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“Working to transform kids’ shift from junk to healthy”
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Monday, 19 July, 2021, 08 : 00 AM [IST]
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Covid-19 has accelerated health seeking trends to improve immunity and reduce unhealthy fat consumption. With lockdowns snacking frequency for kids is up with increased calorie intake. “We are working to ensure a shift in snacks from junk to yummy and healthy,” said Harshavardhan, co-founder & CEO, along with Pariksha Rao, co-founder and chief nutrition officer, Lil’ Goodness, in an email interaction with Nandita Vijay. Excerpts:
How is your brand positioning itself to grab the market share for kids and their families? Ours is a kids’ food and nutrition brand. We are working to transform how 100 million children in India snack and shift from junk to yummy and healthy. The brand is positioned as the 'daily dose of goodness' for children and their families to solve two major problems: Vitamin B, C, D, Minerals: Zinc, Calcium, Iron, protein deficiency and excess of unhealthy fats and carbs. The second is fussy eating behaviour of children by offering a variety and change with and tasty yet healthy options.
How has the company fared since inception and particularly during this pandemic? How much of the fussy eating behaviour of kids have you managed to overcome? We went live online and offline, around a year ago. The first products were placed on the shelves in March 2020 and then for 2 months, encountered supply chain issues due to the lockdown. Since then, we have scaled up and figured among the Top 20 for chocolates in February, getting a positive response, especially among children. At least 86% of our consumers are families with children and teens. We are present on Amazon, Big Basket and Flipkart. Our website, relaunched in March 2021, yielded sales that matched or at even beat other e-commerce websites. We have scaled 25x and the recent lockdowns have accelerated our sales too. What differentiated our channel strategy was our offline presence with 200 stores which is a platform for growth.
Which products from your line-up starting from Mom Goodness Box to B12 jaggery, are the fastest growing and indicating high demand? Our three major product lines are anytime savoury snacks of multigrain puffs, veggie crackers made with real veggies, supergrain teff, no trans-fat, no palm oil, no added colours or preservatives. The veggie crackers were launched in May 2020, the multigrain teff puffs in March 2021. Sweet snacks are Prebiotic chocolates. The others are B12 Jaggery, teff grain, etc. These products have the required daily dose of micro and macro nutrients. Prebiotic chocolates are the best performers and B12 jaggery is the fastest growing. There is a pre-order queue for about 3 weeks, as we went out of stock selling out within 40 days of launch.
What led you enter this field and is this a one-of-a-kind offering in the country? We have a combined experience of 25 years in health and nutrition. While Harsha was formerly associated with the Tata Group, setting up and scaling the Tata Health business in its formative years. Pariksha is a PhD in nutrition and has over 15 years of experience in nutrition and wellness. We have a shared vision and passion for creating India's first children’s food and nutrition start-up, touching at least 10 million children over the next 2 years.
While there are competitors in this space, we felt that nobody had cracked the code of taste and health in snacking formats for children in the 4-15 age-group which opens substantial opportunity in terms of segment size and nutrition impact. Eating habits get formed in this age-group as children start making choices. Hence, there is a need to influence them to make healthier choices.
Would you tell us more about the funds raised and the intent going forward? We raised a seed round from reputed investors. This includes a US-based Indian family office and a Japanese institutional investor. Fund raising is an ongoing process. We delayed our fund raise since we have enough in the bank to scale our business for some more time. We would ideally look to raise funds once there is greater certainty of the Covid situation. Like any early stage high growth startup, funds are required to grow the business, at the right time.
Give details of the first of its kind tech-enabled precision nutrition platform which will use an algorithmic approach to personalise snacking options for kids. The preliminary version of this is available on our website. Any consumer can enter the nutrition profile details of their kids through a basic questionnaire. This assesses their nutritional profile, checks for allergies, health conditions and accordingly recommends a suitable snack box. This is just the basic building block for a personalised snacking model based on a more detailed health profile of the kids.
Give details on the research efforts. How much time it takes for product development trials? For product development, macro level and sectoral trends of consumer preferences are assessed. Data from digital consumption and social media channels allow prototypes for small batch production. The tested, stable commercial products are sampled with consumers for a quick feedback on taste, texture and pricing before being readied for larger commercial batches. Leading scientists and partners like Tag Taste evaluate, improve to create world class products at scale. Product trials are conducted in-house at our micro-facility, where the prototyping and recipes are standardised for scale-up by contract manufacturers. It takes between 4 weeks and 6 months to launch a new product based on the complexity and customer feedback.
Where are these products available and how are they positioned on the retail shelves? We have an omni-channel strategy mix for Bengaluru, Delhi, Mumbai and Hyderabad that can be scaled once Covid subsides. During lockdowns, brand’s presence via digital was strengthened. Working with channel partners ensures stock rotation and tertiary billing. We plan to grow offline 5x over the next one year and the store mapping exercise is complete.
What are the visible trends in the kids’ snack space? India has 300 million children under the age of 15. Of these, 100 million are undernourished and 18-24% are obese. We intend to prevent a major health crisis. Parents, especially in urban areas, are digitally empowered, willing to spend on children’s health and lifestyle, while being sufficiently conservative and looking for options that combine taste with nutrition.
Covid has accelerated trends to improve immunity and reduce unhealthy fat consumption. Snacking and calorie intake have increased due to lockdown while physical activity has decreased. Since incomes are constrained, purchases have gone down. These are multiple factors needed to solve the larger problem of affordable nutrition and snacking. While there are options for the 0-3 year olds, there are fewer or none at all for the older ones. Also, children prefer adult snacks and not the other way around. Except for milk supplements, most products are designed nutritionally for adults, including the traditional namkeens which is a potential opportunity.
How receptive are VCs and PEs towards funding such business models? There are a few leading funding start-ups in the consumer space. There is also an ecosystem of early stage micro VCs/family offices willing to bet on ideas. The past year has seen a proliferation of D2C brands and so the bar is set higher for start-ups to raise larger rounds from the bigger VCs. It also puts the onus on founders to create sustainable and scalable business models. We have also seen PE and IPO exits in recent times, an indication of the opportunities in this space from an investment perspective. There is also a new trend of the ‘thras.io’ type of funding models where strategic investors bet on D2C brands to scale them to around 4-5x of their current models to exit.
What are the challenges sighted in the space?
Proliferation of brands over the past 2 years shows niches are being carved. Digital advertising costs have increased with rise in online shopping. A differentiated channel strategy is critical to succeed. Product, packaging, value for money and clean labelling are needed to create a strong offline impact amidst a digital clutter. Brands will have to build trust based on product promise, consumer centricity, pre-post-sale, and use genuine verified channels to communicate and convince consumers.
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