The chickens have come home to roast

Start-ups are taking on the local butcher with responsibly sourced meat. Can they hack it?

One myth that lives on is that India is largely a vegetarian country. Truth is over 70% of our population eat meat and seafood. In many homes, a weekend does not go by without a serving of tangy tandoori chicken, spicy mutton rogan josh or lightly seasoned fish fry. Usually, the local kasai meets this huge demand. But now, start-ups want the choicest cut of the action.

Starting 2015, Meatigo, Licious and Zappfresh have emerged as big players in the online meat trade. Licious, the biggest among them, ended FY19 with revenue of Rs.2 billion, quite a jump from Rs.14.7 million in its first year. The company says that it is growing at 300% year-on-year, with 10,000 orders a day. Meatigo posted estimated monthly revenue of Rs.16 million in FY19 with 13,000-15,000 orders a month and Zappfresh reports average revenue of Rs.30 million per month with 1,700 orders a day. Meatigo’s average ticket size is the highest at Rs.1,200; while Licious and Zappfresh have an average ticket size of Rs.600.

Meaty beginnings 
Founders of Licious, Abhay Hanjura and Vivek Gupta were in comfortable corporate jobs — one was in risk assessment and the other working in an investment firm — when they used to meet for lunch. Their easy conversations were wide ranging, and once they discussed the lack of good-quality meat in India. “While every other household commodity has been branded, including water, meat as a vertical has been completely left out,” says Hanjura. As a person who appreciates a good cut, he suggested that they start a meat business. Vivek was a bit hesitant, but he had been thinking of starting something of his own anyway for a while, so the two shook hands and Licious was founded in 2015.

Around the same time, Deepanshu Manchanda and his colleague at Mobikwik, Shruti Gochhwal had been learning from grocery delivery vendors how meat delivery in India is poorly served. “I realised nobody had really disrupted the segment because of the size of the market,” says Manchanda, adding, “The supply chains were fragmented and there were lack of options for the customer.” The two, who were both in sales, had done their market survey in 2014 and started Zappfresh a year later. Close behind, in Delhi, Siddhant Wangdi had been making plans to start his own venture. He had been part of a leadership programme at the Tata Group, working across departments, when the idea for Meatigo struck him. A foodie, he was tired of hunting for fine meat in India, and he launched his start-up in 2016.

These start-ups have set themselves a hard task. That is because around 90% of the over Rs.1-trillion meat trade in India is still unorganised. Analysts say the remaining 8% is served by organised, offline retail, and 1-2% by the organised, online channel. So, the start-ups need to more than politely knock on doors, they have to fight for every inch. Hence, they are working hard on transforming every part of the process — from sourcing to delivery. 

For sourcing, the start-ups partner with farms to get hormone and anti-biotic free meat, through exclusive tie-ups. Besides training the farmers, they deploy teams at these sites to keep a check on the health of the animal, provide them with the right feed and keep them ‘bio-secured’ or avoid letting them mix with the regular farm breeds. The partner-farmers are paid higher than they would be by regular retail chains.

Meatigo’s Wangdi says “the meat in India tastes different from frequent use of antibiotics and hormones for better yield and disease-free produce”. India ranks fourth in the world when it comes to use of antibiotics in animal farms. While internationally, use of antibiotics is prohibited in food products of animal origin, including fish, it was not until 2017 that the health ministry here took steps to limit its usage in meat produce. 

Gupta of Licious says, “Not only are our livestock free of antibiotics and steroids, but also of a certain age and weight to ensure that the meat is tender and at its best in terms of taste. To that end, we have set up testing labs including one in Gurugram, to ensure the quality and freshness of the meat procured.” The start-ups are also adventurous with the kinds of meat they offer, and can deliver duck, quail, blue crab and Atlantic salmon to your door. 

The slaughterhouses the start-ups work with are also carefully vetted. For storage, Licious’ Hanjura says, they use globally accepted techniques, such as storing the slaughtered animals in certain conditions to reduce their pH balance to 5, which softens the meat. “Throughout the process, until the product is delivered to the customers all products are sorted at a temperature of 0-50 Celsius,” he adds. Their processing plants in Bengaluru, Mumbai and Delhi-NCR are run by qualified food technologists and microbiologists. As meat is highly perishable and given that the success of these start-ups lie in ensuring steady availability, they are banking on machine learning and AI to precisely predict the demand pattern across seasons. “We have a fill rate of almost 98%, so as a customer you will never find a product out stock,” says Manchanda. 

There is the frozen foods category that no meat company can ignore, but this is dominated by brands such as Venky’s, Suguna and Godrej Tyson. Moreover, with an effective distribution network, their products are available at any neighbourhood supermarket and at times, with lucrative discounts. Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India, says that the start-ups cannot directly compete with frozen foods brands. “But they can differentiate in value-added products such as pickles, specific masalas and marinated dishes,” he says. Pahwa adds that such products can help with branding, mostly in the Tier-I market. 

Therefore the start-ups are trying to beat the existing giants through in-house innovation and by moving up the freshness curve. Licious serves up freshly cut and marinated food products, such as kebabs and nuggets, which are made at their own facilities. It also offers hyper-local delicacies such as kalimiri chicken (New Delhi), chicken ghee roast (Bengaluru), Andhra chilli chicken (Hyderabad), kozhi milagu varuval (Chennai) and prawns koliwada (Mumbai/Pune). Meatigo offers a more premium product range to stand out, and every month they launch two new products, such as pork belly, gourmet sausages or Butterball’s turkey. “These are not just sausages. We have various options, with various meats and flavour combinations,” Wangdi says. 

So far, value added products contribute only a small portion to their revenue — 20% for Licious, and 10% for Zappfresh, but almost 50% for Meatigo since it is the only one offering products such as streaky bacon and prime bacon. Bestsellers on the former two platforms include chicken breasts, chicken thighs and a range of seafood. While none of them are profitable yet, Ben Mathias, MD, Vertex Ventures, who has invested in Licious, says he was sceptical about the start-up’s prospects in the raw meat segment since it is operationally heavy. “But, when we met them again about a year-and-a-half ago, they had proven themselves and their operations were showing very strong unit economics,” he says. Bertelsmann India, 3one4 Capital, Sistema Asia Capital are some of Licious’ other investors. While Meatigo is bootstrapped, Dabur India’s chairman Amit Burman and SIDBI Venture Capital have invested in Zappfresh.

What next?
As things stand, the meat start-ups are operating in a niche, with their reach confined to the metros. Going beyond the big cities is the next target. Pahwa says that calls for a different approach, “An only online play might not work in smaller cities. They need an omnichannel approach. I think everybody will open experience centres.” Licious already has one in Gurugram. “As people get more comfortable buying online, the number of stores will eventually reduce,” adds Pahwa. He believes the Tier-II market, which is more price-sensitive, will take a while to crack. But, there is potential nevertheless.

Technopak’s associate VP-retail and consumer products, Ravindra Kumar Yadav, feels that, in three to four years, there might be more players entering the segment. “Ultimately, like any other aggregators and start-ups, two-three clear market leaders will emerge,” he says. While some analysts believe the coronavirus pandemic could upset the growth forecast for the meat industry, others are of the view that the current crisis may be a blessing in disguise for these start-ups. On one hand, consumers are avoiding meat due to a fear that it could be a carrier of coronavirus. But on the other hand, many are appreciating the convenience of getting fresh meat right at their doorstep. 

Hanjura of Licious maintains that orders have been growing and despite a slowdown in the initial days of the lockdown, they are back on track with order deliveries. “We believe this will be a permanent shift. We have already seen 200% rise in consumer demand,” he says. Zappfresh is also using this crisis as an opportunity to build awareness about quality and hygiene to score over the local meat vendor. “In fact, a new campaign is already underway to inform people about how meat can be an excellent immunity booster,” says Manchanda. While start-ups are busy geeking up this young sector, the world is also making a conscious shift towards plant-based meat. In India, we are still riding the antibiotic-free fresh meat wave.