‘E-commerce has replaced modern trade in our retail strategy’
In January 2020, digital channels accounted for only 4-5% of the sales; today, their share is above 30%
As it diversifies Epigamia’s product portfolio beyond yoghurt, Drums Food International has set an ambitious target of expanding to 70 more cities by March 2022. Rohan Mirchandani talks to Devika Singh, about creating a market for niche products like almond milk in the small towns, using the digital channel as a testing platform, and more.
The top five metros bring in the bulk of your business. What are the challenges as you expand your presence in order to scale up?
We have expanded to 12 other tier I and II cities in the past year; but this reach is minuscule for an FMCG business. Being a start-up, we do not bring years of experience in the industry. Although that is why we have been able to bring disruption to the market, we now need the expertise to scale up. Hence, we hired a sales head recently who comes with several years of experience in the segment. It is difficult to predict demand in these towns; besides, there could be a skew towards certain products. Therefore, we are going to test these markets and then gradually scale up.
Will you be doing things differently in the newer markets, in terms of your retailing strategy?
In the pre-Covid times, we would use the modern trade channel for brand building through trials, and then scale up through general trade. However, we now plan to tap the e-commerce channel first. While we are not a digital-first company, we have seen sales from the direct-to-consumer channel and other e-commerce marketplaces take off last year. In January 2020, digital channels accounted for only 4-5% of our sales; today, their share is above 30%. So, e-commerce has replaced modern trade in our strategy now.
We plan to use the digital channel as a testing platform for our products in the new cities, and then push through general trade when we have an idea of the demand in these towns and cities. This will also help us in convincing the kirana store owners, who are known to be reluctant about stocking new categories, as we will have data about products that are in demand in these towns. We are present in 12,000 retail touchpoints at the moment; the aim is to be present in 30,000 by March next year.
Some of your products like ghee spreads and almond milk cater to a niche audience. Will you be altering your product mix to make it more accessible to the masses?
We are testing our product range in these towns, and it would be unfair to conclude that our products will not find takers there. That said, the idea is to make these consumers try our products in the lower price range, and then move them gradually towards those in the higher price points, such as almond milk. We recently launched Probiotic Yogurt (Rs 25) and Mishti Doi (Rs 30), and these products have seen good traction in the small towns. We have 34 SKUs in the market across price points, and are also giving an aspirational positioning to these products. Consumers in the small towns want to try out these products given their exposure to social media. Going ahead, we might introduce a few more accessible curd and yogurt products, keeping these markets in mind.
You were selling as many as three million units of Greek Yogurt per month earlier. Have you been able to sustain this post pandemic?
Due to the impact of the lockdown, our sales obviously slowed between April-June, 2020; but we were back on track in the later quarters. According to our projections, we will grow 40% in the last quarter (Q4) of FY21, as compared to the same period last year. At the moment, we are producing 4.5 million units of our Greek Yogurt every month. Overall, we expect to end the fiscal with a 10% growth. This is a feat for us, considering that about 25% of our business comes from alternate channels such as hotels, office complexes and schools, which have been severely hit.