Startups bet on tech, smart logistics to carve a big chunk off meat & fish market


It is 8 am on Independence Day. Staffers at Gourmet delight’s distribution and packaging center at Mumbai’s Chembur start trickling in. It is going to be an easy day. All deliveries have been cheduled for later hours as most customers had “patriotic” engagements that morning. Some staffers, who start receiving and packing fresh mutton, chicken and vegetable supplies that are arriving from villages around 50 km away, would soon change roles — they would get on their motorcycles and deliver products across Mumbai.

Founder and CEO of the online food store, Raka Chakrawarti, prefers to employ delivery boys instead of using a service like Swiggy. More than 70% of the orders are from repeat customers and it helps if the company, through its staff, can get to know its customers and their preferences.

A degree of familiarity is key in this business.

Customers have a preference for cuts of chicken or mutton. They ask Chakrawarti for fish of a particular size, especially if it is hilsa. Chefs from top hotels, who know her from her earlier stint in hospitality at Taj, call Chakrawarti for supplies.

Success in fresh products, she says, needs a similar intimacy with the supply chain also. Chakrawarti works closely with her suppliers — MD Shakeel sends meat from near Pune, Reena Shah brings in poultry from Nashik and Daniel Joseph, who owns a few fishing boats, supplies fish from Colaba. Chakrawarti likes to update her customers on details like when the next batch of fresh desi eggs would arrive from Nashik or about the catch of the day.

The nature of the business gives it a unique positioning but also acts as a barrier to scaling up. While earning customer loyalty can guarantee business, widening the trade comes with logistical problems.

Even within the same city, it is not possible to spread out too wide, if one wants to deliver fresh fish and meat. Kanwaljit Singh, managing partner of venture capital firm Fireside Ventures, and an early investor in online meat shop Licious in his personal capacity says: “To build the business, you need a supply chain which is very local and a front-end logistics that is very tight. And you have to do it in every city.”

Yet, a bunch of fresh fish and meat start-ups in India have unsheathed their national ambitions after consolidating their home base. In the past three years, a large number of fresh fish and meat startups have set up shop in India, with each major city having at least two or three outfits.

Startups bet on tech, smart logistics to carve a big chunk off meat & fish market
For each one, it has been a learning experience. ET Magazine spoke to five fresh meat and fish startups across the country that are harboring national ambitions. Some, like Licious of Bengaluru, have already moved to their second and third cities.

These young entrepreneurs are turning fresh meats and fish business on its head. They couldn’t have chosen a better time. More families, especially younger people, now prefer to get deliveries at home rather than going to a butcher shop or fish market. Some, mostly those living away from their homes, are even unaware of how to buy fresh fish or meat.

This in a country where 70% women and 78% men are non-vegetarians, as indicated by the National Family Health Survey, 2015-16. It also showed 42.8% of women surveyed and 48.9% of men surveyed consumed fish, chicken or meat weekly. Some surveys have also said a third of Indians are vegetarians, and only a fourth have never eaten fish or meat in their lives. The Union Ministry of Statistics’ National Sample Survey Office survey in 2011-12 showed only 36.88% of the people surveyed had not eaten non-vegetarian food in the last one month. The India Human Development Survey — conducted jointly by India’s National Council of Applied Economic Research and the University of Maryland, USA, in 2011-12 — showed only 23.48% of Indian households could say that everyone in that household has never eaten non-vegetarian food.

Startups bet on tech, smart logistics to carve a big chunk off meat & fish market

The growth potential is appetizing. The market for Indian meat and poultry is pegged at $31 billion, according to industry estimates, and expected to grow at 20% CAGR to $65 billion by 2022. The fish and seafood market is pegged at $20 billion with an expected grow at 15% CAGR. Only 10% of this combined market is organized.

Startups bet on tech, smart logistics to carve a big chunk off meat & fish market
Yet there is a perception challenge. Licious cofounder Abhay Hanjura, who found time to talk to ET Magazine while vacationing in Vietnam last week, recounted how a waiter in a Hanoi restaurant was surprised when he ordered a frog dish. The waiter thought all Indians were vegetarians. This was not a new experience for Hanjura. He recalled how he and his cofounder Vivek Gupta saw the same reaction at Harvard Business School’s India Conference in February 2018. During a session on disruptive innovation for consumer brands, the largely American audience was surprised anyone could think of building a technology-based business on fresh meat out of India.

Startups bet on tech, smart logistics to carve a big chunk off meat & fish marketThe Indian diet myth has to be busted, said Hanjura over the phone from Hanoi. “It is time meat stepped out of the closet in India.” After all, India is one of the largest consumers of meat, the largest exporter of beef and the largest holder of livestock in the world. “Finally, meat is making news for the right reasons,” he said, talking about the buzz around fresh meat and delivery startups.

For one, funding is available and venture capital and angel investments are happening. While Licious from Bengaluru, which is now a three city-operation, has raised around $15 million (Rs 100 crore plus), Delhi-NCR based Zappfresh has already raised Rs 26 crore. Players like Gourmet delight is in the market for funding. Chakrawarti, who has been bootstrapping her venture so far, is looking for an angel funding of around Rs 10 crore. Kolkata-based Delybazar, having raised two bridge rounds (between seed capital and series A), is looking for a fresh round of $2 million (Rs 14 crore).

Technology investments in the fresh food business are usually done in checking the quality of the meat and fish. Licious, for instance, retains a sample from every batch. They also have the technology to track back every piece of meat or fish to its origin.

Startups bet on tech, smart logistics to carve a big chunk off meat & fish market
The business of delivering fresh meat is the exact opposite of what frozen meat and poultry companies do, says Abhirup Basak, co-founder and CEO of Delybazar. Frozen food players build infrastructure to preserve their perishable products for long. But the focus in this business is not to freeze the products but to use a little cooling to preserve freshness and deliver as fast as possible. There are regional quirks too that the players must keep in mind while thinking about expansion. In Kolkata, Delybazar sells more fish than meat and poultry put together. In Delhi, Zappfresh says, chicken accounts for 55% of sales.

The biggest customers are those aged between 20 and 35, says Deepanshu Manchanda, who set up Zappfresh in 2015 along with a colleague from his Mobikwik days, Shruti Gochhwal. Manchanda, CEO of Zappfresh, says the younger generation is keen on non-vegetarian food but does not fancy visiting the butcher or a fish market. Neither do they have the knowledge to choose raw meat or fish based on its freshness and quality?

Keeping meat fresh is the key, says serial entrepreneur Nishant Chandran, who started Tender Cuts out of Chennai after selling his earlier venture EBilling Solutions to Ogone Payment Services. “Meat starts losing moisture the moment it is cut into pieces.”

Startups bet on tech, smart logistics to carve a big chunk off meat & fish market
He had to change his business model midway making the spokes in his hub-and-spoke model, more important. Now the bulk of the cutting is done at designated places closer to the customer to ensure the product is fresh. The spokes are also retail outlets, and retail sales account for 40% of the total.

Just like Chandran, many others have changed their model midway. Some have introduced pickles, spreads, ready-to-eat products, and marinades. Delybazar has even gone the whole hog to add groceries.

Basak says a Bengali household buying meat is usually also looking for onions and potatoes, for the typical Bengali chicken or mutton curry.

Chandran says: “In this business, you cannot go too far from your source. You cannot scale up too much.” One way to get past this barrier is via acquisition. That is what Pune-based Easy meat when it acquired rival Nonveggies, as it wasn’t able to cover the whole of Pune from its single warehouse.

The expansion is on the minds of others, too. Licious, which has 5,000 orders a day, has just expanded to Gurgaon and Hyderabad.

Chandran wants to take Tender cuts, which has 1,500 orders a day, to Hyderabad. Even smaller players such as Gourmet delights (100 orders a day) is raring to expand. Chakrawarti says she will move to cover Bengaluru, Gurgaon, and Pune as soon as she gets funds.

Basak wants to expand Delybazar, which has 400-500 orders a day, beyond greater Kolkata, start at Bhubaneshwar by the March 2019 and then possibly Hyderabad. But is there enough on the plate for everyone? Yes, says Manchanda of Zappfresh. “Market size is not a problem.” The NCR market alone has Rs 12,000 crore worth of annual sales of meat and fish, says the CEO of Zappfresh, which has 1,500 orders a day at a ballpark of Rs 600 per order. He wants Zappfresh to move to another city by December 2018. The company has invested in technology to forecast demand. It is also working with some of the larger grocery players like BigBasket to supply fresh non-vegetarian offerings.

Delybazar celebrated its birthday on August 15. It’s been three years since the first delivery. Unlike Gourmet delights, the day was hectic at Delybazar. The five founders, all engineers from Jadavpur University, could not get together. So, they cut two cakes. One at the office and the other at a processing center. Life has become busier, and meatier too.


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