Inside FreshToHome’s strategy to enter Saudi Arabia market

FreshToHome, the Bengaluru-based online meat and fish retailer, made its entry into the GCC region in 2019 with the UAE. Today, close to 15% of the company’s $130 million annualised revenue comes from the Middle Eastern country. The D2C brand is now looking closely at the overall GCC market, starting with Saudi Arabia. 

The company plans to utilise its recent $104 million Series D funding led by Amazon Smbhav Venture Fund to expand its presence in Saudi Arabia, as well as elsewhere in the Middle East and North Africa (MENA) region. 

“According to our internal research, Saudi Arabia is a $24 billion market. We have the licenses and created the entity there, and it will take 9-12 months before we go fully live in Saudi Arabia,” Shahnawaz (Shan) Kadavil, Co-founder and CEO of FreshToHome, tells YourStory Gulf Edition. 

With this funding, the startup aims for the Saudi and the UAE markets to contribute close to 25% to the company’s annualised revenue by the end of this year. Kadavil says a significant chunk of the fresh capital will be focused towards the GCC market. 

“India is already operationally and marginally profitable; we don’t need additional funds for the India market but the GCC is a different ball game,” he explains. 

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Focus on localisation 

The idea is to replicate the same playbook that made FreshToHome’s UAE entry successful. However, Saudi Arabia has a lesser skew of an expat population than the UAE, so the products will have to be more localised. 

Starting with Riyadh as it is the core base, FreshToHome’s primary SKUs will be fish since the market is further away from the coast. The company says consumers will get fresh products direct from the farm while the produce will be processed in the city. 

The team will be soft launching for one year to understand the market before pushing deeper. The idea is to understand which products work and customise the service based on the demography of Saudi Arabia. 

While the market and the demographics will be new for FreshToHome, the D2C brand is pinning on its strategy of stronger localisation. It will set up a localised team in the country, with local Saudis to run the day-to-day operations. Towards that goal, Kadavil says the team has spoken to a few companies in the region for acquisition and partnerships. 

“We are seeing significant traction from the entrepreneurial community. Some of this is recent, but it is also a large market and is fast-growing,” he explains. 

The focus on GCC 

But why the GCC? 

“There is a genuine product use case in our scenario. Food, especially fish and meat, is largely imported from India. GCC has imported $5 billion worth of fish and meat from India, with the UAE being the primary market. So, the source or the moat that we have created in India for fish and meat is applicable for any city in the GCC,” explains Kadavil. 

According to the Arab-Brazil Chamber of Commerce, India was the top food supplier to Arab countries. 

FreshToHome has used its strong sourcing network in India to its advantage in the UAE. Kadavil explains that the startup is able to deliver fresh fish within 24 hours—after being caught in the harbour at 4 am and put on a 3.5-hour flight to the UAE—because it doesn’t depend on the middlemen and uses its own sourcing network.

Apart from this, Kadavil also has a strong personal connection with the region. He has lived in the UAE for a long time and finished his schooling at Sharjah’s Indian High School. “I understand the ecosystem and culture, and I also understand the demographics. These are largely skewed towards the expat population,” he says. 

A larger spending power 

He highlights that FreshToHome has become one of the largest online fish and meat players in the region within a short time frame. While India has a larger addressable market, the UAE helps it maintain the bottom line with profitability.

“While India has an average order value of $10, in the UAE, it is at $20 with the same acquisition costs,” adds Kadavil. This is topped with high customer retention as the frequency of meat and seafood consumption is higher in the region. 

He explains it was also easier for the startup to activate its brand locally thanks to widespread digitisation.

Currently, FreshToHome competes with the likes of Stockmansteaks, Meatse, BucherShop, MeatnMore, Barakatfresh, and others. A report by Mordor Intelligence states that the Middle East’s edible meat market is projected to register a compound annual growth rate (CAGR) of 2.13%, with Saudi Arabia being the biggest in the segment. 

FreshToHome had last raised $121 million in a Series C round led by the Investment Corporation of Dubai in October 2020. Founded in 2015 by Kadavil, the company currently has a presence across 160 cities, including seven cities in the UAE.