Online grocery unicorn BigBasket is exploring investing in early-stage consumer brands that sell on its platform through its accelerator programme BB Accelerate.
The company announced that emerging food brands such as Delight Foods, Kapiva and Vahdam Teas among others are already a part of BB Accelerate. The startups were selected and then nurtured by BigBasket’s executives for a year. BB Accelerate now has 20-25 such small brands on board, according to BigBasket cofounder and CEO Hari Menon.
Speaking to TOI, Menon said these brands get special privileges such as monthly meeting with company executives, consumer data analysis and express delivery of their products.
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The CEO said that the company is considering investing in early-stage food-based startups by taking some equity and pumping back that money to help these brands grow. Menon added that while the scale of investment is uncertain at this moment, it would depend on the capital cost of the brands and the nature of its operations.
BigBasket at present owns private labels such as Fresho (fruits, vegetables, idli/dosa batter, meat), BB Popular & BB Royal (grocery staples) and Tasties (coffee, snacks) and many more. It plans to expand this business further, but the company does not want to undertake a private-brands-only approach, added Menon.
BigBasket generates over 35% of its total sales from private labels, and want to scale this up to about 45% with new FMCG products.
Competition Intensifies In Grocery Delivery Market
According to TechSci Research report, the Indian online grocery market is expected to grow at a CAGR of 55% during 2016 – 2021.
The competition is getting fierce, and companies such as Flipkart, Amazon, Ola and Paytm have previously made investments in this sector.
Flipkart recently announced to launch FarmerMart, its food retail business which will sell locally-produced and packaged food products directly to customers i.e, not through third-party sellers. Amazon, on the other hand, has committed to invest $500 million over five years to sell third-party and its own private-label food products, under the brand name Amazon Prime Now.
Walmart-owned Flipkart is likely to formally submit a food license application soon, which would let it start selling food product directly to consumers. Due to the food retail norms, the application for the food license is unlikely to be tied into Flipkart’s SuperMart business, which handles the delivery of groceries, fresh produce and other daily essentials. The company has taken SuperMart to five cities this year; it launched Flipkart Supermart in Mumbai in May, following the launch in Bengaluru, Chennai, Hyderabad and Delhi.