Introduction How did Licious - a company started just six years ago - became a billion-dollar D2C brand in India? In the last six years, Licious has grown its revenues by 280X – from $200K in FY17 to $56 million in FY21. What is it that made Licious so big in such a small amount of time? Well, the answer is simple - by selling fresh meat and seafood to their customers. Yes, it is in fact that simple. Licious is born out of one of those simple ideas which you often look back and think 'why didn't I think of it?' In fact, the idea was sitting right in front of all of us. Consider this, more than 70% of Indians consume meat and it's a massive $40 billion industry. Despite that, 90% of it is unorganized. Ask yourselves, before Licious came along, where did you get the meat or seafood you needed to make your favorite dish? Your answer would probably be your local butcher and if you've made a trip to your local butcher you can vividly remember the stench and the unhygienic atmosphere and add to the fact that you never know if the meat or seafood you’re getting is even fresh or just pumped with chemicals to make it look fresh. The answer to what made Licious so successful isn't in the question 'what they did' but 'how they did it'. How did they turn a simple idea into a billion-dollar idea - while making a dent in India's $40 billion meat industry? Origins To answer this question, let's go back to 2015. At this time, Abhay Hanjura, a Kashmiri Pandit and a self-proclaimed meat lover were doing pretty well in his job at an insurance broking firm named Futurisk. By this point, he had been working there for five years and had climbed up the corporate ladder to become the firm's Senior Vice President. Life was pretty comfortable, yet, he felt that something was amiss and he wanted something more from life - something more exciting. While working at Futurisk, he had met Vivek Gupta - who was a Finance Controller at a VC firm Helion Ventures, and had worked there for eight years. Helion Ventures had been a client of Abhay's. Over the years, the two had become good friends, and sharing a good non-vegetarian dish over a long conversation used to be the norm. While Abhay came from a family of meat lovers, Vivek came from a strictly vegetarian family and had picked up his love for meat from his trips to the US. Abhay would often discuss startup ideas with Vivek while sharing their favorite meat dish. During one such long conversation, Abhay had pitched Vivek the idea of selling fresh meat online. But Vivek being a VC dismissed the idea saying that if it really was a great idea and the market was big enough - someone would have already done it. Also, he didn't think that Abhay was serious. He figured Abhay had a pretty comfortable job and wouldn't really be throwing his well-paying job away to chase some idea that wasn't even validated yet. But he was wrong. Instead, Abhay went to work - he started researching the industry and created a presentation which he titled ‘The Meat Project‘ and went to meet Vivek at his fancy VC office. He not only showed Vivek the potential of India's meat industry and the merits of his Idea but also his conviction. He pulled his laptop and wrote his resignation letter right there in front of Vivek and sent it to his bosses. That was the moment of truth for Vivek - here was this guy so convinced and pumped about this opportunity ready to dive in headfirst. Abhay had convinced Vivek of the potential of his idea and the market but he was still a little hesitant. Abhay's infectious conviction and actions charged Vivek and he copied Abhay's resignation letter and sent the same one (after simply changing the name and a few details) to his own bosses as well. And just like that, in mere moments, Licious was born. Abhay and Vivek had found a perfect opportunity that was just waiting to be grabbed: A $40 billion market, 90% of which is unorganized and there was no established competition in sight. This was going to be an opportunity for Vivek to come to the other side of entrepreneurship - from sitting in his fancy office and giving advice to entrepreneurs to actually getting his hands dirty and solving problems. However, they were soon about to find out why they had no competition. Challenges before even starting out Starting out is difficult on its own but when you are starting out in an industry that's already stigmatized and hasn't seen any innovation in decades, it only gets worse. While the two had decided to start up in the meat industry and were thrilled about their journey, their families were not. When Abhay first told his parents about his plans, his father essentially told him that working in this industry was beneath us. Abhay was shocked at his response - this coming from a family that relishes meat. On the other hand, Vivek's family which was completely vegetarian was equally shocked and in fact, his parents were embarrassed to even tell their relatives what their son was doing - that was until they were invited to Harvard to give a business talk. And this was not just their families, there was this stigma attached to the meat industry across India. But why was this happening? In a country where the majority of people love eating meat but are not comfortable working in this industry? The answer can be found in the Indian culture - if you have ever bought any of these things - meat, condom or sanitary pads from a shop - you might remember that they are always sold in either black polythene or wrapped in newspapers - almost as if they don't want anyone to know what you are carrying. This tells you why people would be uncomfortable working in such industries. This was when they decided that they wanted to bring the meat out of the black polythene bags and in the open. They wanted to take away the stigma attached to buying meat - one bite at a time. Building Licious Their initial idea was to build an online fresh meat and seafood delivery platform - where they would just take care of the delivery for the vendors. But when they saw the quality of meat these vendors were selling - they weren't comfortable with it and decided they wouldn't sell something of inferior quality. That's when they decided to own the complete supply chain and to build a brand out of it - rather than just being a platform for selling meat. A farm to fork model - where they could control the entire supply chain - giving them control of the quality of their product at every stage. This was all great but they had a big problem - neither of the two had any experience with the industry - apart from the consumer side - they both loved eating meat. But that was not going to help them here. Since neither of them were experts - they had to figure two things out. First, dive into research mode and understand all they could about the industry they were looking to change for good and hire some experts in their team who could help them achieve the ambitious goal. The first step was to get a Co-Founder who understood the meat industry - that's where Joe Manavalan - Licious' less-known co-founder comes in. He had not only been a chef but had also ran his own business called Painted Platters. The next step was the most important - to build a cold supply chain that would keep their meat fresh - right from getting it from meat vendors to the customer’s home. And this wasn't going to be easy. See, meat remains fresh for only 4 hours after the slaughter - after that, it starts to go stale at room temperatures - that's not a long window. After that, it needs to be stored at temperatures between 0 and 4 degrees Celsius to keep it fresh throughout the journey. If the temperature goes above 5 degrees Celsius, the meat could go stale and if goes below 0 degrees Celsius- it becomes frozen. There really isn't a huge margin for error - it is safe to say that their entire startup depended on their supply chain. Their aim was to source the meat within 24 hours of slaughter and deliver it to their customers within 90 minutes of ordering. This meant, they could ensure that the meat their customers were getting was always fresh. Another thing they needed to do was find meat vendors who could supply them the quality of meat they needed - which wasn't easy to do in an industry that had no set standards and who were not willing to go that extra mile. In the meat industry, Abhay and Vivek were known as the 'crazy guys looking for gold-plated meat'. No one believed that customers would be willing to pay a premium for their meat and they were wasting their time. But Abhay believed otherwise - he believed that there was demand but people just didn't have the option. Licious shuts down before it could take-off By July 2015, Licious was all set - they had managed to partner with 30 meat vendors and animal farmers and had set up their supply chain. They had established their meat processing center at Hennur in Bengaluru and their first delivery hub in Marathalli. Licious was ready to make its first big splash in the online meat delivery industry. The orders started to come in. They had received 35 orders and were really excited, but what happened next was a nightmare. All their deliveries were late. They immediately had to shut down their operations. They had to regroup and train their entire delivery and processing staff to make sure this doesn't happen again. No one would buy from them if they couldn’t keep their promise of delivering fresh meat in time. Once they were satisfied that everything was in order, they began again in August 2015. The second time was a success - they had gotten 1,300 orders in their first month and things were looking up. They had finally cracked the code. By the end of the year, they had managed to rake in $200K in revenue and they were now selling everything from chicken, lamb, and seafood in fresh, marinated, or cold cut forms. Small changes, big impact - Growth and Expansion This was enough to get investors excited as well - in September they had managed to rope in the likes of Mohandas Pai, Kanwaljit Singh, and 3one4 Capital - who invested $1 million in their seed round. By the end of 2017, Licious was processing around 50,000 orders a month and the best part was - more than 90% of their orders were coming from their repeat customers. This meant that people were loving their product. This was the validation that they needed. Despite the meat industry veterans telling them that customers would not pay a premium and they didn't really care about the quality. Their numbers, however, we’re telling them otherwise - there clearly was a demand for their 'gold-plated' meat. During this rapid growth phase, while they were growing like crazy - they still had a big problem. Since they were dealing with fresh produce, they were not very efficient - around 40-45% of their produce was getting wasted. But since their customers loved, which made their investors love them as well. With all the money that was coming in, they used it to strengthen their technology which helped them predict customer demand in advance, and thanks to that they were able to bring this number down to just 3%. This was a game-changer - which meant they were becoming more efficient as a company and building a supply chain that could be replicated across the country. Oh and remember, how Abhay and Vivek wanted to bring the meat out of the black polythene? They did this spectacularly by putting it in white packaging with the faces of their proud customers on it. Quite a way to take the stigma head-on - their customers were loving their product and the way they were doing it. After spending two years perfecting their supply chain and business model in Bengaluru - Licious was all set to replicate their success across the country. In 2017 alone, they had expanded to Hyderabad and Delhi-NCR. Today, Licious is available in 14 cities - delivering fresh meat to a million homes every month (from just 1,300 orders a month just six years back). They've also expanded into other value-added products like ready-to-eat and ready-to-cook products and meat spreads to capture the even bigger meat market that was looking easy to make meat products. Even during the pandemic, when most businesses were struggling - Licious actually grew their revenue 3X in just the first six months of FY21. They were able to do this by continuing to do what they were already doing - focusing on stringent health and safety protocols which were reflected across their entire supply chain - customers knew they could trust Licious. By the end of FY21, Licious had posted a revenue of $56 million. Earlier in October 2021, Licious raised a $52 million round led by IIFL - making them a unicorn. And this is how Abhay and Vivek turned a simple idea into a billion-dollar D2C brand. Lessons and Learnings Follow your curiosity: Abhay wasn't the first person to recognize the need for fresh and hygienic meat - most of us have been there and wondered why there wasn't a better solution available but that's where most of our questions stopped. But when Vivek asked Abhay why weren't there any big players in this market if it was such a big opportunity - Abhay didn't just stop there, instead, he went and found out the answer to that question. By following his curiosity and taking action, he not only found an untouched opportunity, a co-founder in his journey but also built one of India's most successful D2C brands. Perfect the formula before you scale: Licious had spent almost two years building their operations in Bengaluru. They could have jumped ahead and started expanding to more cities but instead, they used those years to perfect their supply chain and made sure they had everything was just right. By the time they decided it was time to expand - they had everything figured out - customers had fallen in love with their product (90% of their customers were coming back to them) and they had plugged all the leakages in their supply chain (reduced wastage from 40% to just 3%). While it took them 2 years to scale in Bengaluru, it took them just four years to expand to 13 more cities. That's because once the formula was perfected, all they had to do was replicate across cities. And they executed it perfectly. Listening and understanding your customers: If they had listened to the so-called meat industry experts and veterans, they wouldn't have started Licious. Everyone told that it was a stupid idea and no one would pay a premium for fresh and hygienic meat. But instead, they talked to hundreds of meat lovers and understood their needs and pain points. That's what made Licious into what it is today.
