You can be on Entrepreneur’s cover!

Gobbling Down The Meaty Pie In the unorganized set up of the industry, dominated by local market mom-and-pop butcher shops and traders, quality is never an issue.

By Sandeep Soni

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Entrepreneur India

We have a great "meating' of the minds. In fact our knack to "pick bones' with chicken, mutton, fish etc., at dinner table almost every alternate day isn't a myth. To be precise 71 per cent of our believably vegetarian motherland loves to put flesh on their palettes, chopping out quality and hygiene without a second thought.

That's what has been rotting away the market's true potential. Now, the task at hand for online meat ordering start-ups is to drive the mindset change required on consumers' part. Let's look at the problem at both, the consumer and supplier/seller end. In the unorganized set up of the industry, dominated by local market mom-and-pop butcher shops and traders, quality is never an issue.

That's because they are not aware of prescribed government guidelines, right from what kind of feed is to be given to birds and animals to the right temperature settings for stocking meat before portioning it at the shop. On the consumer end too, things aren't very different and that's again because they are not aware of what kind of meat is fit for consumption. So they are not averse to buying whatever is slaughtered in front of them as fresh. All this is apart from the poor hygiene level at the shops that stinks perpetually.

"The first thing that hits you while stepping in a meat shop is the foul smell which itself is an indication of the quality of meat stocked," says Siddhant Wangdi, Founder and CEO, Meatigo – a Gurugram based start-up that started last year. The way meat is portioned at shops is just one of the points on the quality checklist. Deepanshu Manchanda, ex-MobiKwik executive, who launched Zappfresh – a fresh chilled meat brand based out of Gurugram opines that 70 per cent of the quality aspects depend on the level of hygiene maintained while slaughtering the animals or birds and the rest on maintaining the right temperature while stocking the meat.

"Who is slaughtering it and where, these aspects are also important. Further, how the bird or animal has been raised and in what conditions at the farm, whether clean water is used for slaughtering, etc., are critical areas." Post slaughtering, the meat has to be stored below five degrees right till it is portioned for sale to the consumer. The shelf life hence is about five days for fresh chilled products otherwise that's only good for as long as up to two hours.

For instance, Mihir Tewari, Co-Founder, NeatMeats, says, "The bird's body temperature, let's say is around 35 degrees during slaughtering, hence it must be put into freezer to bring it down to less than five degrees. Then you must ensure that as much fat and blood as possible is removed and the meat is clean." Tewari, former IT and telecom head at Bharti Walmart, started NeatMeats early last year. The shelf life of sea food including fish, prawns and crabs is higher – 10-12 days if kept in ice.

Smart Sourcing

While more than 80 per cent of the stock sourced daily is sold the same day, the rest is disposed of. Zappfresh, also into business to business (B2B) model, sells the additional stock that doesn't get sold on first day. But B2B ain't easy, admits other start-ups. "We can't manage long working capital cycles with restaurants and hotels. B2B customers are very price sensitive instead of quality. Moreover, we have positioned ourselves as a consumer brand," says Abhay Hanjura, CoFounder, Licious.

Based in Bengaluru, the start-up raised $10 million from Mayfield India and 3one4 Capital in March this year. But to predict the daily demand and stock products accordingly Manchanda has demand forecasting engine that helps Zappfresh understand the pattern, based on which the procurement is done. The procurement too, usually happens in two ways – direct from farms or from slaughter houses. For instance, NeatMeats procure meat from slaughter house and wholesale meat market at Ghazipur in Delhi.

Licious, on the other hand, goes bit further in establishing the entire back-end supply chain. It has partnered with integrators including chicken hatcheries who prepare feed specified by the start-up and hatch one-day-old chicks which are then sent to poultry farms to be raised for around a month. The birds are then sent back to integrators who undertake dressing and deliver those to Licious in temperature-controlled vehicles.

"At the macro level, there is a definite demand but at the same time, at the shop level there is a huge gap in terms of quality and what people are consuming," adds Wangdi. Nonetheless, fresh meat category has not received the same attention as other fresh food items. Also, most discovery and product or brand research is now performed online.

"This combination means that any new brand that wants to build a hyper awareness for its product, it will have a distinct advantage if the online channels are leveraged appropriately. Fresh and unfrozen gourmet meat is a very difficult business to master, and Licious has been able to persistently scale this model," says Pranav Pai, Founding Partner, 3one4 Capital.

The government too takes cognizance of such meat delivery platforms bringing standardization in meat processing and delivery. Some of the guidelines stated (as per Food Safety and Standards Regulations 2011) include first, getting qualified veterinary doctors for conducting ante-mortem and postmortem examination of animals slaughtered to check whether those are healthy and disease free. Second, using humane methods of slaughtering which inflict minimum pain to animals and third, maintaining hygiene standards in slaughter houses and meat processing units.

"Organization of unorganized meat market through online meat delivery platforms is welcome. They have backward integration or control over slaughter houses and meat processing plants to ensure that supply of meat complies with the requirements specified above," says Pawan Kumar Agarwal, Chief Executive Officer, Food Safety and Standards Authority of India. The food safety regulator is now drafting hygiene guidelines for small slaughter houses.

The Value Game

While decent capital expenditure is required on the supply chain side because of the perishable nature of the product, the commercials in meat delivery business is better than food and grocery business. There are two things to look at, explains Tewari, first the inward margin that you make on fruits and veggies after wastage is slightly better in meat delivery while your wastage too can be better controlled by right sourcing.

"Another area is the cost of delivery - for fruits and vegetables you would probably need bigger vans for delivery and fair amount of manpower even as the category has lower transaction value. In meat, you have higher transaction value and lesser weight and lesser number of stock keeping units. So from retail perspective it makes lot more sense." Tewari claims to be cash positive at unit economics level.

Being hyperlocal, these start-ups have challenges in last mile deliveries and have to deliver on their own while there have been casualties in e-commerce space over last few months as couple of hyperlocal logistics start-ups shut down including Genie, Opinio. Like other sectors, there would be customers who would want to see meat product portioned and cleaned in front of them. But these start-ups are wary of not to chase growth with only customer base by offering deep discounts.

"We firmly believe that any valuable and sustainable brand cannot operate on differentiation via discounts. The maximum effort has to be into designing and sustainably making a superior product available consistently. Other aspects such as supply chain efficiency, sourcing quality, packaging, etc., also must be fixed," concludes Pai. That's clear in the fact that these start-ups have more than 80 per cent returning customers.

(This article was first published in the June issue of Entrepreneur Magazine. To subscribe, click here)

Sandeep Soni

Former Features Editor

Business News

Google's 'Find My Device' Will Finally Roll Out to Android Phones. Here's Why It Was Delayed.

Both Android and Apple iOS users will receive unknown tracker alerts on the Find My Device network.


How Corporate 'Intrapreneurs' Can Harness the Power of AI to Transform Their Businesses and Supercharge Their Careers

Corporate intrapreneurs are uniquely positioned to lead the charge in harnessing the transformative power of artificial intelligence within their organizations. Here is how and why.


Employees Are Burning Out — and the Culprit Isn't What You Think

There's a type of stress that has a huge impact on employees' health, work performance and personal lives. Here's what it is and what you can do to combat it, both for yourself and your employees.

Side Hustle

This Insurance Agent Started a Side Hustle Inspired By Nostalgia for His Home State — Now It Earns Nearly $40,000 a Month

After moving to New York City, Danny Trejo started a business to stay in touch with his roots — literally.

Business News

Elon Musk Says AI Technology Will Be Smarter Than 'Any Human' By 'Next Year'

The billionaire spoke about the rapid advancement of the technology in a livestream interview on X.