With An Eye On Contract Farming, Milkbasket Commits $1.4 Mn On Fresh Products

Gurugram-headquartered hyperlocal delivery startup Milkbasket has announced that it is investing $1.44 Mn (INR 10 Cr) to scale its fresh fruits and vegetables category.

Milkbasket said that it aims to set up to 10 additional collection centres in villages to promote right farming practices for better quality yield, maintain the cold chain to mitigate the food wastage and preserve the nutritional value of produce.

The company has first launched a centre in Bakhtawarpur in Delhi which receives fresh produce from over 20 villages around the city. Going forward, the company is looking to open these centres in shortlisted villages in Bengaluru, Hyderabad, Nasik, Haryana, Himachal Pradesh and Uttar Pradesh.

Founded in 2015 by Anant Goel, Ashish Goel, Anurag Jain and Yatish Talvadia, Milkbasket fulfills the daily grocery needs of a household with deliveries starting at 7:00 a.m. The company claims to serve 100K households. It claims that 70% of Milkbasket revenue comes from non-milk products, which are serviced by 8,500 SKUs.

The company last raised $10.5 Mn in a funding round led by Unilever Ventures with participation from Mayfield India, Kalaari Capital, Blume Ventures and a few Indian family offices. In all, the company has raised $26 Mn in multiple funding rounds.

Over the last few months, it claims to have grown 20% M-o-M. The company says that it has achieved positive unit economics in its first six months of operations and continues to grow rapidly.

“We process over 2,000 tonnes of fresh produce on a monthly basis and deliver high quality fruits and vegetables to over 100K families on a daily basis. Currently, fresh fruits and vegetable category contributes over 25% of our sales and we endeavour to grow this category by at least 1.5x over the next 12 months,” Anant Goel, cofounder and CEO at Milkbasket said.

What Is The Plan?

The company said that the collection centres were first introduced to ease farmer lives while being responsible for verifying and certifying the quality of fruits and vegetables procured by the company’s partner farms. Other benefits include a fair price for their produce, to and fro transportation from the collection centres, incentives for good farming practices and more.

Milkbasket says that the company records farmers’ data, their agricultural practices and their yields. They say it also helps farmers with critical sowing and harvesting decisions.

Further, Milkbasket said that it has tied up with multiple FPOs across the country to source directly from states like Bihar, Himachal Pradesh, Uttar Pradesh and Gujarat. Goel says that they will now continue to invest significantly to establish a robust processing and distribution network over the next year.

Going forward, Milkbasket aims to get into the contract farming. It is in talks with various agronomists and farming experts to help farmers develop sustainable agricultural systems by technical knowledge transfer.

To begin with, Milkbasket has partnered with multiple hydroponic farms to ensure 100% pesticide free produce for its customers. It is the first player in the market to sell 3 tonnes of hydroponic produce every month.

The Competitive Market Of Fresh Produce

One of the biggest challenges in the fresh produce for the country is time sensitivity. With cases of extreme carelessness and lack of demand leading to wastage of produce, the time-sensitive products are tough to track.

Also, when the focus comes on online grocery delivery, the challenge continues to be the freshness of these products by the time the delivery is done. These companies are facing challenges from local vendors as they ensure timely use and physical check of these products.

India being the second-largest producer of fruits and vegetables, facilitates the fruit and vegetable processing industry in acquiring its primary resources. The agriculture ministry data shows that the production of fruits is estimated at 97.35 MT, while that of vegetables at about 187.5 MT.

The players in the segment include BigBasket, Grofers, Amazon Pantry, Flipkart Supermart among others. A Goldman Sachs report forecasted that the Indian online grocery market is set to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022.