Bangalore-based, Nandu's is a meat brand with close to 50 stores across Bengaluru. It is currently the only hyperlocal, omnichannel retail brand in Karnataka. Unlike the popular notion that offline sales will be replaced with online consumption given the current scenario, Nandu's has seen exponential growth and foot-fall for its stores in the month of May and June. The trend will only have greater momentum, as per the company officials.In an exclusive conversation with Narendra Pasuparthy, CEO, Nandu's talks how poultry market is shaping up in the post COVID world.
What are the customer trends you have noticed in the past few months? Example Offline vs Digital footfall.
Over the past few months, we all have been learning to navigate unchartered territory. Initially, when the lockdown was first announced in March, there was a predominant sense of bafflement at life coming to a standstill. However, gradually, in business as in life, customers are adapting to the ‘new normal’.
Traditionally, over 85 per cent of the Indian consumers buy meat from local markets. The meat industry has been largely unorganised in the country, with online players catering to niche sections of the urban population.
The 3 main consumer trends noticed are
- Growing concern on health & hygiene – shift in habit of buying meat: Consumers are preferring to buy their meat from branded and hygienic meat retail stores such as Nandu’s instead of buying from the local butchery shop. We have witnessed a growth of 40% of sales via our retail stores
- Adoption of online purchase: Many consumers are preferring to order online via e-commerce websites and app as well as ordering from online marketplaces – we have noticed a 50% increase in the purchase from our online ecommerce platforms and also on marketplaces such as Dunzo, Swiggy Stores & Zomato Market
- Adoption and acceptance of ready to eat/cook products which was a very small portion of the business earlier. At Nandu’s we have seen an increase of 200% of our Ready to cook/eat and heat and eat category products. The closure of restaurants during lockdown have driven the sales of this category up as at home cooking was the preferred choice.
Overall for Nandu’s the hyper-local and omni-channel business strategy has paid rich dividends and we believe that omni-channel retail is the future.
In the current scenario, consumers are making a conscious choice of buying from trusted brands that vouch for high standards of hygiene, health and safety of their products and services. Nandu’s offers meat free from hormones, steroids or antibiotics, and any form of growth promoters. As a hyperlocal brand with fully-integrated operations and the only omni-channel farm-to-fork player, Nandu’s is well poised to cater to the changing customer trends.
What challenges did you face during the lockdown and how have you overcome them?
When you don’t know what to expect, the challenges seem unsurmountable. Especially in an unprecedented crisis like the COVID-19 pandemic that has rattled economies across the globe.
Following were the challenges:
- Supply chain & Logistics
- Manpower availability and movement
Despite poultry being classified as an essential goods item, our biggest challenge, at Nandu’s, has been coping with the prevailing uncertainty. The earliest manifestation was in disruptions in the logistics and supply chain. Manpower management was another challenge, as many members of our staff were anxious and were considering going back to the presumed safety of their towns/villages.
As I look back at the last few months, I recognise that we were able to overcome these challenges essentially due to our robust foundation and agile work culture. Nandu’s has fully integrated back-end operations, wherein we own our own hatcheries, feed mills, breeding farms, processing centre, food factory, cold chain infrastructure and retail stores. This is a huge advantage that enables us to make swift changes, ensuring that we can offer uninterrupted services to our customers.
However, without the resolute support of our staff and our integrated farmers it would not have been possible to overcome the challenges. A strong sense of community has helped us emerge stronger. We have been proactive in providing a safe work environment, accommodation and easy access to daily essentials to all our staff members as well as ensuring livelihood, safety and business continuity for the farmers.
In terms of business, the sales numbers for the last three months have been remarkable. Fresh chicken still remains our top seller. Interestingly, we have seen a surge of about 200 per cent in Ready to Cook/Ready to Eat (RTC/ RTE) products, especially chicken 65 and butter chicken masala.
As an omni-channel brand, we have been able to rise up to the challenge and cater to our customers via our retail stores, the online and ecommerce space, as well asthorughour own call centres.
How do you foresee the future in terms of customer expectations and demand?
The poultry market in India, currently valued at INR 1.72L crore, is growing at a Compound Annual Growth Rate (CAGR) of about10 per cent. Given the evolving role of the organised market and changing customer dynamics, the potential for growth is immense.
Owing to the current scenario and the prevailing pandemic situation organised meat retail is set for tremendous growth and omni-channel retail is the future.
The current socio-economic situation is bound to have a profound effect on customer expectations and demand. Right from hygiene and safety to greater transparency and trust, brands will have to raise the bar to keep the customers satisfied. To avoid supply chain disruptions in the future, customers will expect brands to invest in integrated backend operations and control their own our supply chain.
I also foresee a greater demand for RTC and RTE value-added products - that not only rank high on convenience, but also on taste. Brands that listen to their customers and evolve will be in the position to drive economic growth in the pandemic and post-pandemic world.
What is your company's growth projection for the next financial year?
Currently, we are profitable at the operational level, with 2.5x growth every year. For the next financial year our target is to grow 3x times while continuing to be profitable and we are looking at foraying into all 7 major cities in India in the next 3 years as we intend to soon be a pan India brand. Also, our RTC/RTE range of products will be retailed through Modern Trade outlets pan India.
Are you looking for funding/closing a funding round?
Nandu’s been self-funded since its inception in 2016. We have developed a strong and profitable business model with huge market potential. Right now, we are looking at growing pan-India.In order to capitalise on the growing market and fuel our aggressive growth plans, we are looking for private investments.
What are your expansion plans?
In India, 60 per cent of meat consumption is driven by urban markets. Nandu’s aims to strengthen its prominent position in the industry by entering new markets with our own retail stores in cities such as Hyderabad, Chennai, Mumbai, Pune, Delhi, Kochi, whereas our RTC/RTE range of products will be retailed across all major cities in India via modern trade stores.
We plan to have 600 Nandu’s stores across India in the next 3 years with a goal to be India’s fastest growing and largest meat omni-channel meat retail chain. As a truly omni-channel brand, we will continue to offer customers home delivery via our e-commerce website, app, call centre orders as well as e-commerce marketplaces. The vision is to make fresh, healthy and high-quality meat and meat products accessible to customers, irrespective of where they are based.
What kind of initiatives have you launched in the past few months?
We are the first meat retail brand in India to successfully roll outa CRM and loyalty program for our retail consumers. Club Nandu’s shall enhance the buying experience for the consumers while helping us develop products and services basis insights we obtain from our large base of loyal customers.
We deployed Net Promoter Score (NPS) – the first meat brand in India to introduce NPS in meat retail – to gain valuable insights into our customer experience. We are constantly striving to learn and improve. Nandu’s Consumer Loyalty Programme has been a result of this endeavour. Similarly, our RTC/ RTE products are designed on the basis of customer feedback.
In keeping with the current norms of social distancing, we’ve also implemented important measures, such as contact-less delivery for our online customers and queue management systems at our retail stores. Similarly, all our staff follow strict hygiene and safety protocols at our stores as well as our back-end operations.
8) Could you give us some insights into the Offline Vs Online models and its potential from a consumer standpoint?
Conventionally, the meat industry has been providing one of the most underserved retail experiences across categories. As more consumers make the move from local butchery shops to trusted brands (that operate in the online as well as offline space), the market will get more organised.
The current pandemic offers customers the opportunity to discern healthier and more hygienic ways of buying meat. The shift in consumer sentiment will ultimately create a more accountable ecosystem.
While online/e-commerce ordering for meat will continue to grow, the mainstay and faster growing channel will be physical retail. We believe that being a neighbourhood meat retail store will give Nandu’s an advantage to capitalize on the growing demand and become the largest and most widespread meat retail brand in the country.
As I see it, the issue is not so much about the online or offline models, but about customer trust. Organised players entering the meat market can tap into the growing market opportunity to build trust in an increasingly trust-deficient domain.
9) What insights can you give us on the meat industry and its future?
The meat industry in India has witnessed measured growth, despite its remarkable potential, predominantly because of its unorganised nature. The disruption from COVID-19 puts the industry at an exciting tipping point. There is significant opportunity for improving the way Indians experience meat.
Over the last few months, we are seeing the market get organised – in the urban sector – with the spotlight on safety and hygiene standards. Through organised growth, we can leverage the potential to create a healthier and more sustainable ecosystem.
In the next 5 years the organised meat retail industry will witness double the growth of what has been achieved in the preceding 5 years owing to change in consumer preference and behaviour when it comes to buying meat. India being a young population will further drive organised meat retail as the consumption of meat is on the rise.
In the near-future, I expect to see more customer-centric business models, supply chain remodelling and efficiencies driving value creation. There will be more innovation in terms of enhancing customer experience as well as catering to the ever-evolving tastes of modern-day consumers.Evolving customer behaviour and the demand for hyper-local brands with omnichannel presence will fuel Indian meat sector’s growth momentum over the coming years.