Functional Foods With an Ayurvedic Touch: The Story Behind Kapiva
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Ayurveda, considered among the oldest systems of healing, dates back a few thousand years. Born in the Indian subcontinent, it has long been a preferred option for a lot of natives, and now several abroad, even as modern science has grown leaps and bounds.
“In Ayurveda, only about 10-15 per cent is about healing when you are sick, almost 90 per cent is about staying healthy,” says Ameve Sharma, a third-generation entrepreneur of the Baidyanath Group. Baidyanath was started by Ameve’s grandfather and is one of India’s largest Ayurvedic product companies.
And while Sharma is still involved with the firm, in 2016, he decided to venture out on his own. With Shrey Badhani, formerly an associate at Bain Capital, Sharma founded Kapiva.
With pollution going up and people getting busier, the need for lifestyle change has become important, says Sharma. “And the biggest change you can make in your lifestyle today is through food. You can eat better quality, healthier food, get more nutrition directly from your food and that’s one of the largest contributors to a healthy lifestyle.”
A functional foods brand, Mumbai-based Kapiva currently has about 80 different products ranging from juices to ghee and sells at both modern retail stores as well as walkthrough big format general traders. Over time, it also plans to get into other categories such as snacking and breakfast-related foods.
Beginnings and the Pivot
According to Sharma, the initial idea was to make Ayurvedic clinics. They set up clinics at four different locations and then realized that it was a very difficult business to scale. But “it was a great place to actually get good market research,” he says.
One of the many interesting observations from that stint was that people weren’t very comfortable with the idea of consuming things in the powdered form or via pills. “But the moment you have it in a juice form, taking a shot in the morning is something very easy for them.”
In about nine months of starting, with these observations learnt and the research that came alongside, Badhani and Sharma pivoted into functional foods. In essence, these are products that claim to have additional value to improve health and well-being.
Sharma says, “the initial idea was that the food you eat should give you nutrition and people are also more open to consuming nutrition in a food form; so it was a combination of both ideas.” The first batch of products that the company launched were a variety of juices.
How Big Is the Market?
“What we are trying to build is an umbrella brand for functional foods with an Ayurvedic twist, so what that means is that we are playing in multiple markets,” says Badhani.
All combined, it is a multi-billion dollar market size that they are playing, he says. Last year, the company raised a $2.5 million round led by consumer-focused Fireside Ventures. So, what made this an interesting proposition for the venture capital firm?
According to Kannan Sitaram, partner at Fireside and a board member at Kapiva, the company is at an interesting intersection of two trends observed in the Indian consumer. One is the general trend of people wanting to shift to eating food that benefits the body, and the other being people taking a renewed pride in things that have existed traditionally.
“Where they are headed is how can we keep discovering stuff from our tradition which is good for our body and how can we make them convenient for modern Indians?”
While two-thirds of the company’s sales comes from online channels, Kapiva’s products are also present in about 6000 locations offline. From a young brand’s perspective, which needs to differentiate itself to the consumer and essentially portray transparency, branding becomes quite significant.
According to Sharma, both Baidyanath and now Kapiva, have always had their biggest focus on the products and how they use only the best possible ingredients. He says, “compared to our competitors, we probably spend double on the raw materials. We spend very little on marketing.”
And though e-commerce allows them to show the consumers in detail of what goes behind a specific product, offline is a whole different ball game. About six months ago, to solve this, the company went through a complete packaging revamp. “The whole idea of the new packaging was...how do we communicate our differentiation, how do we communicate the ingredient story, how do we actually talk about who we are as a brand.”
Sitaram, too, believes it is absolutely crucial.
“Because when we look at all the consumer brand companies the real valuation is not the manufacturing assets and so on, but it's really the brand,” he says.
In 2019, the company saw revenue increasing about 300 per cent on a year-over-year basis, and Badhani believes a similar upward trend would likely continue this year as well.
So far, the company has been able to grow very quickly just on the word of mouth but now, the company is also looking at utilizing the social media community that they have built to better use. “We feel that our community online is and will continue to be a big differentiator for us going forward,” says Badhani.
In terms of numbers, he says the anticipation is to be present in 20,000 offline stores in about a year and grow deeper into India. Albeit still very early days, Kapiva is also venturing into the massive opportunity that lies in the US and Sharma believes they would still need some time to gauge the market before doing anything full-blown there.
“It's been a great journey for us and we see this venture going to the next level in the next couple of years,” says Sharma.
Fireside, which typically invests in companies with a long-term vision, sounds quite optimistic about where the company could go from here.
“I wouldn't be surprised if in five years time, this became anywhere between a INR 300-500 crore brand,” says Sitaram.