Deal focus: VCs take a bite from India’s food sector

When Drums Food International launched the Epigamia Greek yogurt brand in 2015, it tapped a pent-up demand among India’s millennials for a healthy snack. For the company, the success came as little surprise because despite the foreign associations of Greek yogurt, the product’s origins lay far closer to home.

“There’s a similar product to Greek yogurt that has been consumed here for hundreds of years, but it had never come out in a modern packaged format, which is what we’ve been able to do,” says Rohan Mirchandani, co-founder and CEO of Drums. “Of course, we used the global trend of calling it Greek yogurt, but it’s helped us to freshen our product lines for the Indian market.”

Drums’ products now include lactose-free curd and drinkable yogurt, following the same philosophy of updating traditional tastes with modern packaging and distribution. The company markets its products as all-natural, with no preservatives or artificial ingredients, and has gained a growing, loyal customer base.

With a newly closed INR1.8 billion ($25 million) Series C round led by returning backer Verlinvest, Drums is preparing to begin its next stage of growth. The company believes it has barely scratched the surface of India’s health-conscious consumer market.

“There’s a global FMCG [fast-moving consumer goods] revolution that’s happening with the help of start-ups, but it has not come to India so far,” says Mirchandani. “We see ourselves as leading the pack in that revolution, and we can also think very nimbly, move fast, and stay competitive.”

Increasing the number of ways consumers can access products is key to Drums’ expansion plans. Currently the company has 10,000 distribution touchpoints, which include traditional and online retailers along with bulk buyers like schools and hotels. It hopes to grow these to 50,000 over the next three years.

The location of these channels is just as important. At the moment, 90% of touchpoints are in five cities; Drums wants to grow to 25 cities, with a focus on developing regions where disposable incomes are rising. It also needs to build a production facility in southern India, since the country’s inadequate cold chain distribution network means the company’s products tend to expire before they can reach southern states.

Drums’ investors should be able to help with these goals. Along with Verlinvest, which is linked to the founding families of Anheuser-Busch InBev, participants in the latest round include French food conglomerate Danone. The company is planning to leverage the expertise that these investors have spent decades building.

“We’re very innovative in how we think about the consumer and product. But there are a lot of areas where we don’t have to reinvent the wheel,” Mirchandani says. “When it comes to expanding distribution, scaling up production, and growing the sales force, these are things that our investors have immense experience with and have been doing it for ages.”   

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• Topics
• South Asia
• Consumer
• Expansion
• India
• Verlinvest