Licious sees an opportunity to build a $1-bn enterprise in meat market

There is a common notion that most Indians are vegetarian. But look deeper into data, and it turns out that the country’s 70 per cent population is non-vegetarian. However, more than 90 per cent of the $40-billion meat industry is unorganised, thus meat is mostly sold without a quality check and in the hazardous black polythene bags. 

With everything from milk, flour, spices and even water now being labelled, Licious was conceived in 2015 to brand meat, one of the most susceptible categories concerning food safety risk.

For founders Abhay Hanjura and Vivek Gupta, who quit their corporate jobs to start Licious, to make people question the belief that fresh meat is only the one that gets cut in front of the customer's eyes was a challenge. As the category leader, the company needs to work with other players to build consumer awareness about the relevance of meat science, and how it can make a difference to the overall well being, they say.

Licious co-founders Abhay Hanjura (left) and Vivek Gupta

Product concept

The start-up follows a farm-to-fork model, ensuring the right feed is given to livestock and the healthy breed is slaughtered following government guidelines, after which it is transported in a cold chain environment to the processing plants and packaged according to the safety norms. 

“Through its farm-to-fork supply chain network and green-channel sourcing, Licious has established itself as a leading player in the fresh meat category. We have been encouraged by its superlative growth and customer loyalty, and believe Licious is well positioned to become a pan-India brand,” says Dhruv Kapoor, managing director at Sistema Asia Capital Advisory, which is one of the investors in Licious.

As a digitally native consumer brand, Licious engages with its 300,000 consumers across Bengaluru, Hyderabad and Delhi NCR. It has over 90 per cent repeat customers, via its web platform and mobile app. The products delivered are clean, neatly packed in transparent bags, free from chemicals, and easy to use without the hassle of repetitive washing of the meat. The gourmet brand offers curry cut, boneless, cold cut, and marinated forms of chicken, lamb, goat and fish, apart from meat spreads and pickles. 

Revenue model

Similar to any other conventional direct-to-consumer FMCG brand, the company follows a transactional revenue model. It generates revenue from its own channels — Licious web and Licious app— and from channel partners like Amazon and Bigbasket. The company is profitable in Bengaluru and Hyderabad, and plans to invest in newer markets, say Hanjura and Gupta.

With the demand for quality and hygienic meat growing, investors are seeing a big opportunity in the segment. It recently raised $25 million in Series-D funding round, led by Japan’s frozen foods company Nichirei Corp. The start-up had raised another $25 million just three months ago, in September.  

“In Abhay’s and Vivek’s plans for Licious, we identified a mutually shared thesis for what end consumers deserve as an encapsulated experience,” says Pranav Pai, founding partner, 3one4 Capital, an early investor in the company. Marquee investors such as Mayfield India, Sistema Asia Fund, Bertelsmann India, and Vertex Ventures also back the firm, which has been growing over 300 per cent annually.

Challenges

Building, maintaining and expanding a farm-to-fork supply chain, which is cold chain powered, systematically over the years is a complex problem. The other challenging element is the ecosystem at the backend, which is highly fragmented and unorganised. “For example, we must go to each new market and map out the entire supply chain within 300-500 km of the city by identifying farms, fishermen and other stakeholders at the point of origin, introducing them to our specifications and quality standards and working with them to ensure they grow in a sustained way along with us,” explains Hanjura.

Road ahead

There are other players such as Zappfresh and Nandus which have gained local traction, but nothing of a national scale. Licious, which sees an opportunity to build a billion-dollar enterprise, is gearing up for market openings in 11 cities — including Mumbai and Chennai — in 12-18 months, innovate and offer ready-to-cook and ready-to-eat items.

Licious has created a strong barrier to entry

Ben Mathias, Managing Partner at Vertex Ventures SEA and India

We believe grocery as a category is the next frontier as customers leapfrog organised offline retail to digital first. While several players have been able to build online grocery businesses catering to staples and vegetables, the meat and seafood market has largely remained unfulfilled and we do believe Licious is the only brand of scale in this space. 

The biggest pain-point felt by digitally native brands in India is unit economics — for instance, how do you recover the cost of acquiring a customer, and ensure the customer keeps coming back to order more. With Licious, the customer base is sticky with over 90 per cent of orders coming from existing customers. With a strong control over the supply chain and cold chain management, Licious has been able to create a strong barrier to entry for new players.

Factbox

Founded: 2015

Area of business: Online meat marketplace

Funding: $64 million

Investors: Mayfield India, 3one4 Capital, Sistema Asia Fund and Neoplus Technology Fund, Bertelsmann India, Vertex Ventures Southeast Asia and India, UCLA, InnoVen Capital, Nichirei Corp

Breakeven: Already profitable in Bengaluru and Hyderabad