Opinion | Millennial, urban consumers drive fresh food firms
In food market, the consumer is looking for freshness, range and convenience
Fresh is in. If you visit a premium food supermarket, you are likely to be greeted by a well-stocked chilled section with a plethora of new brands in the fresh foods segment. These are products—both snacks and beverages—with a short shelf life. On these shelves, you will find idli-dosa batters, yoghurt, juices, dips as well as meat products.
There are several triggers for fresh food start-ups. “Convenience and hygiene are two of them. But there’s also the promise of a fresh product without chemicals and preservatives,” said V.S. Kannan Sitaram, venture partner at Fireside Ventures, which has invested in several brick-and-mortar food start-ups.
With city folks more pressed for time than ever before, they are looking for such products, giving an opportunity to food start-ups to innovate. “The change is most visible in the affluent, millennial, urban consumers. They want convenience and they want healthier food options without compromising on taste. They are seeking more information about what they eat and will not easily trust brands. They are willing to pay a premium for brands which get all this right.”
Licious, for instance, describes itself both as a classic packaged consumer goods brand and a fresh food company, which has launched a direct-to-consumer online business model. The one-stop shop for meat and fish, currently controls everything, from its processing plants to customer delivery. “And, yes, it is fresh. It has a shelf life of two days,” said Pratik Maitra, associate vice-president, marketing, Licious. The company sells poultry, red meat, eggs, cold cuts, fish and seafood, as well as bottled products such as chicken spread. All the products are preservative free.
Licious, run by Delightful Gourmet Pvt. Ltd, recently raised $25 million. The three-year-old company is present in Bengaluru, Hyderabad and Delhi-NCR, and plans to expand to Mumbai and Pune. Since Licious follows the online business model, the products are not yet available in food stores. “We are obsessed with quality and freshness and, therefore, we do not risk letting our products out of our hands,” said Maitra.
In a completely unorganized market like meat, the consumer is looking for freshness, range and convenience. “The products are vacuum packed and need no washing or cutting,” said Maitra. Licious claims its typical consumer to be more than 26 years. “But we also cater to the mature consumer who has tasted world cuisine. To him, we serve exotic meats.”
Like Licious, the customer for Drums Food International Pvt. Ltd’s Epigamia is also attracted by the promise of a fresh, preservative-free brand. Epigamia sells Greek yoghurt and mishti doi. Its co-founder? Rohan Mirchandani said the brand is disrupting “fresh” snacking in the packaged consumer goods space. Currently, Epigamia sells in the top five cities of Delhi, Mumbai, Bengaluru, Hyderabad and Chennai, with plans to expand to another 25. Mirchandani describes the recent movement towards preservative-free food as a “revolution”. “The Indian consumer is exposed to global products and preservatives are a health concern everywhere.”
P.C. Musthafa, founder of iD Fresh Food (India) Pvt. Ltd, which sells fresh idli and dosa batter, agrees: “Fresh is the way to go in the future. Consumers want healthier food. I read somewhere that in China, 70% of the food business is happening in the fresh category.” Since iD Fresh deals in highly perishable products, it manages its own distribution chain. The products reach the retailer barely an hour after production. Musthafa firmly believes that even larger packaged consumer goods companies are keen on entering the fresh foods category, but they do not have the mindset or nimbleness to do so. Consequently, they will either invest in some of these food start-ups or buy them out, he added.
For now, the challenge to the growth of these fresh food startups in India is inadequate cold chain infrastructure and scaling up of distribution network. But experts see a bright future. The consumer change is fundamental and is not a fad. Besides, health is linked to what we eat and time is more and more scarce. “So, the consumer segment will continue to increase rapidly as affordability increases in India. The retail store operators are also seeing this change and they are improving the availability of in-store infrastructure to cater to the emerging segment of consumers. In more developed economies, chilled, ready-to-eat/cook food is a huge part of the food industry and India will catch up,” says Sitaram.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.
- Banks turned wary of NBFCs months before IL&FS defaults
- HUL Q2: Rising input costs face off against healthy demand growth
- Q2 results: DMart finally set to face a reality check
- Temporary staffing: Decent employee additions, margin pressures may sustain
- Gujarat relief for Tata Power, Adani Power underlines sector’s harsh reality