Lucknow-based brand targets exponential growth by entering quick commerce and expanding artisanal mithai and cafe culture
New Delhi: Lucknow-based food and beverage brand The Hazelnut Factory (THF) is targeting a revenue of Rs 400 to Rs 500 crore by financial year (FY) 2030 as it plans to enter the quick commerce market within 18 months, according to founder and chief executive officer (CEO) Ankit Sahni.
“We are looking at an annual recurring revenue (ARR) of Rs 100 crore by next year. Our target is not less than Rs 400 to Rs 500 crore in the next five years, with the valuation expected to be significant,” said Sahni.
Growth plans & expansion strategy
Founded in 2020, THF currently operates over 18 café-cum-stores and plans to expand to over 70 outlets within the next five years. At present, about 25% of its revenue comes from its cafés. Sahni emphasised the importance of capitalising on the gifting category to increase brand awareness.
The brand sees significant growth opportunities in two areas: coffee and artisanal mithai (sweets). “There are two segments that are set to grow rapidly—coffee and artisanal mithai,” said Sahni.
THF also sees potential in transit retail, including locations at airports, metro stations, and bus terminals. “We are in discussions with two to three airports and hope to finalise deals soon,” Sahni added.
Strong revenue growth & quick commerce entry
The company has seen positive customer reactions and rapid sales growth. “From an annual revenue of Rs 3 crore, we are targeting around Rs 60 crore this year. In the next 18 months, we expect a run rate of over Rs 100 crore,” said Sahni.
To support this growth, THF plans to enter the quick commerce space and launch a direct-to-consumer (D2C) platform to sell bakery and artisanal products. “We are setting up our operations in Lucknow to enter the quick commerce business next year,” he noted.
In addition, THF aims to explore the potential of the National Capital Region (NCR) before expanding into other North Indian cities, including Allahabad, Varanasi, Agra, Bareilly, Haldwani, and Meerut.
Strategic partnership with Bikaji Foods
In October 2024, Bikaji Foods International announced that its wholly-owned subsidiary, Bikaji Foods Retail, would acquire a 53.02% stake in Hazelnut Factory Food Products for up to Rs 131.01 crore. The investment will be made in tranches over the next two years.
“At present, the split is 70% with us and 30% with them,” added Sahni.
Sahni believes the partnership with Bikaji Foods will help scale the business by leveraging Bikaji’s wholesale experience and extensive connections.
Artisanal Mithai & café culture in India
THF’s focus on artisanal mithai aligns with the growing trend of non-frozen, premium Indian sweets. The Indian packaged sweets market was valued at Rs 6,229.7 crore in 2023 and is expected to reach Rs 25,970.8 crore by 2032, growing at a CAGR of 17.19% during 2023-2032, according to a report by Research and Markets.
This growth is driven by a rising working population, changing consumer preferences towards ready-to-serve sweets, and easy availability through online and offline channels. THF aims to tap into this market by offering healthier alternatives, including sugar-free and no-added-sugar sweets made from natural ingredients like dates and premium dry fruits.
In India, the café culture is also evolving, with increasing demand for artisanal sweets and premium coffee. The integration of artisanal mithai into café menus caters to modern consumers looking for traditional tastes with a contemporary twist. THF aims to bridge this gap by offering a combination of artisanal sweets, speciality coffee, and a unique café experience.
Investment in technology and customer experience
THF is investing in technology, allocating nearly 4% of its budget to marketing and 2% to tech enhancements, focusing on both front-of-house and back-end operations. The company also emphasises customer feedback and retention through CRM systems, ensuring a positive customer experience at all its outlets.
Targeting Tier 2 & beyond
THF is actively expanding into tier 2 and tier 3 cities, where its stores have shown promising performance. For instance, its Kanpur outlet attracts around 1,200 visitors daily, selling about 400 cups of coffee and 200 cakes each day.
By capitalising on its brand value and customer loyalty, THF aims to replicate this success across other cities in Uttar Pradesh and North India.
With its strategic quick commerce entry, expansion into new markets, and a partnership with Bikaji Foods, The Hazelnut Factory is well-positioned to capture a significant share of India’s growing café and artisanal mithai market. The company’s focus on quality, customer experience, and technology investment is likely to drive its ambitious growth targets in the coming years.
