus on living and eating healthier.
As a fund, we constantly look for innovative white spaces across categories, and packaged artisan bakery products fall squarely into one such space. The Indian bakery market is worth $10 billion today, with mass brands on one end of the spectrum, and super-premium imported brands and fresh food gourmet bakeries at the other. There are significant challenges to building a pan-India-serving packaged artisanal baked goods brand, like distribution challenges and shelf-life issues.
We have known Sneh and Aditi since they started their journey way back in 2013, and have been loyal consumers of their breads, cakes, and cookies for almost a decade now. Aditi is a trained pastry chef from Le Cordon Bleu Paris and International Culinary Institute New York, while Sneh is an IIM-A graduate and ex-McKinsey consultant. The brand intends to play in the white space between large FMCG mass brands and local bakery brands with limited reach, to become the country’s first pan-India artisanal bakery brand. The Baker’s Dozen is now well-loved by thousands of consumers like us, and, we believe it has what it takes to dominate this challenging, but huge market opportunity.
At the heart of their offering is their commitment to authenticity, and the very highest standards of baking. There are no artificial preservatives, and the products are made using best-in-class ingredients.
The Baker’s Dozen was the first bakery brand in India to use international technology like modified atmosphere packaging to retain the freshly-baked experience of their products while significantly extending their shelf life. Its strong back-end technology integrations for demand estimation helps manage wastages, and ensures traceability. Their full-stack centralised manufacturing facility near Ahmedabad is highly modular, and the brand currently utilizes only a small fraction of the existing facility.
Covid hit the offline bakeries hard but Sneh and Aditi believe every crisis is an opportunity – they pivoted the entire business from a majorly offline focused play (~80% pre-Covid) to online-first (~85%) while scaling the business almost 5X during this timeframe. They have been very innovative in leveraging evolving distribution channels like q-commerce, food delivery (servicing dark stores) to build a strong D2C brand in a traditionally offline category. A combination of brand stores and dark stores enable a very high degree of coverage, and a wide variety of offerings.
The Baker’s Dozen has been built in a very capital efficient manner bootstrapping its way to around Rs 30 Cr of revenue last fiscal while being EBITDA-positive.
Consumer surveys shows that tastier, healthier, better-for-you ingredients are the key trigger for the purchase of these products, with ~65% customer repeats for the breads showing strong consumer love for the brand.
In a category set to cross $12 billion by 2027, The Baker’s Dozen has been growing quickly and efficiently. They scaled 5X in the last two years, and plan to continue this blazing pace. This funding round will help them invest in R&D, build out their C-suite, strengthen marketing, expand distribution, and upgrade technology even further.