Mastering the art of egg-nomics

Textile trader Manjunath Marappan and Ashok Kannan, a herbs trader with great knowledge on traditional and natural farming and medicines, share a common passion for healthy food produced by happy animals. This gave birth to Happy Hens Farm, a free-range eggs start-up, in 2012 in Madurai. Free-range refers to the traditional way of raising hens - letting them roam free and forage as they like.

Commercial backyard model

"Though backyard poultry is widely practiced in India, the high rate of consumption in metro cities and poor connectivity between farmers and consumers, and influence of the western model, gave way for factory farming. The rest is history," says co-founder Marappan.

Indian factory farms confine approximately 200 million hens in barren battery cages. Each bird lives within a space smaller than a single sheet of paper for more than a year before she's slaughtered. Cage-free hens have more space and are able to walk, fully spread their wings, and lay their eggs in nests.

Set up on 25 acres in Trichy, Happy Hens Farm's concept is the larger version of backyard poultry. It follows RSPCA (Royal Society for the Prevention of Cruelty to Animals) standards, which define the space given to each bird and not overcrowding them.

"Happy Hens' eggs assure the sunny side, in its true sense, to our customers, as it is a guilt-free food. We do all that is required to keep our girls (hens) happy," he says.

In addition to free-range standards, Happy Hens Farm takes interest in treating its birds with natural and traditional remedies. There include Brahmi, basil, sweet flag, turmeric, neem, aloevera and the like, that have high medicinal value in the diet to ensure good health of the birds.

"The knowledge of rearing with traditional methods is fading. We need to carry forward our rich Vedic knowledge and remedies, which have solutions to the disease issues. We are looking at rearing BSF (black soldier fly) worms from unused/surplus vegetables from the market, which will be a break-through in the industry," says co-founder Kannan.

Happy Hens is the only start-up that operates in the cage-free eggs production industry, which already has established players like Keggs Farm. Marappan, however, says he doesn't see any competition.

"We are unique," he says. "Rearing native Indian breeds while complying with global RSPCA standards, and by practicing in traditional and sustainable methods, make us stand apart from other commercial-scale players."

Living the next lap

Being a non-technology start-up, Happy Hens had faced hard financial times in the initial days. "We need financial institutions' support as no bankers are coming forward to support indigenous farming, the need of the hour. They don't realise our products are in demand when compared with factory farm eggs," added Marappan.

It was after Native Angels Network (NAN), a forum for enabling angel investments in Tier-II and Tier-III regions, promoted by Nativelead Foundation, investing Rs 50 lakh in 2015 that Happy Hens is keeping the ball rolling.

So far confined to Bengaluru, Chennai and Pune, it is now looking at utilising the funds to increase production capacity and spread to Mumbai, Hyderabad and Coimbatore.

"We hope to see 2,000 eggs a day soon, and will get to 10,000 eggs per day, in a year or two. Happy Hens will be known for its nutritious exotic eggs from chicken, quail, ducks to Guinea hens," NAN chairman and Happy Hens board observer, Nagaraja Prakasam, draws the start-up's roadmap. Happy Hens, currently garnering Rs 30 lakh revenues annually, has set an ambitious target of becoming a $1-million (6.6 crore)company in the next five years. It is also exploring the possibility of taking the franchisee route and engaging women self-help groups to expand. "We have survived and built the brand to the extent we are now. It (free-range eggs) is definitely a viable and scalable business," he adds.

EXPERT TAKE: N Balasubramanian

Most people consume eggs as 'better' food. Therefore, Happy Hens offering 'free-range' eggs by itself is a good concept. Having said that, scalability and viability in a business of this nature depends on execution. For any brand to sustain, maintaining consistent quality and keeping the cost of egg production and distribution under control will be crucial. This is not a new concept; many brands are available locally. One of the major brands in this space I am aware of is Keggs, which now has a national footprint. If they can differentiate in terms of colour (golden yolk) and nutrients delivered, I am sure they will receive a better response. Maintaining consistent quality and keeping the cost of egg production and distribution under control will be crucial to ensure smooth running of operations and viability of the business model. They also need a differentiator in terms of nutrients delivered and consistent quality, with a strong distribution network.

Availability of products and pricing are also key factors. Consumers will not travel a long distance for buying eggs and will not pay too much of a premium because as of today ,there is not much of dissonance with the usual 'caged' eggs!

The larger challenge for Happy Farms is to sustain and overcome seasonality of consumption and have multiple production locations if they want to build national scale, as transporting eggs over long distances is expensive. Overall, the challenge in this business is about ensuring consistent quality, managing efficiencies and sustaining the huge swing in seasonality of consumption in India. Since the business also has thin margins, it is easy to tumble!

N Balasubramanian is CEO of organic food brand 24 Mantra Organic

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel