Reynold Harish, an investment banker in Bengaluru, was unwilling to step inside a meat market again after the experience of shopping online during the pandemic.
“The stench and the entire unpleasantness of the meat-buying experience drove me back to the online platforms. However, now it’s only limited to buying the top-up cuts or special cuts,” he says. Harish has resumed buying poultry, fish and seafood supplies from the bazaar nearest his home, as this allows him to examine the fresh produce and discuss the cut with the shopkeeper.
India’s ₹3.3-lakh-crore (gross merchandise value as of 2019) meat market is soon set to grow beyond ₹4.6 lakh crore, according to Redseer Consulting. It helps that over 70 per cent of the Indian population consumes meat in some form. “This is particularly prominent in eastern and southern India. For instance, over 98 per cent of West Bengal’s and Andhra Pradesh’s population consumes meat. Fish is the most consumed form of meat,” the Redseer report said.
Online platforms account for a minuscule one per cent of the country’s meat and seafood market, although start-ups have made some headway with product-specific supply and quality control chains. Some of the largest players in the sector are Licious, FreshToHome Foods, Captain Fresh, Zappfresh, and TenderCuts.
Given the low penetration and largely unorganised nature of the online meat delivery platforms, marquee investors such as Temasek, Prosus, Tiger Global, 3one4 Capital, and Amazon have poured in over $1 billion funding for the sector, according to market intelligence platform Traxcn.
As much as $132.9 million was raised across eight rounds in 2023, as against $380.9 million across 23 rounds in 2022. These inflows have even given rise to a unicorn — the direct-to-consumer (D2C) firm Licious, which was valued at $1.5 billion in April 2022.
Fresh taste of success
Meat delivery requires supply chains to be organised according to geography and category of products, industry players explain.
Bengaluru-based meat delivery platform FreshToHome, for instance, has 40 collection centres and a ‘commodities exchange’ electronic trading platform for fishermen who sell their catch directly to the company, says its founder, Shan Kadavil. Nearly 4,000 fishermen across 400 harbours use the platform, he says. According to government regulations, fresh fish from the sea must be auctioned. The company’s platform facilitates the auction by allowing fishermen to click and upload images of their catch, which then fetches them a fair price on the platform, Kadavil says.
“It’s a US-based patent, which allows us to forecast prices both at the time of buying and selling; and our produce is fresh by at least two to three days than most of the competition because we buy directly from the source, resulting in longer shelf-life,” he says.
The company also engages in contract farming for varieties such as basa, rohu, katla, shrimp, and prawns. When it comes to poultry, the company controls production end-to-end — right from breeder flocks and hatcheries to transportation and marketing. It sources mutton through partners.
FreshToHome currently operates in 154 cities in India, as also several locations in West Asia. In metros such as Delhi and Mumbai, seafood and poultry orders are delivered the next day.
Cold chain is an important part of the meat business, says Deepanshu Manchanda, founder of ZappFresh. The platform currently delivers in the National Capital Region and Bengaluru, and plans to launch in all the other metro cities this calendar year.
“Our emphasis is on end-to-end cold supply chain in warehousing, transportation, and processing,” Manchanda says. The company relies on automation, AI in temperature control, real-time monitoring, and pilferage control technology for smooth operations.
Wastage control is an equally important aspect of the meat delivery business and online companies say they have cut wastage to 3 per cent. “Our overall wastage is 2.5 per cent. Typically the worst case in the industry is about 15 per cent. Most e-commerce players have wastage of 8-9 per cent,” says Kadavil.
A rebuild in the works
In 2023, food delivery major Swiggy shut its online meat shop, reverting to offerings from D2C firms instead. Rival quick-commerce players such as Zepto and Zomato-owned BlinkIt followed suit.
“I see two major reasons for the downturn — supply chain issues and lack of differentiation,” says an investor, declining to be identified.
Meat buying is concentrated during the weekend, leading to cash burn in building a supply chain to cater to this peak demand period.
Ashish Agarwal, Director, Acube Ventures, points to regulatory complexities and compliance issues, along with supply chain interruptions and cost increases as the major obstacles facing the meat industry.
But most investors and senior executives remain hopeful. Overall, meat consumption continues to grow and newer segments such as ready-to-cook products are opening up.
“Emerging consumer trends and a growing interest in home-dining experiences fuel the demand for quality and easy-to-use meat products. Startups with strong business models and sustainability focus can survive the current funding issues and become industry leaders,” says Agarwal.