Is Binny Bansal-backed food startup Yumlane the FMCG of the future?
You know what they say–third time’s the charm, but only if you do not let yourself fail in vain the first two times. Your eventual meeting with success won't occur if you do not extract every learning possible from your failures, and Hitesh Ahuja did that with flair. His first two takes on entrepreneurship in the food and food delivery sector did not see the light of day, but definitely threw light on the gaps and scope in the space.
He found that traditional FMCG still has at least a few good decades left in it.
He also found that times are a-changing, but the convenience of consuming FMCG products cannot. A company with a foolproof product that adds genuine value to the palette, that is easy on the pocket, and with just the right amount of tech infused in it–not for the sake of it, but to genuinely ease the process of buying, as is the true nature of FMCG–will ensure that it becomes a household name.
Being a food connoisseur through and through, he risked making a mark in the same category for a third time, and this time, he felt he had the perfect recipe, for the product as well as for making it click.
Third time lucky
The 35-year-old first-generation entrepreneur completed his MBA from SP Jain Centre of Management in 2005, and was vice president at New Silk Route Private Equity before pursuing his entrepreneurial dreams in 2013. “Our country offers tremendous opportunities on the demand side, but requires hard work, hustle, jugaad, and funding on the supply side to make the business viable,” he explains, pointing out the apprehensions he had while taking the plunge.
The idea for Yumlane struck after thoroughly studying the food supply chain and the various distribution channels available–through two previous plunges in the food and food delivery sector that ended in failure. Thus, keeping in mind the needs of the millennials, the packaging innovation they crafted is like the ‘Tetrapak of Food’ in the food-on-the-go category, with healthy variants of dishes that do not have one single brand and are currently unorganised, only available at street joints or in local restaurants, and so on.
The consumers can eat a ready snack or a meal “out of the box”, pun intended. Says Hitesh,
“We are the first players in the country to use packaging technology similar to Tetrapak, which is used for juices and milk packing, and with our in-house recipes and advanced cooking techniques, offer you a 100 percent preservative-free, fresh and tasty meal in a box via various distribution points.”
As of now, they sell Oriental Meal boxes (Chinese and Thai) and Snacks (Pizza and Momos), priced between Rs 50 and Rs 90.
Eyes on the prize
The company, an FMCG brand, has been quick to embody the functioning of matured players in the space, with all the key brand functions–sales and distribution, marketing (both digital and non-digital), innovation, technology, and new product development–controlled in-house. “Our sales and distribution has various channels, general trade, modern trade, institutions, and online,” he explains.
Their innovations and tech departments have also been working on overdrive, establishing live inventory tracking of stock movements, as well as a 'sales force automation' software and a dashboard tracker for their B2B arm. Hitesh feels that that is the only way he can beat the legacy FMCG brands at their game–by imbibing the best of both worlds, offline and digital, into their workings.
Thus, as far as their B2C activities go, they will be launching a consumer app as soon as they hit the 5,000 retail touchpoints mark in any city they take on. The consumer app will have four key functions–locate, pre-order, pre-pay, and collect.
Their target group is mainly those in the age group of 18 to 28 who are always on the move and would like to eat healthy yet tasty food. “We are targeting college students who, at 1 pm, are seeking options available in their pocket money–typically Rs 100 per day. Or a working 26-year-old who doesn’t want to order in at Rs 150-200, and would rather pre-order, via app, or head to a retail store and pick up a Yumlane meal box at Rs 70-80,” he says.
They took the general trade and modern trade channels for acquiring customers to build initial traction, and continue to do so in their first city of operation–Mumbai. Says Hitesh,
“We have used BTL marketing strategies–sampling, placement, point of sale management, counter tops, floor stacking units, promoters, experiential marketing, residential activations–to generate awareness and build loyalty.”
Early trials and triumphs
The Yumlane journey spans about 365 days, and their execution journey is even shorter–a mere nine months. The myriad challenges that surfaced in this short duration heavily lean towards finding the right product mix suited for the distribution network they have chosen.
“Given that this is a category creation task, the concept selling and education to consumers is a continuous effort. Our first quarter, where we sold less than 10,000 boxes cumulatively, was about achieving the product-market fit. As the concept was validated, the second quarter was more focused on addressing challenges of building out in a cluster, growing from 10,000 to 50,000 boxes.
"Our current quarter is focused on addressing scale up challenges as we inch towards 100,000 cumulative meal boxes. Creating category or unprecedented plays involves a lot of innovation, and to align the whole ecosystem to the white space opportunity has been a challenge,” says Hitesh.
In this jagged graph, where validation came and went only to return once again, being backed by India's foremost new-age entrepreneurs, at the idea stage in the harshest of winters in 2016, kept them going. They had raised an angel round of $300,000 from Binny Bansal, Anupam Mittal, Sachin Bhatia, and a few others, and a seed round of $750,000 from Orios Ventures, around August 2016.
While they witnessed a 100 percent MoM growth last month, an internal benchmark they are aspiring to is to hit Rs 50 lakh in revenue per month, and to sell 100,000, boxes in the next three months. “Our estimate for Mumbai alone is Rs 100 crores/1 million boxes, to be achieved in the next 12 months,” says Hitesh.
They have been able to tap into Mumbai's existing network of mom-and-pop as well as larger departmental stores, and are available almost all over the city. They also supply to certain college campuses. Locally, they are taking on legacy players like MTR, and globally, players like Barilla, Camphell, and Marks and Spencer Foods are in the same space.
“We are in a white space in India, and are firm believers in the India 2 story, as opposed to India 1, which has its focus on the top 50 million of the population,” says Hitesh, signing off.