🕹️Licious: The Next Amul

Both these companies are soooo similar!

Amul sells milk. Licious sells meat.

Lots of people drink milk. But very few people eat meat.

Amul is a 75-year old brand that is trusted by billions of Indians. Licious is a 6-year old startup.

Comparing Licious and Amul makes no sense. How can Licious be the next Amul?

That's what I thought.

But as I read about Licious, I realized it was soooooo similar to Amul: the business model, the supply chain, the strategies, everything.

So I decided to write this newsletter to prove to you that Licious is the next Amul.

My proof is divided into 4 parts:

  1. Amul: The Cow-to-Consumer business model

  2. Licious: The Chicken-to-Consumer business model

  3. Why Licious is the next Amul

  4. Licious: Better than Amul?

Let's go🚀🚀


🕹️Amul: The Cow-to-Consumer business model:

The story of Amul began in a small village in Gujarat called Kaira in 1946. A British company called Polson was exploiting dairy farmers. They bought milk at cheap prices from dairy farmers and sold it to consumers at high prices. Farmers were angry.

Enter Verghese Kurien.

He organized the dairy farmers into a cooperative. This was a smart move: farmers got fair prices for their milk and consumers got milk at cheap prices. In fact, this was such a good idea that Prime Minister Lal Bahadur Shastri asked Verghese Kurien to implement this system throughout India. The result? In 1970, Operation Flood was launched which transformed our country from a milk-deficient nation into the largest milk producer in the world.

But how did Amul achieve this?

Through their innovative Cow-to-consumer business model. Let's see what this means:

  1. Dairy farmers: 3.6 million dairy farmers are the core of Amul. On average, each farmer owns 5 cows. These farmers collect the milk from cows and take it to village societies. They do this 2 times a day.

  2. Village Societies: Amul has 18,000 village societies that collect the milk from farmers and pay the farmer instantly. Every society has an "Automatic Milk Collection System", which pasteurizes and chills the milk. Amul collects approx 3-4 million liters of milk daily like this.

  3. Distributors: From the village societies, the chilled milk is transported to 10,000 distributors on milk-delivery trucks. The distributors distribute the milk to a million retailers throughout the country, from where the milk reaches billion of consumers.

This is Amul’s supply chain.

Their business model is pretty awesome: they sell the milk to retailers and give 80% of their earnings to farmers.

The remaining 20% is Amul’s revenue. In 2020-21, it was Rs 40,000 crores.

🕹️Licious: The Chicken-to-Consumer business model

The story of Licious starts in 2015 when 2 friends Abhay Hanjura and Vivek Gupta met for lunch:

I had to call Vivek home for lunch and ordered a chicken dish from this company that was there. We received a soan papdi box that was dripping, stinking and had half-green, half-brown meat that splashed on his fancy VC clothes. It was messy and unappetizing.

-Abhay Hanjura

That's when they realized there was no company in India that made good quality meat. In other words, there was no "meat brand".

Surprising, right? Most of the food products in India have brands:

🥛milk: Amul

🥣curd: Mother Dairy

🌾wheat flour: Aashirvaad

spices: MDH

💧water: Bisleri

🍗meat: ???

There was no brand for meat.

Further research told them nonveg food was a big market: 71% of Indians eat nonveg food. India consumes meat worth $50 billion every year.

So they decided to start a "meat brand" that delivered high-quality meat.

That's it! Licious was born🥳🥳

Initially, they bootstrapped it. They pooled Rs.60 lakhs and started Licious in July 2015.

At first, their idea was to buy meat from meat shops and sell it to people under the name of Licious. But there was a problem. No meat shop sold high-quality chicken. In fact, meat shops didn’t even care about the quality of chicken. “chicken is chicken, what difference does it make?”

So the founders had to buy the meat directly from farmers.

In September, they launched the app/website to the public. That month, they got 1300 orders. The surprising part? 90% of customers came back to order the next month. Amazing retention! This proved people appreciated Licious.

Since their goal was quality, they spent a lot of time understanding the basics: what is good meat? How does one know if the chicken is right? What should be the weight of the bird?

We learnt that chicken must be antibiotic free
-Vivek

They also understood the difference in meat in different regions:

If you are a Punjabi and I am a Kashmiri, the meaning of chicken curry is different for the both of us. Therefore, we have a hyper-customised offering rather than mass personalisation at scale.

All of this sounds awesome on paper, but converting it to reality was very difficult:

  1. They had to work directly with poultry farmers and fishermen

  2. ensure the animals were raised and fed and reared properly

  3. an auditor examines the meat

  4. The animals are then slaughtered in government-run abattoirs

  5. transported to Licious processing centers(~5) in refrigerated trucks. Licious gets about 60-70 tonnes of meat everyday.

  6. clean and purify and package the food in Licious processing centers

  7. send the food from processing centers to delivery centers(~100)

  8. build a delivery network of drivers to deliver the nonveg food to people

They could have made their task easier by storing the meat in cold storage. But it went against their goal of quality. Storing the meat in cold storage reduced the quality of meat.

So they went for a "Zero Inventory Model", in which they sold meat as soon as they received it. No need to store it anywhere.

If you think this was difficult, wait till you hear about their covid-experience.

Fake news on WhatsApp spread that chicken was causing covid. So people stopped buying chicken. Poultry farmers shut down. Transporation facilities stopped. Delivery partners needed to be safe from covid while delivering orders.

What to do in this impossible situation?

Simple: focus on quality💯

If they also started serving bad quality meat, people would quickly lose trust in them. But if they kept supplying high-quality meat, even in this difficult situation, people would trust them 100x.

So they went to farmers and asked them to keep supplying high-quality meat, even if it meant Licious had to pay more. Licious team members went to fishermen on the south coast and assured them of supply.

If Licious couldn't find high-quality meat in an area, such as Delhi, they airlifted meat from Bengaluru.

To ensure drivers don't have covid, they made a bio-bubble(just like IPL did). Around 700 workers were put in this bio-bubble. A hotel was reserved for staff, no guests were entertained and no movement was allowed. From the hotel, the employees came directly to the plant, and then went back to the hotel at night.

The result of all this hard work? Sweet money😋💰

From 1300 orders in September 2015 to 1.5 million orders currently, Licious is on a rocketship. In 2015, their turnover was Rs.3 crore. This year, it will be Rs. 1500 crore. After the latest funding, they became a unicorn with a $1 billion valuation.

Covid couldn't stop Licious's amazing growth. Their revenue in the 6 months of covid was more than 5 years of revenue combined!


🕹️Why Licious is the next Amul

Alright so now you have understood both Amul and Licious in detail. Now you can understand why I'm calling Licious the next Amul.

Supply Chain:

Amul buys the milk from farmers, processes the milk, transports it using milk delivery trucks, and sells it to retailers.

Licious buys the meat from farmers, processes the meat, transports it to cities, and sells it to consumers.

Business model:

Amul buys the milk from farmers and sells it to retailers.

Licious buys the milk from farmers and sells it to consumers.

Goals:

Amul's goal is to supply high-quality milk to consumers and establish itself as the No.1 milk brand for consumers.

Licious' goal is to supply high-quality meat to consumers and establish itself as the No.1 meat brand for consumers.

Pretty similar, right?

That’s why I’m calling Licious the next Amul.

But wait. Licious is not just the next Amul. In fact👇👇


🕹️Licious is a better Amul:

Why did I spend so much time comparing Licious and Amul?

Because it shows the potential for Licious.

Just look at Amul's business, it's truly gigantic. In 2020-21, Amul's turnover was ~Rs. 40,000 crores. Their goal is to double this revenue to Rs 1 lakh crores in 3 years. Such awesome financials are only possible because Amul has built such an awesome brand.

Licious is doing the same.

That’s why if Licious succeeds, we will see similar awesome financials.

But Licious has the potential to do even better than Amul. Why?

Amul doesn't use tech very much. They could use tech to sell directly to consumers and eliminate the retailers in between. This would mean even more profits for Amul and its farmers.

But Licious is already doing this. They sell directly to consumers using their website and app. The Licious-consumer relationship doesn't have any middleman. This allows Licious to

  1. make more money

  2. understand its customers better

So, Licious can innovate faster and better to improve its service for consumers. This is something that Amul cannot do because it doesn’t have the end relationship with consumers.

Plus, Licious is also going offline: they launched 2 physical Licious shops in 2019 in Bengaluru and Gurugram. Now they will be launching lots more so that they can be better connected with their customers.

That’s why Licious has the potential to become a better Amul.


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