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Snacking and healthy — the twain shall never meet? A host of new-age startups appear determined to disprove this. Many of them are using the burgeoning quick-commerce platforms to discover their customers and be discovered by them.
Take, for instance, Aditya Sharma, a product manager at a fintech startup who craved for a healthy bite to keep hunger at bay in between mealtimes. He was dismayed to find that such products were typically exorbitantly priced or found only in high-end stores, until he uncovered more affordable options on quick commerce apps.
He is the target customer of a company like Fitfire, which sells a range of dry fruits packaged as flavoured snacks under its brand Nutri Binge. Anindya Sengupta, the founder and CEO, relies on a channel-specific strategy for wider reach. For online channels, he supplies bigger packs as the average order value here should be higher to make economic sense, he explains. For the general trade or kirana outlets, he supplies a product range starting at ₹20.
Smaller packs are useful in pushing products that are inherently more expensive. “Cashews that cost ₹1,000 a kilo are sold in 200-250 g packs priced ₹300-400 each,” he says. Founded in 2022, the brand is currently available across 1,000 outlets and targets reaching nearly 25,000 within a year.
Vinay Gopinath, chief growth officer of Bengaluru-based startup Adukale, estimates that savoury snacks alone command a ₹45,000-crore market in India with a compounded annual growth rate of 15 per cent. It is also a market where demand for traditional and regional snacks is growing faster compared to other kinds, he says.
Feeding this hunger for growth among snack platforms, venture capitalists have pumped in nearly $272.9 million since 2019, according to market intelligence platform Tracxn. Funding peaked at $129.2 million in 2022.
This year, they have invested about $9.8 million so far, which is 26.4 per cent lower compared to a year ago and 92.4 per cent lower than in 2022.
Flavours of innovation
When it comes to innovating for evolving tastes and demand for variety in the healthy snacking segment, the newer players appear more nimble that the legacy FMCG companies that have dominated the segment until now.
Karan Korke, co-founder of The Healthy Binge, says the turnaround time for rolling out newer products is less for startups compared to bigger food companies. “The way we market and engage with our consumers on social media is in tune with what is needed today,” he says.
Archana Jahagirdar, founder and managing partner of Rukam Capital, which has invested in snack platforms Sleepy Owl and GoDesi, says quick commerce is a great way for startups to reach consumers who are eager to try newer brands and categories.
Omnichannel approach
While quick commerce offers smaller brands the much needed visibility and reach, many of them also believe that an omnichannel approach is indispensable to break even.
Aditya Sanghavi, founder, and CEO of Mumbai-based Snackible, credits online channels for 70 per cent of the company’s sales, including 25 per cent from its website and 45 per cent from other marketplaces. Offline channels, including the business-to-business segment, general trade and modern trade, account for the remaining 30 per cent of sales. The company has 140 stock keeping units (SKUs) listed on the website, another 10-12 on quick commerce platforms, and 40 on Amazon.
Echoing this omnichannel strategy, Adukale’s Gopinath says, “Only 20 per cent of our target consumers are online, while 80 per cent are shopping offline. Since we sell instant food, snacks, and instant mixes, the probability of our products being a part of the monthly grocery list is high, so we did not want to be solely a day-to-day or online-first brand, but an FMCG brand with a multi-channel presence.”
The company’s 23 experience stores across Bengaluru and Mysuru generate 35-40 per cent of its revenue, he says.
Sandeep Singh, whose direct-to-consumer startup Blue Tribe sells plant-based alternatives to meat protein, swears by the omnichannel reach even as he credits quick commerce for levelling the playing field for new entrants. With 8-10 SKUs currently, he targets adding three more within five months. “Traditionally it would take companies months, if not years, to build a distributor channel. Today, if you are listed on Swiggy or Blinkit, you will be available across 1,000 pin codes,” he says.
In matters of food and taste, where the legacy brands score is in the trust factor, built over years of standardisation in their manufacturing processes. Small businesses have to work extra hard to gain this edge.
Healthy Binge’s Korke believes the answer lies in effective distribution. “Sales, marketing, brand building, and distribution, all need to go hand-in-hand,” he says.
Eat, Repeat
Pricing is the other major differentiator.
As Snackible’s Sanghavi puts it, “The biggest challenge in offline retail for insurgent brands like ours is that over 70 per cent of sales in general trade still occur at the ₹5 price point. The leading snack companies have 70-85 per cent of their sales at this price level... we are competing with these large brands for shelf space.”
Sounding a similar note, Fitfire’s Sengupta says only the right price can lead to repeat purchases. Many startups charge a premium, which may attract first-time buyers. But if the price is too high, they may not buy regularly, he says.
Legacy vs newbie
Rukam Capital’s Jahagirdar points out that the very rationale for a startup’s existence is to take on legacy brands, and this remains true in the snack category too. She does concede that large companies have two clear advantages — offline distribution, which demands a lot of capital and time; and brand equity with consumers — both of which cannot be built overnight.
“Most small businesses in the snack industry build to be acquired. The idea is to create a strong niche, become a David in a small State, and hope the Goliaths will buy you out,” says Harish Bijoor, business and brand strategy expert, on the legacy vs newbie tussle in the segment. “Investors are looking for brands with traction, quality, and the ability to leave a palate memory in consumers. They are looking at unique offerings that can leave people craving for more.”
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