BANGKOK -- Young Indians are turning to a Thai conglomerate's fried chicken as a crispy, spicy and cheap alternative to global fast-food chains such as KFC and McDonald's.

     Charoen Pokphand Foods, or CPF, the flagship food arm of Charoen Pokphand Group, has opened 265 of its Five Star Chicken outlets across four states in southern India. It is set to double that number.

     "Our Five Star brand is well known among Indian teenagers," said Sanjeev Pant, a CPF senior vice president with its branded foods unit. "Even if they don't know CP, they know Five Star."

     Although CPF has been in India since 1992, bringing in Five Star Chicken was the Thai company's first step into the consumer food market.

     The first Five Star outlet opened in Bangalore in December 2012, and was initially modeled on Five Star stalls in Thailand, which only serve food to go. Some changes were made to suit the Indian market, where young people are often averse to street food, which they consider unsanitary or for the poor. 

     The Indian outlets soon had eat-in areas of 10 to 15 sq. meters. No cutlery was offered, and the seating was minimal. Most Thais buy chicken for home consumption, since eating with hands in public is considered impolite. The Indian preference, however, is for eating on the spot, and using one's hands to eat rice and curry is common.

     Five Star changes its recipe to suit local preferences. Spices are adjusted not just in comparison to Thailand but also depending on the Indian state. Servings in Chennai, in the southern state of Tamil Nadu, are less spicy than elsewhere, for example. "It's a fusion of Thai and Indian taste," Pant said.

Something "nobody can copy"

CPF is working to bring low- and middle-income consumers in India into the fast-food market. The bigger global chains can be prohibitively expensive. A piece of Five Star fried chicken costs 40 rupees (62 cents) -- about half what KFC charges and only 10-20% more than street stalls.

     The Thai company wants consumers to step up from eating at those stalls. "Our chickens come from our global-standard farms and are more hygienic," Pant said.

     Smita Punitas, a 29-year-old customer, was satisfied with her Five Star experience. "It was crispy and a bit spicy," she said. "I have never tried something like this before." She has been to the shop in her city twice. While she said she prefers the spacious shops of Kentucky Fried Chicken, Five Star offers "great value for the money." 

     After 24 years of building a chicken supply chain in India, expanding Five Star was the natural next step for CPF. The group currently has seven feed mills and contracts with hundreds of local chicken farmers. 

     "Anywhere we have chicken farms and feed mills is perfect for Five Star," Pant said.

     Five Star was acquired by CP in 2005. Currently, the chain does business in nine countries, with 5,500 outlets in Thailand alone. The Philippines, where CP runs farms and feed mills, is the next target market, with entry scheduled for next year.

     Pant believes CP's production backbone gives Five Star "uniqueness that nobody can copy," he said.

     Five Star in India is expected to move into profit this year. Besides opening more chicken shops, there are plans to start selling packaged products in supermarkets under the CP brand.

     The group has a dedicated plant for processing chicken on the outskirts of Bangalore. A new plant opening next year in southern India will produce chilled and frozen products along with sausages for distribution to supermarkets, traditional retail outlets, restaurants and airlines.

     Pant believes packaged foods will eventually become a bigger revenue source than Five Star Chicken because of the range of products involved. Total revenue at CP India is roughly $600 million a year, half of which comes from livestock and the rest from seafood.

     With only Five Star at present, revenue from the consumer food business is equal to just 5% of the livestock segment. Pant hopes the chain's expansion and the introduction of packaged foods will push that figure to 15% within five years.

Nikkei staff writer Rosemary Marandi in Mumbai contributed to this story.

 

http://asia.nikkei.com/print/article/97047