Online milk deliveries pick up steam

Start-ups in this space have seen growth in recent times, and have also diversified into groceries. But this is still a tier I phenomenon

Online milk deliveries pick up steam
“The diversification has paid off,” said Ritwik Bahuguna, partner, agriculture, dairy and food-processing division, Wazir Advisors.

With the customer increasingly shopping online during the pandemic, several product categories that were hitherto unpopular on the web, have picked up steam. According to Red Seer Consulting, the online e-grocery market stood at $3.3 billion in CY20, of which online milk delivery start-ups account for 7-8%, and expected to grow at a CAGR of 50% over the next five years. Some of these companies have also diversified into related offerings like bakery, fruits and vegetables.

During the second wave of the ongoing pandemic, online milk delivery start-ups like Country Delight, FreshToHome and Supr daily witnessed 15-20% growth, aided by the launch of new SKUs and product diversification.
“The diversification has paid off,” said Ritwik Bahuguna, partner, agriculture, dairy and food-processing division, Wazir Advisors.

Country Delight, an online milk company, claims its business saw a twofold increase since the onset of the pandemic. “Recently, we launched preservative-free bread, coconut water as an immunity booster, Ratnagiri mangoes and several other fruits and vegetables, including premium leafy vegetables,” said Chakradhar Gade, co-founder, Country Delight. Focused on the quality of products, the start-up is planning to expand into towns and cities located near metros. “Currently, we are present in the top 10 metros, but our business will not expand to more than 15-20 cities in the future, as each city is a big market in itself,” added Gade.

Supr Daily, a morning essentials aggregator, is currently fulfilling two lakh deliveries daily, up from 30,000 deliveries pre-pandemic. Along with milk, value added products like curd, paneer, etc, are also being purchased. “We started with an SKU in less than 100 products; we have now expanded to 5,000 products across a wide selection,” said Puneet Kumar, founder and CEO, Supr Daily. The start-up is currently present in the top six metros.

Then there’s FreshtoHome, which entered the milk delivery space in 2019. Its delivery service called FTH Daily is also seeing a surge in order volumes. “Currently, consumers are gravitating towards less processed food and fresh produce,” said Shan Kadavil, CEO, FreshtoHome. The company forayed into groceries in 2020. “Now due to the higher order value, it’s easier to connect directly with farms, leading to better quality products,” he added. The company has increased its range of stock keeping units (SKUs) from 80 to 250, during the pandemic.

As these start-ups are region-specific, the online milk delivery segment is pivoted towards hyperlocal packaging and marketing. “Online milk delivery start-ups have limited geographical reach due to high last-mile delivery costs,” said Saurav Chachan, engagement manager, Red Seer Consulting.

However, with a clutch of new players entering the segment often, it may become possible for players with deep pockets to overthrow smaller ones, leading to a monopolistic/duopolistic situation in the future. It is also crucial for players to optimise supply chains to reach a break-even, added Bahuguna.

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