Country Delight looks to be profitable by FY24, go public by 2025

31 Oct , 2022 By : Monika Singh

Country Delight, a direct-to-home (D2H) consumer tech platform which sells milk under the same brand, is aiming to be profitable by financial year 2023-2024, with the ambition to be a vertically integrated D2H private label company, and expanding into all categories of food essentials. The company is also hoping to list on the stock exchanges by financial year 2024-2025.

Started off primarily as a milk delivery platform in 2015, the company has seen a growth of 2-2.5X annually. “From a Rs 6 crore turnover in 2017, Country Delight has crossed Rs 1,000 crore in revenues this year,” Chakradhar Gade, co-founder and CEO, Country Delight, told FE.

“Our value proposition is giving fundamentally better and natural products. We don’t want to look at ourselves as a convenience-driven business or platform. We want to be responsible for the products that we are giving to the customer. Better quality is the primary play, which makes our business truly unique in the way we are doing it,” Gade said.

The company is present in 11 states and delivers in 15 cities, with the North being its major market and contributing 50% of the business. Gade said the West and the South regions are also growing, and the company sees near-equal distribution evolving over the next one year. Country Delight has been seeing a 7-10% month-on-month growth in revenues across geographies, he added.

As the company works on a subscription model, it boasts of 400,000 subscribers and adding another 15,000-20,000 month-on-month. It also has a VIP programme for regular customers through which they can save up to 30% of their spends by making an upfront payment. “We intend to reach a million subscribers by FY25,” he said.

According to Gade, the company has no ambitions of becoming a super premium brand, but Country Delight will continue to play in the mass premium segment. At present, Country Delight milk, for instance, is priced about 12-15% higher. However, some of the milk value-added items like dahi or paneer are priced even lower than competition, Gade said.

“We will stand out with the brand, the product quality and then the convenience. As our product categories increase, as customers spend more with CD there is scope for reducing prices, but we don’t plan to become a super premium brand,” he said.

After milk, the company is now foraying into multiple food staple categories, which includes rice, wheat, pulses, grains, jams and pickles. The company launched pulses earlier in October and launched dry fruits earlier this week to coincide with Diwali. It will be launching its own oils and wheat flour in November. Country Delight plans to cover 80-90% of the staples category by April 2023. For pulses, the prices are again 10-15% higher compared with competition.

The company is present in 11 states and delivers in 15 cities, with the north being its major market and contributing 50% of the business. Gade said the west and the south regions are also growing, and the company sees near-equal distribution evolving over the next one year. Country Delight has been seeing a 7-10% month-on-month growth in revenues across geographies, he added.

As the company works on a subscription model, it boasts of 400,000 subscribers and adding another 15,000-20,000 m-o-m. It also has a VIP programme for regular customers through which they can save up to 30% of their spends by making an upfront payment. “We intend to reach a million subscribers by FY25,” he said.

Gade differentiates his business model from other FMCG food staples companies on the proposition that Country Delight orders fresh on behalf of the customers, which they can consume within a month and can order again, eliminating the need for intermediaries or trade channels.

“In most of the food staples, the trade channels eat up 30% of the margins, which makes the price unaffordable if the quality is very good. But here I own my distribution channel and this distribution channel is paid for by milk. So, as our SKUs increase we have the potential to make everything more competitive because we own our distribution,” he said. Overall, the company is making operating margins of around 40%.

At present, roughly 40% of the business is non-milk, which will grow to 60-70% over the next couple of years as the company keeps increasing its households and the proportion of business keeps growing.

In terms of market share, it is fairly small and Gade said the company has not even scratched the surface. “In Delhi-NCR, we are 3-4% of the geography. We plan to reach 10-15% market share over the next three years across markets in the north. We are still new in the south and west, and market share is lesser, but north itself is a big geography,” he said.

Going forward, Gade said new product launches and category evaluation will be a key area of focus. “We look at improving the quality from the supply chain point of view and engaging more with the farmer networks. The third area is tech-driven solutions. We run supply chains across 11 states in a very capital-efficient and distribution-efficient manner because we leverage tech in ways which others don’t,” he said.

The company earlier this year raised $108 million in a Series D funding round led by Venturi Partners and Temasek. SWC Global and Trifecta Capital, along with existing investors such as IIFL Asset Management, Elevation Capital, Orios Venture Partners and Matrix Partners India, also participated in the fundraise. So far, the company has raised a total of $147 million.