Licious Explained: The New Way to Shop Meat

Licious is stepping out of the virtual world! Recently, the company raised around ₹4,111.1 crore from its investors and reached a whopping valuation of around ₹12,585.0 crore.

For those of you who don't know Licious, here's a little context.

It is a company that retails meat and seafood products through online stores. It was founded in 2015 with Vivek Gupta and Abhay Hanjura's vision to provide high-quality and hygienic meat products.  

Now, it is moving into the territory of offline stores, with the aim of capturing a bigger chunk of India's meat and seafood market, which is worth around ₹2,60,090 crore. The industry is currently quite unorganised and dominated by local shops. This makes Licious a "pioneer" as it is taking the very first steps towards organising the sector.

I have much in store for you about Licious' current happenings, the story of how it came to be and more! So, let's get started.

Article Content:

• What's latest with Licious?
• Licious' Founding Story
• Licious' Business Model
• Industry Overview
• Licious' Financials
• Licious' Competitors
• Conclusion

What's Happening With Licious?

The company is planning on opening 500 physical stores across 20 cities, with 75% of these stores in urban centres like Delhi, NCR, Bengaluru, Mumbai, Pune, Chennai, and Kolkata.

You might be wondering, "Why the shift to offline stores?" Here’s why!

Licious's Offline Expansion Strategy

The company is stepping into the offline market:

a. Strategic Shift: The company's decision to venture into offline stores is a strategic one. This will effectively change its model to hybrid, increasing brand visibility and customer engagement while providing an alternative to traditional wet markets.

b. Initial Rollout: It is planning to open the first five stores in the upcoming 2-3 months in Bengaluru. Each of these stores will cover 700-800 square feet. The plan is to take advantage of the city's affordable real estate, its existing supply chain and processing plants to help speed up the store opening process.

c. Customer Experience: The company is focusing on offering a premium shopping experience, with value-added offerings such as ready-to-eat and cook products, to gain a competitive advantage over local meat shops.

Let's face it: not everyone can survive the sounds, sights and smells of a traditional meat shop, and many may find it helpful to have an organised alternative like Licious.

The Indian meat and seafood market is on the road to growth, thanks to rising disposable income and changing consumption patterns. The country's per capita consumption of meat saw an increase from 4 kg in 2000 to 12 kg in 2023, which means that there is a lot of scope for Licious' growth.

Here’s the extra on Licious:

• Its parent company, Delightful Gourmet, just appointed Karishma Gupta as its new Chief Financial Officer (CFO). She has previously worked with big names like Jubilant FoodWorks, Diageo, GSK Consumer Healthcare, and ITC. With such extensive experience, she might prove to be a great asset to the company.
• It might launch an Initial Public Offer (IPO) in the next 24 months. Joining the IPO wave means strengthening governance frameworks and implementing robust financial practices.

However, success is not guaranteed. The company may or may not be able to recover the capital expenses for each store; it all depends on how much traffic the stores get and the overall Licious experience. It can deal with this challenge by attracting consumer loyalty through its superior product offerings and by taking advantage of its online business.

Licious' Founding Story & Business Model

Licious is India's first Direct-to-Consumer (D2C) unicorn. It is a meat ordering and delivering company operating on a farm-to-fork model. It is headquartered in Bengaluru, Karnataka and owns its personal cold and back-end supply chain.

Here is the story of how Licious was founded.

Abhay Hanjura and Vivek Gupta, two IIT Delhi students, saw a problem while working on their final-year project.

The problem: If you wanted to buy meat in India, your only options were local butcher shops or supermarkets that sold low-quality meat at high prices. The existing system had some glaring inefficiencies, resulting in wastage of food.

So, they created Licious as a solution in 2015 in the hopes of changing India's meat retail market. The goal was to provide a better shopping experience for meat and poultry, ensuring the delivery of high-quality and fresh products to its consumers.

Before founding Licious, both of them had budding careers.

Vivek had studied to be a Chartered Accountant and had extensive work experience as:

• Corporate Finance Manager at Tavant Technologies
• Finance Controller at Helion Ventures
• Non-Executive Director at MobiCom Commune Pvt. Ltd.

Abhay had extensive work experience as:

• Deputy Manager at India Insure Risk Management Services,
• Head of Business Intelligence and Associate Director at Futurisk Insurance Broking Pvt. Ltd.

They didn't know if this idea of theirs would succeed, but they decided to pursue it anyway. Both of them quit their jobs and borrowed money from friends and family to launch what would be India's first online store for quality meat.

Their mission was simple: "We won't sell what we won't eat ourselves!" This is a clear reflection of their commitment to providing quality products through Licious. This commitment has played a huge role in the company's operations and growth over the years. 

Licious' Business Model: D2C Model

Licious’ business model is based on controlling the supply chain completely, aka Direct-to-Consumer (D2C) model. This makes sure high-quality products are delivered to consumers, ultimately leading to enhanced consumer satisfaction. The strategy seems to be working quite well for the company to date, it has served 1,200,000 unique customers.

Here are the steps involved in this model:

a. Product Sourcing & Procurement: The company procures meat from two basic sources: self-owned farms and third-party suppliers. Currently, 50% of the meat comes from its own farms, which is an improvement from 10% in 2020. The other 50% is from trusted suppliers to help maintain consistency in the supply of fresh and high-quality meat.

b. Processing and Storage: Meat needs to be properly processed and stored before consumption. The company has its own processing centres where it maintains stringent standards of hygiene and quality control.

The next step is proper storage. The company maintains a strong cold chain system from processing to delivery to maintain the freshness of the processed meat. In turn it reduce reliance on other storage houses and also possibilities of spoils.

c. Packaging and Delivery: Its approach to packaging is quite unique. Instead of packing the meat in the traditional black plastic bags, it uses neat boxes and leak-proof pouches, maintaining product hygiene and enhanced product presentation. When it comes to delivery, products reach the consumers within 90-120 minutes, ensuring freshness and quality.

The difference between Licious' supply chain and traditional supply chains is vast.

Since the number of middlemen is much lower than in traditional chains, D2C supply chains have a better profit margin of 30-40%. Licious' complete control over its supply chain, from procurement to packaging, gives it a significant advantage over its competitors.

4. Online Platform and Subscriptions: The company has multiple channels of sale.

• It offers a website as well as a mobile application where users can place their orders securely.
• It also offers a convenient subscription service where users can choose to get regular deliveries and schedule their orders in advance. Various subscription plans based on their needs and preferences offer regular deliveries of meat and seafood products at discounted prices.
• It also has a special "Recipe" section, which offers recipes for various non-vegetarian dishes, sort of like a how-to manual.

5. Value-Added Services: Licious has a robust delivery network to ensure timely and efficient delivery of products to customers' doorsteps. It also offers personalised product recommendations based on customer preferences and dietary needs.

With the custom orders feature, customers can customise their orders by choosing specific cuts, marinades, or packaging options. The new additions like Uncrave, Illuminati, etc. (which has been discussed below) also attracts consumer's attention.

Licious' Product Line

It offers much more than meat and seafood products, including:

1. Spices: In December 2022, the company announced the launch of speciality spice blends in the top 8 cities.

2. Plant-Based Alternatives: In December 2022, it also launched Uncrave, a vegan alternative.

3. Offline Stores: With the opening of 5 new offline stores in the Delhi-NCR region in June 2023, the company is set to provide a better meat shopping environment.

4. Infiniti: Announced in August 2023, it is a rewards programme for the company’s customers. True to its name, it provides unlimited and unconstrained benefits.

It hasn’t been a clear path to growth for Licious. It has faced its fair share of challenges, even before it was launched:

• Abhay comes from a family of pure-vegetarian Kashmiri Pandits, and as you can imagine, they weren't all that happy about him building a meat-based startup.
• On the day of the launch, the company had to put a pause on its operations, and all of its deliveries were delayed.
• For a brand that was focused on providing high-quality and fresh products in a timely manner, this was a major setback.

However, Licious didn't back down. Its founders perfected the supply chain management until they had worked out all the kinks, which took 15-20 days, after which the company unpaused its operations.

Current challenges the company is up against:

• The number as well as the intensity of competitors in the online meat market are on the rise.
• Increase in the frequency of infections in livestock
• The growing demand for meat alternatives like plant-based and mock meat
• The costs associated with fulfilling small-scale orders
• People are used to buying meat from local butchers

Despite the many challenges, the company has many growth opportunities ahead. India is ranked fourth in the production of meat on a global scale. Additionally, there is a lack of cold storage facilities in India, meaning that storing meat properly and maintaining its freshness is a struggle for many companies. Licious is trying to use this problem to its advantage by taking complete control of its supply chain.

Licious' Advertisements and Campaigns

The company engages with various Bollywood and Tollywood celebs like Kunal Roy Kapoor and Parambrata Chattopadhyay for its marketing campaigns and advertisements. Its #FasterChef initiative campaign featuring Kunal Roy Kapoor is especially noteworthy, with its emphasis on the joy of cooking and sharing good quality food.

Licious' Awards and Achievements

It is the first business that solely focuses on delivering meat, seafood, and eggs in India. Since its inception, it has achieved many milestones and awards including:

• 2016: Made the Top 12 Emerging Startups list by CB Insights.
• 2018: Received many awards, such as BW Disrupt 40 Under 40 and GQ India's Most Influential Indians.
• 2019: Recognised by Fortune, BW, and received awards for food safety and innovation.
• 2020: Recognised as the "Food & Beverage Start-up" of the Year.
• 2021: Achieved the Thought Leadership Award for ESG Goals, became India's 29th unicorn and the first D2C unicorn startup.
• 2022: Opened its first offline store in Bengaluru.

That's quite the journey!

E-Commerce Industry Overview

Licious' recent foray into the offline world aside, the company has been strictly online, operating as a part of the larger e-commerce industry. So, here is some insight into the Indian e-commerce industry.

The Compound Annual Growth Rate or CAGR for the industry is estimated to be 27%, which means that by 2026, it will reach a whopping valuation of ₹13,67,570 crore. By 2030, the sector is set to rise even higher in valuation, which is projected to be somewhere around ₹25,17,000 crore. A huge jump from its valuation in 2023, which was somewhere between ₹4,73,100  and ₹4,98,000 crore.

Here is some data on the rising Internet trend in India:

Out of the total number of active internet users a surprising 4,42,000 thousand were from rural areas. Additionally, the number of smartphone users in India is expected to reach 8,87,400 thousand by 2030, thanks to low-cost data plans and affordable smartphones.

The sector also has the government’s support:

1. With the Digital India campaign as well as the government's policy to allow 100% Foreign Direct Investment (FDI) in the Business-to-Business (B2B) segment, the industry has seen serious growth.
2. Back in 2016, the Government e-Marketplace was launched. In the past financial year, the platform's procurements reached ₹2 lakh crore.
3. The government is also trying to standardise the infrastructure in the e-commerce industry. Open Network for Digital Commerce (ONDC), which is a government-backed platform, is aimed at achieving this goal.

Licious’ participation in ONDC will help it get a better competitive advantage in India’s booming e-commerce market, providing access to:

• New markets
• Reduced costs of operation
• Increased profitability

Now that we have covered Licious' industry, let's head on to its financials!

Licious’ Financials

The numbers behind the company tell that to date, it has raised an amount close to ₹4,076.41 crore in funding, which is a grest show of investors' faith in the company. Here are the details of its funding and investors:

Let us move on to the financials of the company.

As you can see in the above infographic, the company’s operating revenue grew to ₹747.7 crore in FY23 from ₹420.3 crore in FY21. But, its expenses also increased to ₹1,309 crore from ₹646.5 in FY21. This may be because it is spending a lot of money on the maintenance of its supply chain, processing, and marketing.

Startups are bound to lose money in their early stages; it is expected. However, Licious' losses have increased to over ₹500 crore in FY23 from ₹370 crore in FY21 instead of reducing. This may mean that the company is spending money faster than its ability to generate revenue. This is a sign that it needs to work on managing its costs more efficiently.

Additionally, its EBITA margin in FY22 was -62.75% and has only improved slightly in FY23, standing at -55.45%.

Even though it maintained a consistent expense-to-revenue ratio at ₹1.75, its Return on Capital Employed (ROCE) dropped from -29% in FY22 to -40.05% in FY23.

The current Revenue Run Rate for the company is around ₹850 crore. This brings its monthly revenue to somewhere between ₹70-72 crore. This is an 18% rise from its previous year’s monthly revenue of ₹60 crore.

On the other hand, the company’s revenue went up by 64%, increasing from ₹430 crore in FY21 to a whopping ₹706 crore in FY22. However, this growth trend was then hampered due to the economic slowdown caused by COVID-19, and it only earned a revenue of ₹808.87 crore in FY23.

Its gross margin has been improving in the past 18 months, growing to an impressive 30% from -5%, showcasing better cost control and operational efficiency.

Licious is known as the largest player in the segment, and in the past few years, the company has seen a 500% growth. All its product offerings have been growing consistently, but major contributors to its revenue were its ready-to-cook and ready-to-eat categories. Its kebab range, chicken spreads, as well as its new range of tandoori products are some of the public’s favourites.

Additionally, it has a 90% repeat purchase rate, which means almost all the people who try Licious's products once, buy them again. Every month, it serves 1,200 thousand orders. In the past year alone, it has served over 20 lakh unique customers and has over 1,535 employees.

It is often assumed that most Indians are vegetarians, when in truth, over 73% of the Indian population eats meat. This is one of the biggest reasons behind Licious' growth.

Peer Comparison: Who is Licious Against?

Let’s see where Licious stands against its competitors.

As you can see from the infographic above, Licious has the highest revenue among its peers, thanks to its strong presence in the market and extensive consumer base. However, it also has the highest expenses, which means that the company needs to improve its cost management.

If you look closely, all the companies are showing negative profitability except ZappFresh. Maybe Licious can take a page from its book and turn its losses into profits. It also has the highest negative cash flows among its peers. This indicates the company is over-dependent on external funding, which may turn into a red flag in the future if it doesn't improve its operational efficiency.

The Bottom Line

That's the whole Licious story. It is an online meat and seafood delivery startup turned unicorn, with hopes of conquering the offline market soon. It has already started opening physical stores in major cities like Bengaluru and Delhi-NCR, with more in the pipeline. As if that wasn't ambitious enough, it might also be launching an IPO in the next 24 months.

Add the appointment of Karishma Gupta as the new CFO of Licious’ parent company (Delightful Gourmet) to the mix. It seems like the company has some major growth plans.

Ultimately, it all comes down to what the consumer wants: traditional wet shops or Licious's hygienic and fresh products. Which one would you go for? Let me know in the comments!

FAQs

Q1. What is Licious?

Licious is an online meat and seafood delivery company that is currently trying out its hand in the offline market. Its goal is to serve fresh, high-quality meat to its consumers.

Q2. Who is the founder of Licious?

Licious was founded by two IIT Delhi students, Vivek Gupta and Abhay Hanjura, in 2015 when they saw the glaring gap between the need for fresh quality meat and the available options to fulfil this need.

Q3. How much is Licious' revenue?

Licious' revenue in FY23 was ₹1,309 crore, rising from its FY22 revenue of ₹1,191 crore. If you want to know more about its financials, please refer to the “Licious' Financials” section of this article.

Q4. Is Licious an Indian company?

Yes! Licious is an Indian company headquartered in Bangalore, Karnataka.

Q5. How many customers does Licious have?

Every month, it serves 1,200 thousand orders; in the past year alone, it has served over 20 lakh unique customers with an average basket size of ₹700.

Q6. Who are the competitors of Licious?

Licious was the first to organise the Indian meat delivery market. However, it is facing competition from FreshToHome, ZappFresh, and TenderCuts as the sector becomes more popular and new companies enter the market.

Q7. What is the business model of Licious?

Licious has a farm-to-fork business model. The company handles the entire supply chain, from procurement, processing, and storage to reaching the consumer.