01 Sep Startups look to cash in on healthy processed food boom
Innovation in processed food has emerged a focus area for several startups looking to cash in on a booming market for healthy, organic and ready-to-eat food items with a range of products, driven by changing consumer preferences.
Some of these ventures such as Bangalore-based YCook and Soulfull and Delhi-based Zea Maize have gained investor attention with their protein-rich and quick-serve foods.
“People are shifting from grain-based to protein-based diet, as reflected in prices of rice and wheat that haven’t increased in the same manner as fruits, dairy, vegetables and pulses,” said Jinesh Shah, founding partner at venture capital firm Omnivore Partners that invested in YCook India this April. “Also, for the first time, Indian consumers are willing to pay a premium for quality and improved taste of food,” he said.
Launched by ex-banker Janardhan Swahar and his schoolmate Vijay Reddy four years ago, YCook offers sweet corn kernels and cobs, baby corn, chickpea, and chutneys that stay fresh for 12 months without preservatives and refrigeration. It plans to add baby potatoes and boiled peanuts, which will hit shelves in Delhi and Kolkata, respectively, by November.
“Sweet corn is an exothermic vegetable with a shelf life of less than three days. We decided to bridge this gap with our innovation. Our see-through packaging for cobs is microwavable and visually appealing that makes people pick it up,” said Swahar, managing director and chief executive officer at YCook.
Market experts expect small and medium-sized brands to play a key role in India’s growing food processing business.
“Breakfast’s an underserved market and widest skipped meal among urban consumers,” said Parameswaran, managing director at Kottaram Agro Foods, which owns Soulfull brand.
Both Soulfull and YCook plan to enter the ready-to-cook market early next fiscal. The former will use fox tail millets (navane) to make quick nutritional meals, while YCook’s Swahar said it has a series of lentil-based meal concepts on the anvil
Besides YCook, Omnivore has also invested in Arohan Foods, a pork processor selling sausage, salami, bacon and ham as premium products nationwide.
Aspada invested Rs 10 crore in Ooty-based Lawrencedale Agro Processing India, which sells 30 types of vegetables under the brand LEAF, in April 2012. “We saw an opportunity to sell hygienically processed and packed products in a structured format and productize our offering,”said K P Nair, director at Lawrencedale. Aspada’s other investments include SV Agri and Schedulers Logistics.
Venture Intelligence data shows that so far in 2014 (year-to-date), $119 million has been invested across eight investment deals and eight merger and acquisition deals valued at $414 million have been announced. In 2013, the space attracted $234 million in venture capital and private equity money across 19 companies and $383 million across 13 M&A deals.