How Licious Became A Unicorn

Direct to consumer (D2C) start-up Licious is the latest Indian unicorn, with a $52 million investment from IIFL Asset Management. It is the first Indian company from the D2C segment to achieve unicorn status. Previously Licious had raised $192 million at a $650 million valuation led by Temasek Holdings and Multiples Private Equity.

The Value Proposition

Licious, founded in 2015, is the brainchild of Vivek Gupta and Abhay Hanjura. The start-up operates a D2C e-commerce platform through which it sells seafood and fresh meat in multiple Indian cities. The company focuses on providing high-quality, hygienically processed meat to consumers at their doorstep. It operates five processing centres, along with around 90 delivery centres, and a strong hyperlocal distribution network for delivering the products to the buyers.

The Indian meat market largely consists of illegal slaughterhouses and butcher shops. The unorganised slaughterhouses often lack basic operational standards and operate in unhygienic conditions, posing health risks for workers as well as consumers. Several start-ups in the organised space are looking to capitalise on the opportunity and create a safer ecosystem for meat consumption.

The Freshness Guarantee

Other markets like the USA had seen the rise of direct-to-consumer meat delivery right in the 1950s, when Omaha Steaks launched its mail-order system. However, in India the lack of proper cold supply chains and the taboo associated with the meat industry ensured that the sector remained unorganised, and that home deliveries remained limited to local butcher shops.

But, in recent years, several companies armed with investor money have been investing in developing better supply chains for perishable goods. Yet, these companies focused on packaged meat or took a day or two to deliver fresh meat. Licious went a step ahead with the zero inventory model to deliver fresh meat within a few hours.

Controlling the Value Chain

In addition to hygiene, these start-ups understand the urban population’s growing obsession with fresh, organic, and chemical-free food. The chemical-free aspect is slightly difficult in the meat space as meat is a highly perishable commodity, making it necessary to use chemicals to prevent degradation. But according to some of these companies, proper handling and efficient cold supply chains ensure that no chemicals are used.

Licious does this by partnering with farmers, selecting the birds, selecting fees, monitoring vaccination, hygiene and other measures. Licious owns and operates the entire back-end supply chain, and completely shuts out any middlemen. Involving a middleman could mean that the company’s standards might not be upheld.

Unlike other start-ups that set up cold-supply chains and now supply fruits, milk and other items, Licious plans to stick to the meat. But it has been introducing several other value-added products such as cold cuts, spreads, and fry-and-eat products to enhance its customer offerings. In addition, it offers various cuts for different dishes.

In order to convince customers about the authenticity and hygiene, the company has also begun setting up experience centres. The move is in line with the company’s omnichannel strategy.

Pandemic Push

The pandemic has been a boon for these companies as more consumers came on board. Apart from the convenience, the strict hygiene helped the company’s increase its user base. According to reports, the company now fulfils more than 10 lakh orders each month, with 90 per cent customer retention. According to publicly available data, the company had clocked in Rs 138 crore in revenues with expenses of Rs 283 crore in the year ended 31 March 2020. The company recently announced that it had a revenue run rate of Rs 1000 crore.

Rise of the D2C Business Model in India

In recent years, direct-to-consumer brands have seen a rapid rise. With strong investor interest and funding, these brands have scaled heights within extremely short periods of time. Unlike traditional brands that had to move slowly due to a lack of funding, these brands have the luxury of burning investor money.

For instance, a report by Avendus shows that Bikaji Foods took 21 years to reach the Rs 100 crore revenue mark. In contrast, D2C brands like Country Delight, MuscleBlaze, and Licious took just three to four years to hit Rs 100 crore in revenues. The same pattern holds true for electronic brands like Boat, which took two years, and personal care brands like MamaEarth, which took three years.

Despite the rapid scale-up, Licious was the first D2C business to achieve the coveted unicorn status. However, markets like the USA show that the D2C space could see higher valuations in the coming years.