Anuj Rakyan, founder, RAW Pressery
Anuj Rakyan used to play football for Bombay Gymkhana. A back injury needed surgery, but Rakyan was keen to let it heal naturally. Besides physiotherapy, this required good nutrition and he began making fruit and vegetable juices at home. It stuck him that while one could get fresh juice on the street, it was not available on retail shelves.
He decided to address this gap and founded RAW Pressery, which sells fresh, cold-pressed juices that are healthier, as they have no preservatives, sugar, or juice concentrate. After rolling out its juices in 15 cities, the Mumbai-based start-up plans to push other beverages such as almond milk, ready-to-eat soups, and functional water.
Last month, the company raised $6 million from venture capital firms Sequoia Capital, Saama Capital and DSG Consumer Partners, after raising $4.5 million in February 2016. In all, the firm has raised around Rs 100 crore. “Consumers are asking for brands like RAW by their name, which is a defining moment. What Bisleri did to water, RAW is doing to juices,” says Viraj Bahl, founder, Veeba Foods, a peer entrepreneur and an admirer of RAW.
In India, all consumers — rich or poor — have consumed fresh juice; easily available on street corners but not in retail stores. RAW Pressery is trying to organise the fresh juices market. A year ago, it asked 4,000 people what kind of juice they were looking for and all respondents said they were looking for fresh juice. “No one said they want juice where the top three ingredients are water, sugar and 10 per cent concentrate. The customer doesn’t want the kind of juice Tropicana, Minute Maid or Real makes. They are looking for 100 per cent fresh juice, not made from concentrate, no water or sugar added,” says Rakyan.
But, it’s not easy to make and distribute fresh juice. Fresh juice made at home will not last more than a day; it starts separating. The challenge was to increase the shelf life and yet keep it natural and healthy. To do so, RAW uses cold pressing technology that allows it to extract juice from a fruit without subjecting it to heat or oxidation, and then uses pressure to prevent the growth of bacteria in the juice for three weeks if refrigerated. Cold-pressing is opposite to pasteurisation that uses thermal treatment but in the process also kills all living enzymes. Cold-pressing is popular in the US and Europe; investors in RAW say it is the only Asian firm that has a cold-pressing machine, which costs Rs 10 crore. The recent funding will help add a new production line at Panvel (near Mumbai), which will help hike its production capacity to two million bottles a day.
A key challenge for a start-up is to scale; 90 per cent of companies
fail when they try to scale distribution rapidly for a fresh product to meet demand. RAW Pressery uses an ERP software in manufacturing and distribution, which has brought efficiency, while an experienced team has helped it manage a 120 per cent year-on-year growth.
Besides product quality, RAW Pressery has done well to create a differentiated brand. “The consumer is no longer thinking of it as a juice but a lifestyle brand,” says Rakyan. He remembers how energy drink Red Bull embodied a lifestyle. RAW has three line of juices: Multi-ingredients ‘benefits’ juices for weight management or detoxification; ‘basic’ juices of single ingredient which have no water, sugar or concentrate, and ‘shots’ of haldi or wheat grass.
Juices and smoothies bring in 80 per cent of its revenues, with basic juices accounting for two-thirds of sales and the benefits line contributing the rest. Predictably, the company charges a premium of 20-30 per cent on its juices over existing brands. It has introduced one-litre packs, which are 20-30 per cent cheaper than smaller packs. A one-litre Valencia Orange juice costs Rs 260-270 and packs in four-five glasses; the smaller 250-ml pack costs Rs 80.
Rakyan feels consumers don’t mind as they see value; it would be more expensive to make these juices at home.
There are few fresh juice brands like MyGreens in Bengaluru and and Rejoov in Mumbai, but the real competition for RAW Pressery is Real (estimated sales: Rs 1,600 crore) and Tropicana (Rs 800 crore). RAW is taking market share from these two — market research firm AC Nielsen tracking its sales is an indication. “The opportunity is massive. We can easily hit Rs 500-600 crore (in top line) in 4-5 years,” says Rakyan.
The company is banking on new product launches such as almond milk, functional water and ready-to-drink soups (already launched) to boost revenues. These are areas with very large markets, which should help. Non-dairy milk, for instance, is a Rs 250-300 crore market, with players such as Hersheys (brand Almond Fresh), and imported brands such as Dream and Europia. Similarly, soups is a Rs 300-crore market, growing at 25 per cent. Players include Knorr (Unilever), Keya and Bachelor in the sachet category and Heinz and Campbell in the canned soup market.
Rakyan says there’s an opportunity for RAW to emerge as a clean-label beverage brand, where everything is natural. This will be its guiding philosophy in beverages — juices, smoothies, almond milk, water (vitamin-infused water) and soups. In product-based business, profitability comes from how you source, manufacture, and scale distribution, so you get the economies of scale, similar to any fast-moving consumer goods business.
RAW controls margins across sourcing, manufacturing and distribution. As it scales, expenses will not grow at the same pace as revenues and it hopes to turn profitable by FY19.