“If you don’t eat yer meat, you can’t have any pudding. How can you have any pudding if you don’t eat yer meat?,” Pink Floyd famously sang in ‘Another Brick in the Wall’ Part II (1979). Since the dawn of time, there has been much exhilaration surrounding the consumption of meat. No wonder, India is currently the second largest processed meat and poultry market, growing at a CAGR of 22%, according to the global market intelligence agency Mintel.
Nevertheless, meat – especially the experience of buying it – remains a stigmatised topic in India, hidden in black plastic bags and procured quite hastily from unhygienic slaughterhouses that are clustered in some of the dirtiest and most crowded places of the city. Backed by technology and innovation, one startup, Licious, is striving to bring meat to the limelight by uncovering the shroud that currently surrounds it.
Headquartered in Bengaluru, Licious is an online gourmet meat startup that, unlike other ecommerce platforms in the space, is actually based on an end-to-end model that starts right from procuring the fresh produce to processing, storage and delivery. In an industry largely dominated by the frozen meat market, this Mayfield Capital-backed gourmet meat startup endeavours to satisfy customers with fresh, locally-sourced meat and seafood that has been processed using globally-accepted scientific techniques.
Before we delve into its exciting two and a half year journey, here are some key stats that perfectly highlight just how far Licious has come since its inception in 2015:
- Boasts more than 300K customers across the county.
- Handles over 5,500 orders every day.
- Has forged partnerships with over 180 vendor partners, including individual farms.
- Has set up a chain of processing plants and more than 27 delivery centres.
- Present in five cities – Bengaluru, Hyderabad, Delhi, Noida and Gurugram – with a workforce of around 600 people.
- Has attained operational break even in Bengaluru, aims to become profitable within the next three to four months.
- Has raised $14 Mn+ in funding from a clutch of investors such as Mayfield Capital, 3one4 Capital and Sistema, among others.
Meat Lovers To First Time Entrepreneurs: How Licious Was Conceived
Owned and operated by Delightful Gourmet Pvt. Ltd, Licious was founded in July 2015 and officially launched in October of the same year – by Abhay Hanjura and Vivek Gupta, former corporate executives and self-proclaimed foodies. During his initial conversations with Vivek in early 2015, he talked passionately about the inherent problem pertaining to the shopping experience of meat, the duo recalls.
He explains, “Although my initial hypothesis was very limited, I found that the experience of buying meat in India is very unappetising. Together with Vivek, I wanted to embark on the journey of solving this problem.”
Having come from middle-class families with no prior entrepreneurial experience, this was a major step for both of them. However, quite coincidentally, each came with a specific set of skills that made the process of starting up much easier. A Kashmiri Pandit from Jammu, Abhay, a former Futurisk Insurance Broking employee, has a biotechnology degree and is also an Indian Institute of Insurance alumnus.
A qualified chartered accountant, Gupta, on the other hand, joined VC firm Helion Ventures as a Finance Controller in 2006, where he architected a number of consumer deals across ecommerce, FMCG and other sectors, including iD Fresh Food, BigBasket, among others.
Armed with a keen eye for scalable and executable ideas, which is often typical of an experienced investor/VC, Vivek soon realised that the issue in the Indian meat industry was not insufficient availability, but lack of trust. As a result, they started focussing on building a consumer brand, rather than just an online marketplace.
It was around the time that the duo started engaging with Adithya Kote, who was then the Creative Head at Cafe Coffee Day Group. After going through more than 300 name ideas, they finally zeroed in on Licious, which is actually taken from the word “delicious”. On why they ended up with that particular name, Abhay said, “We wanted to name our company something that appeals to people’s emotions. Our intention was to be a complete meat brand.”
How Licious Is Striving To Streamline Meat Sourcing And Processing
As Gupta proudly answers, “There is ordinary meat and then there is Licious meat.” Meat, according to him, is a highly commodified item. Although the founders admit they have not created any new product with Licious, their aim was to create a brand around this category.
In the food space, India has seen atta getting branded, butter getting branded and milk getting branded. Today consumers don’t buy groceries. Instead, they buy brands,” averred Vivek. While this might be true for other categories, meat as a vertical has been completely left out. Although meat is well loved by most Indians, Abhay points out that our hypocrisy is evident in the fact that we hide meat in a black thaili (packet), which incidentally was what inspired Licious’ white packaging.
Back in 2014-15, Vivek recalls, there was limited visibility of the problems and gaps that exist even now in the meat market. To create their initial value proposition, Hanjura and Gupta had to first interact with a lot of different people from both consumer and vendor sides. Following were some of the problems that the duo uncovered during their initial interactions:
- Lack of food safety and hygiene, which made the experience of buying meat extremely harrowing.
- The absence of widespread of awareness, be it in the way farmers were raising the livestock, the way they were fed or the way the meat itself was processed. Interestingly, up until now, there was no such thing as the processing of the meat.
- The sector, even today, is largely dominated by local integrators who are selling up to 90% of the available meat live to butcher markets. While consumers have been programmed to think of fresh cuts as the best form of meat, what is often overlooked is the science that controls the quality and “freshness” of the product.
Licious was, therefore, built with the vision to offer an alternative that can be consumed safely by even pregnant women. He adds, “Ours is a bundled proposition. Because we have built the country’s first meat brand, there is a lot of responsibility on us to ensure that we have a differentiated product. And to create a differentiated product, we have to be present end-to-end.”
To solve the issue of hygiene and food safety, the gourmet meat startup relies on globally-accepted meat processing techniques. The process, according to Vivek, usually involves cold-chain, ageing neutralisation of pH balance and natural tenderisation, before the meat can go for butchering.
Inside Licious’ Futuristic Processing Plant
In order to bring efficiency to the processing of meat, the team at Licious had to first define their standards, in terms of the livestock being free from antibiotics, steroids, etc. To that end, the company has set up testing labs – including one in Gurugram, where “meat scientists” check the quality of the meat procured, ensuring that it is devoid of any of these substances.
Related Article: Meat Delivery Startup Licious Raises $25 Mn Series C Funding
Apart from that, it has also set up its own cold-powered processing plants in Bengaluru as well as Delhi-NCR. These plants, according to the founding duo, are run by qualified food technologists and microbiologists. And the actual processing depends on the type as well as the cut of meat, which can range from curry cut to keema.
What sets Licious apart from other meat retailers or e-tailers is that it leverages technology to keep track of every step of the process. With the help of algorithms, therefore, it keeps records of everything digitally for further monitoring.
In the highly fragmented and unorganised meat segment, Licious, backed with technology, is striving to bring efficiency to the sourcing and processing of produce. For instance, the last-mile engagement with the customer happens with the help of technology. Because the company interacts with the customers directly via the website or the app, the last-mile inventory management becomes more streamlined.
This, essentially, eliminates the need to stock the products like retail shops, which in turn reduces its lifespan. Another angle of technology use and innovation is tracing the whole inventory, from the time it is sourced from the suppliers till the time it reaches the customer.
When the lamb is hung in the cold room, for instance, care needs to be taken to ensure that the meat is not frozen suddenly. To that end, the company relies on a technology that maintains the conditions inside the cold room, including the temperature, humidity, fan speed etc. In fact, the tracking of the entire value cold chain is done through technology. Furthermore, on the logistics side, when the product leaves the plant to be delivered to the customer, a specific set of algorithm helps track the temperature at which the meat is stored inside the vehicle.
Similarly, on the delivery side, the tech team at Licious has developed containers that come equipped with temperature sensors. Along the same line, the company has built a biodegradable bag that can maintain the temperature between 0°C and 4°C for around three to four hours. It currently in the process of adding these trackers to the delivery bags used by the delivery agents.
Additionally, they have created a technological system that helps predict consumer behaviour ahead of time. Based on the behavioural patterns that are collected over time, the gourmet meat startup has built several algorithms around that are working to solve the problem of stocking branded, chilled meat round the clock.
In the fresh meat category, some of the popular products that Licious specialises in include chicken breast, chicken drumsticks, goat keema, lamb chops, among others. Apart from red meat and poultry, the gourmet meat company also offers a range of fish and seafood products such as basa fillet, mackerel, sardine, prawns, etc. Some of the exotic meat varieties that Licious offers on its platform include turkey, blue crab, quail and Atlantic salmon.
In addition to raw meat, it sells a variety of pre-marinated meat that is created with in-house recipes. Within the ready-to-eat range, the gourmet meat startup offers soups, pickles and spreads like tuna spread, butter chicken spread, etc. With a shelf life of 30 days, these products have no added preservatives, claims Abhay.
The gourmet meat startup is currently in the process of expanding its product category in this vertical. Another value-added category the Licious caters to is cold-cut meat, which together with pre-marinated meat and ready-to-eat items accounts for close to 20% of its total sales.
The meat, Licious provides, comes from cage-free farming. To offer an end-to-end solution, the company started working with farmers to procure the team. On the seafood side, they employed people on the coast. Additionally, the founders also onboarded other partners to have a right cold chain infrastructure in place.
Over the last two years, Licious has also forged contractual arrangements with a number of large institutional meat vendors and integrators on the poultry side, who are trained in managing livestock and meat handling techniques. In total, the startup has on-boarded around 180 vendor partners, who, in turn, work with individual farmers.
This, the founders claim, allows them to deliver the products within 120 minutes of ordering, either through the website or the Licious app. They are sold across BigBasket, Grofers, Amazon, Daily Ninja as well.
Over the years, the gourmet meat company has also trained farmers and farm owners on the best practices of rearing and feeding livestock. To further ensure the quality, each of the products is sourced locally from the place of their origin.
In case of fish, hilsa, for instance, is sourced from the Brahmaputra Basin or Bangladesh. Similarly, seafood is sourced from the east as well as the west coasts of India. Licious currently has vendor distribution networks across both coasts. Everything is sourced from the point of origin, meaning all the meat is fresh, not frozen, with two-day shelf life.
At present, the fresh meat range forms the company’s core business, contributing the highest number of sales. Of this, around 40% to 45% of all orders are poultry, while red meat – which essentially refers to goat, lamb and sheep – accounts for another 20%. As stated by Gupta, fish and seafood contribute nearly 30% of Licious’ total orders.
Why Competitive Pricing Is Not The Most Important Thing
When it comes to poultry, the quality of meat depends greatly on the breed of the bird as well as the feed given to it. So, the way the bird is brought up determines, to a large extent, the quality as well as the price of its meat. Because the price is dynamic, depending on the demand and the supply in the market, it tends to create a lot of pressure on the back-end ecosystem to keep pricing low.
The founders elaborate further, “On the price side, you can’t fight a large integrator that is producing thousands and thousands of tonnes of meat every day. So, the way many players keep the price in check is through cross-breeding. The birds are often brought up in small coops and pumped with growth promoters, antibiotics or hormones. You get unprofessional child labour to manage it. Plus, there is no quality check, no proper slaughtering process.”
Licious, therefore, initially focussed on adhering to the correct food safety standards and offering high-quality, cage-free meat. With scale, they have managed to bring the costs of products down significantly. Overall, between a guy who buys his meat from local suppliers and slaughterhouses and someone who gets all his meat from Licious, the overall dent in the pocket per month is not more than $4.6 (INR 300), claims Vivek.
With a lean team and an efficient process in place, the gourmet meat company has managed to bring down its own expenses, thereby enhancing its revenue and profits even further. Gupta adds to that, stating, “Because I come from a finance background, every cost is tracked efficiently. We don’t splurge as a company. Even after VC funding, we have been very conservative in terms of our spendings.”
As a result of these cost-saving measures, Licious managed to hit breakeven in Bengaluru and has actually become profitable at the operational level. Its annual turnover has increased by several-fold to $2.3 Mn (INR 15 Cr) as of August 2017. It now aims to break even within the next three to four months.
Relying On Word Of Mouth To Create A Sustainable Business
Over the last two and a half years, since its inception, Licious has successfully achieved an upward growth trajectory that hasn’t yet slowed down. It originally raised a Seed investment of about $1 Mn (INR 6.4 Cr) in 2015 from angel investors such as Mohandas Pai, Kanwaljeet Singh and Kaushal Agarwal.
Within seven months from that, the company announced a $3 Mn (INR 20 Cr) Series A fundraise from Mayfield Capital and 3one4 Capital.
Later, in May 2017, Licious secured its Series B funding of $10 Mn from Mayfield Capital, 3one4 Capital, Sistema Asia Fund and others. The funding was largely used to set up cold chain-powered processing units as well as delivery centres in Bengaluru. Some portion of the logistics between these centres was also outsourced. However, the last-mile logistics from the processing centres to the customer’s house is currently done by an in-house team of delivery boys, adds Gupta.
The company claims that the number of orders grew from 1,000 in July 2015 to 5,500 daily orders currently, with an average ticket size of $8.4 (INR 550). From clocking business $461.1K (INR 3 Cr) in the first year, Licious managed to hit the $384.2K (INR 2.5 Cr) in a single month last August.
Attributing the growth to its increasing repeat customer base, Vivek adds, “More than 70% of our business has come through word-of-mouth. Around 90% of our monthly revenue today comes from repeat business.”
To achieve that feat, the gourmet meat startup adopted a very comprehensive marketing strategy, starting from radio sessions, tasting sessions, referral campaigns to chef tables, sampling, interactions with food bloggers, apartment events. Apart from that, it also conducted campaigns to increase customer awareness about the quality of meat, different types of cuts, etc.
Adding to this, Gupta said that that the meats/orders are vacuum-packed with the face of an actual customer on the packaging. When asked why they chose to put their customers’ faces on the packaging, Abhay quips that the aim is to create an approachable brand that interacts and engages with customers closely. What has helped Licious become a more self-sustaining business, over the years, is the fact it is based on a model that is very viable, believes the founding duo.
Since it does not depend on the volume of new customers and thrives on repeat business, the company, unlike ecommerce players or retailers, has managed to cut down costs substantially, while also increasing its revenues by leaps and bounds.
Five Cities, Two Processing Plants, 27 Delivery Centres
Today, all products sold to Bengaluru-based customers are processed at a 20,000 sq ft processing plant located. Boasting a capacity to process 10 tonnes of meat per day, the facility works in tandem with 11 delivery centres spread across the city.
In February, just over a year after its launch, Licious expanded to another city: Hyderabad. Most recently, in October last year, the gourmet meat startup branched out to Delhi-NCR, armed with a state-of-the-art processing unit in Gurugram and 12 delivery centres.
According to Abhay, setting up the infrastructure in Delhi was slightly more challenging than in Bengaluru because the market is a bit more fragmented in NCR. However, despite initial hardships, Licious currently has around 10 delivery centres across Delhi, Noida and Gurugram.
With a workforce of 600 people, the startup now has a network of 27 delivery centres in the five cities. True to its city-by-city approach, it is currently preparing to go live in Mumbai and Pune by 2019.
Initial Challenges, Future Plans
No entrepreneurial journey is devoid of challenges and obstacles and it wasn’t any different for Abhay Hanjura and Vivek Gupta. According to them, the biggest challenge they faced initially was getting the team right. The first six months, the duo recalls, was spent getting the right team and the product. Similarly, on the vendor side, the major hurdle was procuring the produce at low costs.
Having overcome these obstacles, however, the gourmet meat company has managed to grow tremendously, which is evident from the expansion of its scale. When Licious was started in Bengaluru in October 2015, Vivel recounts that, for the entire month, they bought a total of 1 ton of meat. Today, nearly 150 tons of meat processed per month in the four cities.
Coming to its future plans, the duo revealed, “We have enough money in the bank to expand to Mumbai and Pune. But, sometime this year, we will do another fundraise. It will probably be the last fundraise in our journey as a startup because we hope to turn profitable by then.”
Apart from expanding its geographical presence, new product categories, recipes and catalogues are also in the works particularly in the ready-to-eat vertical. For that, it is now looking to partner with retailers and other brick-and-mortar vendors to increase the reach of the range among customers.
In the burgeoning online meat delivery space, Licious competes with a number of players such as Zappfresh, EasyMeat, Brown Apron and MeatRoot, among others. In August 2016, Pune-based raw meat etailer EasyMeat had acquired Nonveggies in an undisclosed all-cash deal.
More recently, in March 2018, Gurugram-based Zappfresh raised around $3 Mn (INR 20 Cr) in funding led by Amit Burman, Vice Chairman of Dabur India. The round of funding also saw the participation of SIDBI Venture Capital.
While some of these players have stayed on the ecommerce side, Licious stands out as the startup that is aggressively leveraging technology to create an approachable, consumer-centric brand. Having already acquired a strong position in this space, it remains to be seen if this Bengaluru-headquartered gourmet meat company will ultimately be able to bring order and efficiency to the overall unorganised meat market in India.