Investors warming up to D2C F&B start-ups
In our Fifty-Second D2C Insider edition, explore how Investors warming up to D2C F&B start-ups, Consumers Tap Dad’s Summer Grilling Excitement for Father’s Day and more!
Hello and welcome to the world of D2C Insider, your weekly dose of insights, news, and trends from the direct-to-consumer space in India and beyond. In D2C Insider Digest’s Fifty-Second edition you'll see:
Investors warming up to D2C F&B start-ups as firms prep for funding round
The direct-to-consumer (D2C) model is thriving in the food and beverage industry, meeting evolving consumer demands for personalized, high-quality experiences. New startups like Boba Bhai, Blue Tokai Coffee Roasters, Plix, and Pluckk offer innovative products, attracting $635.5 million in investor funding across 174 rounds in 2023. In the first five months, D2C brands raised $278.1 million.
As economies grow, consumer spending shifts toward premium food experiences, driving demand for unique products offered through the D2C model. Venture capitalists are interested due to high potential returns. Boba Bhai recently raised $3 million to deepen its omnichannel presence. Companies like Frubon, Sweet Karam Coffee, and Samosa Singh exemplify successful regional D2C brands.
Consumers Tap Dad’s Summer Grilling Excitement for Father’s Day Gifting
For Father's Day, some consumers are opting for premium meat cuts as creative gifts amidst barbecue season. Reba Hatcher of ButcherBox, a D2C meat company, says Father's Day sees more one-time gift box purchases like tomahawk or T-bone steaks versus subscriptions - providing a "wow factor" for grilling experiences. While overall Father's Day spending is projected at $22.4 billion this year by NRF, slightly down from 2022's record, consumers are mindful of inflation pressures.
A PYMNTS report found 52% of holiday shoppers were more price-conscious, with 48% considering prices when deciding where and what to buy, and 42% factoring in sales and discounts. Premium meat gifts allow for special occasions while navigating economic conditions.
Trade Marketing - The Offline Equivalent of Performance Marketing
Arindam Paul, Founding Member & Chief Business Officer @ Atomberg, shares that Trade marketing can be viewed as the performance marketing equivalent in the offline world, and its effective execution has been a key driver of Atomberg's growth in the offline space. Just as online businesses rely on SEO and SEM to rank highly on Google for generic queries, offline businesses need strong relationships with retailers to ensure their brand is introduced to customers seeking products in that category.
Analogous to the importance of strong reviews and ratings for higher online conversions, offline businesses need retailers to reassure customers about the quality of their brand. Online businesses invest in display ads and aim for a high share of voice on e-commerce platforms like Amazon and Flipkart, while offline businesses strive for prominent product displays and a high share of shelf space at the point of purchase.
Crucially, these trade marketing efforts are executed in a data-driven manner with a strong focus on return on investment (ROI), much like online performance marketing initiatives.
Choosing Spices Over Steel - Forging a New Legacy
Akash Agrawal, Co-Founder @ Zoff Foods, faced a pivotal choice: inherit his family's 700-crore annual revenue steel business in Raipur, a legacy built over generations since the 1990s, or forge his own path. Despite the allure of a well-established family enterprise, Agrawal's passion and vision for something unique proved stronger than the pull of tradition.
In 2018, he saw a golden opportunity in the spice market, driven by a dream to bring Indian spices back to the global stage. This wasn't merely about launching a new business; it was about trusting his instincts, creating a new legacy from scratch, and stepping out of the comfort zone of the family business.
Agrawal's advice to young students and entrepreneurs is simple yet profound: "Never be afraid to follow your dreams. They will lead you to what your heart truly desires." His story serves as an inspiring reminder that sometimes, the greatest legacies are forged by those brave enough to chart their own course, even if it means leaving the comforts of the known behind.
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In the second week of June 2024, startups raised around $97 million, a significant 28% decrease from the same period last year. This week's funding amount also marked a 70% reduction from the previous week's total of $326.1 million, which was boosted by a large $200-million deal. The funds were raised across 13 rounds, mostly at the early stage, compared to 34 rounds during the same period in 2023, when startups raised $134 million. Indkal Technologies, which raised $36 million, accounted for nearly 38% of the total funding this week.
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