Currently, the three-year old company, Yumlane operates from Mumbai, Pune, Bengaluru and Hyderabad
Mumbai-based FMCG startup QwikPik Technology, which owns and operates Yumlane, aims to touch sales target of Rs 100 crore by 2020 from the current Rs 20 crore, said Hitesh Ahuja, Founder & Chief Executive Officer, Yumlane.
In a freewheeling chat with Moneycontrol, Ahuja said they operate in 4 Indians cities currently and target to grow this number to 8 cities by 2019.
The three-year-old company, Yumlane operates from Mumbai, Pune, Bengaluru, and Hyderabad as of now.
Founded by Hitesh Ahuja in 2016, Yumlane sells packaged food, specifically pizzas and momos, in supermarkets. It also sells the products in about 300 modern trade outlets and through online distribution channels.
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The company which has retail partners like DMart, Food Bazaar, and Godrej Nature’s Basket, raised $4 million in April 2018 in Series A round of funding led by Singapore-based family office RB Investments.
Existing investors who participated in the round include Flipkart co-founder Binny Bansal, Rehan Yar Khan-led early stage venture capital firm Orios Venture Partners, and other HNIs (high networth individuals).
The company plans to use the funds to develop products, increase retail footprint, hire sales and marketing executives, and manage its backend operations.
The 36-year-old first-generation entrepreneur, Ahuja 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.
Excerpts
Q: It’s been almost two and half years since you started Yumlane in March 2016. How has the journey been so far? Have you managed to break even? If not when do you expect to break even? Have you set any targets?
A: The journey has been exhilarating over the past 25 months or so and we are excited to build the heat and eat category in India with our delicious and hygienic pizzas and momos.
Over the last 12 months, consumers have helped us build our modern trade channels to units per month. We would like to achieve Rs 100 crore sales milestone by 2020 before focusing on company level breakeven.
Q: Could you please explain in brief about your business model. What inspired you to start Yumlane and how does it work?
A: Our inspiration to start Yumlane is the new-age / modern Indian consumer who is seeking new snacking options, honest ingredients, zero preservatives and value for money. We started Yumlane as India's first Fresh Food FMCG brand focused on selling new foods to millennials, rushed moms, busy professionals.
Our products are backed by state-of-the-art manufacturing partners and logistic partners at the backend and marquee organized retail partners like DMart, Food Bazaar and Godrej Nature’s Basket who stock our products and keep a certain percentage for every unit they retail.
Q: How is Yumlane different from competitors?
A: Yumlane is building the heat and eat category in India with new foods such as pizzas and momos. We are the first movers in this category and believe there is a large white space opportunity we would like to capitalize.
Q: In one of the past interactions you had mentioned that you want to be the Coke of Food. How are you planning to climb that ladder and what will be your strategy?
A: Yes, over the next 10-15 years, we would like to build a vast distribution footprint and a powerful brand. Our immediate focus is to penetrate deeper in the four cities we are present in and expand gradually across the 250 cities and remain focused on building a powerful brand that becomes synonymous with delicious heat and eat snacks.
Q: You are already into momos and pizzas. Anything more that you plan to add to your gamut of products?
A: We have 25 to 30 products in the R&D stage and at the right time, we will launch these in the market.
Q: How many retailers do you have in general trade and others?
A: Our current touch points across all our channels total up to 1,000+ across the 4 cities we operate in.
Q: You have decided to go asset light? Has it worked so far?
A: Although our chosen approach is asset light, we work closely with our backend partners with strict input metrics on quality and service levels. There are pros and cons to both asset heavy and asset-light models and given the stage where Yumlane is, we took a call to focus on building the demand side and create supply side partnerships.
Q: Penetration is key in your business to make your products available. Digital is the one way to go but are you looking at that kind of scalability? Tell us about your distribution network?
A: Yes, penetration is our key success driver. FMCG businesses consist of 3 key constituents - product, distribution, and marketing. We believe that to execute a successful pan-India distribution network takes anywhere between 5-7 years and with the rise of the internet/digital, the food delivery market will grow manifold. Overall, we believe it is a great time to be in the food retail business.
Q: Don’t you think Patanjali has taken giants by storm in terms of their reach? How are you planning to compete with such giants?
A: Patanjali has built a Rs 10,000 - crore entity in a very short time with key wins in commodity (Ghee & Oil), oral care and personal care categories. Over the last 6-8 quarters, the FMCG giants have responded with new product innovations.
We believe customers will choose to buy a great product at an affordable price irrespective of the brand/label and consumer startups like Patanjali, Chings Secret have been able to build large franchises despite the presence of large multinationals and given the branded food retail market is largely untapped we don’t see any player as a competition.
Q: Which segment are you targeting for your products?
A: Pizza is already consumed by a wide TG (target group) across lunch & dinners. In its current form, we will be able to access a larger customer base and internally we believe the addressable customer base is approximately 100 million households and 300 million consumers pan-India.
Q: What is the funding status? How much more are you planning to raise and are you in talks with anyone?
A: We have raised $5 million from RB Investments, Orios Venture Partners, Binny Bansal, Anupam Mittal and a few more angel investors and are currently deploying the same in our tech, manufacturing, and operations.
Q: What is the market size and opportunity?
A: Food retail makes up 60 percent of the overall retail sales basket which is approximately $1 trillion. A large portion of these sales is unbranded and we believe our select product categories can scale to billion-dollar revenues given the vast opportunity at hand.