It recently raised $4 million in the Series A round led by RB Investments, with participation from existing investors Orios Ventures and angel investor Binny Bansal.
“Working with an experienced founder in Hitesh in this gigantic space is thrilling. The rapid roll-out since we invested the seed capital a year back now touches over 2,500 outlets and is expected to approach 50,000 in a year. The customer response has been tremendous and we have heard from many store managers that Yumlane is among their top two emerging brands. We are looking forward to building with the team India’s most exciting ready-to-eat brand,” says Rehan Yar Khan of Orios Ventures.
Evening snacking (4 pm to 7pm) and late-night snacking (11 pm to 3 am) are largely unbranded in India with most food brands focussed on lunch and dinner.
“Early trends are Yumlane Pizzas getting picked up by new age mothers, children, and young professionals. Also, since it is a great snack-in-the-box at the affordable pricing of Rs 60–Rs 80, consumers are happy to give us a shot,” the founder feels.
Yumlane’s pizzas or momos are not full-size servings; there are 8-10 bites snacks.
“Snacks is the most unorganised category in India and that’s what we are targeting. We are building the category by introducing snackable pizzas. We are the first players in the snacking food category as casual eating or chhotibhookh is on a growth trajectory,” adds Ahuja.
India has only three-four snacks in the branded space compared to seven-eight globally. Branded snacks in India are biscuits, namkeens and chips.
Area of business: On-the-go food segment (snacks segment)
Funding: $4 million in the Series A round, $300,000 in the angel round and $700,000 in the seed round
Investors: R B Investments, Orios Ventures, Binny Bansal, Anupam Mittal and others
Overall Indian snacks market as per Nielsen is more than Rs 500 billion. Whereas pizza and momo snacking although a new category, which the company is creating, it believes will easily add up another Rs 50 billion to the snacking category over next 8-10 years.
“Dominos, which is primarily into full meals business, earns more than Rs 30 billion in revenues. Hence, we believe have the tailwinds with us,” says Ahuja, also the chief executive officer.
Yumlane operates in the direct store delivery (DSD) model. Currently focussed on modern trade channels, this year it will be adding traditional and online channels of trade. The company is targeting an estimated market size of Rs50 billion but it is barely at 0.2 per cent of that.
“Our medium-term milestone is to hit Rs1 billion in revenues in two-three years. We will hit ebitda (earnings before interest, taxes, depreciation, and amortisation) and PAT breakeven in five and seven years, respectively,” says Ahuja.
The company aims to enhance its sales by five times from 200,000 units it is selling per month.
Having a presence in Mumbai, Bengaluru, Hyderabad and Pune, Yumlane plans to add more cities in the last quarter of the calendar year.
The company plans to utilise the fresh funds to increase its distribution footprint, new product development and investments in marketing.
Earlier, Yumlane had raised two rounds of funding. In July 2016, the company had raised $300,000 in the angel round from Binny Bansal, Anupam Mittal and other angels. In the seed round, the Mumbai-based start-up raised $700,000 in the seed round in November 2016.
EXPERT TAKE: Much headroom but a lot of competition
K Ganesh, Partner, GrowthStory, and Promoter, FreshMenu
Indians love snacking and Yumlane addresses this interesting and a large niche within the food sector, providing packaged snacking at pocket-friendly prices. The promise of 100 per cent natural ingredients and "no preservatives" is another draw, although not as significant in this segment as the attractive price point.
There is plenty of headroom in the cnacking segment, but, equally, lots of competition.
Roadside snack vendors, the neighbourhood chaat shops, local bakeries, and packaged snacks from established players such as Halidram's all address this space. One of the key challenges for Yumlane is to get people to make the switch from options they are habituated to.
Another challenge is ensuring distribution and quality of food/packaging as the company scales.
Encouraging people to test their products, expanding the range and catering for local palates, the rising consumer awareness of good nutrition / healthy food, maintaining quality as well as ensuring availability of products on the store shelves will be the key. They will need to establish a seamless supply chain as their footprint expands.