D2C Fresh Produce Startup Farmers Fresh Zone Acquires AM Needs

Direct-to-customer (D2C) fresh produce startup Farmers Fresh Zone (FFZ) has acquired subscription-based milk delivery platform AM Needs for $2 Mn (INR 15.95 Cr) in a cash and stock deal.

The acquisition will help FFZ diversify its portfolio and scale operations. On the other hand, AM Needs will leverage FFZ’s consumer base to shore up its presence in the $144 Bn Indian milk market. 

According to AM Needs, the collaboration will bring in ‘tremendous scope’ for the milk delivery startup while ensuring effective service to its customers.

“With this acquisition, we add locally sourced pure country milk offerings to our portfolio…The move puts us ahead of the market by offering its customers subscription-based milk, vegetables, and other fresh products. Using the AI-based demand-driven production planning module – Captain Farm – we can ensure food safety and traceability for the ‘fresh’ category. With this, we will be further expanding our portfolio,” said Farmers Fresh Zone CEO Pradeep PS.

Founded in 2019 by Pradeep, FFZ directly procures products from local farmers and sells them to customers via its platform. The startup deploys artificial intelligence (AI) to predict demand based on past sales data and marketing data and then leverages its value and supply chain to ensure adequate supply flow to all operational areas. 

Incubated at Kerala Startup Mission (KSUM), FFZ is backed by investors such as Indian Angel Network, Malabar Angels and Native Angels Network. It had last raised INR 6 Cr as part of its pre-Series A funding round led by IAN in September 2021.

FFZ is currently operational in five cities – Kochi, Thiruvananthapuram, Thrissur, Kottayam, and Coimbatore, with plans to expand to more cities soon. 

The omnichannel platform is targeting INR 1,000 Cr in revenue in the next five years. FFZ competes with the likes of Fraazo, Gourmet Garden, FreshWorld and Otipy in the fresh vegetables and fruits delivery space.

On the other hand, AM Needs was founded in 2019 by Sujith Sudhakaran and Ranjith Balan. The startup has built a technology stack from scratch to ensure delivery of fresh items such as milk, vegetables, and breakfast essentials to customers. 

Currently operational in four cities, AM Needs collaborates with Kerala Co-operative Milk Marketing Federation (Milma) to sell milk and dairy products. The platform delivered more than 1.2 Mn orders last year.

The fresh fruits and vegetable delivery market has seen an uptick in adoption in the past few years largely on account of rising digital penetration and pandemic-driven growth. There has been a sharp increase in the agritech startups in the country that have changed the game with sharper focus on supply chain and management.

These new-age startups are deploying technology to tackle the inefficiencies of the fragmented and manual labour-led Indian farming landscape. However, problems still persist such as the perishable nature of goods and lower price points  that affect margins. 

An Inc42 report estimates that Indian agritech startups raised nearly $1.4 Bn in 189 funding deals between 2014 and January 2022.

Earlier this month, agritech startup Akshayakalpa raised $15 Mn as part of its Series B funding round. Prior to that in August, Chandigarh-based Harvesting raised $4 Mn in funding from US-based Social Capital and a clutch of other angels.