Ayurvedic food spiced up by FMCG boost

Shelly Pinto believes in the goodness of nature. A mother of two school-going kids, she often picks up healthier foods such as wild honey, A2 ghee and herbal juices in her grocery shopping.

Selling these functional foods and more is Kapiva Ayurveda, which last week raised $2.5 million in funding led by VC firm Fireside Ventures, Mohandas Pai's family office, Madhu Kela and GITS Foods.

Launched by the scion of Baidyanath Group, Ameva Sharma, and ex-Bain Capital executive Shrey Badhani, Kapiva has grown 12 times in 2018, after it pivoted to an FMCG-type model from a clinic-led model.

Initially, the duo wanted to build an ayurvedic chain, on the lines of Dr Batra’s for homoeopathy. As ayurveda is driven by doctors, they first opted for a clinic-led model which sold over 200 products.

The clinics were doing well, but Kapiva found that functional foods such as honey, A2 ghee, juices, teas, cold-pressed oils were doing better and showed more promise and relatively easier to scale. In 2017-end, the company pivoted from a clinic-led model to an FMCG-type distribution model, brought down the number of products it sells to 40 from 200, redid its packaging and hired a relevant team to reach out to modern trade and online channels like Amazon and bigbasket.

Today, Kapiva is available across 4,000 outlets in 10 cities, including retail outlets such as Reliance, Spencer's, and Nature's Basket. Online sales of products like wheatgrass and Amla juice on platforms such as Amazon and bigbasket account for a third of its sales.

In online sales, if products are good, brands get a lot of positive reviews. Kapiva created a team for online sales, hired an SEO (search engine optimisation) person, ensured 24-hour deliveries and a team to address customer issues. All these helped it grow 12 times-13 times since last January, giving it the confidence to target a revenue run rate of ~6-7 crore a month, which it hopes to achieve in 12-18 months. Sharma says he can’t disclose current revenues.

Kapiva has also focused on product development and sourcing of products, leveraging the supply chain of the parent. Wild honey, which has higher pollen, enzyme and higher nutritional value, is sourced from Odisha and the Western Ghats.

Similarly, Sharma says the A2 ghee is sourced from the Gir region in Gujarat, home to 3,000 desi cows. The ghee is extracted from curd as suggested in ayurveda, and not from the cream. Kapiva’s wild honey retails at ~199 for 250 gm; Dabur Honey sells for ~120. Similarly, Kapiva charges a premium of 5070 per cent on other products.

While ghee is a ~13,000-crore per annum market, honey is a ~3,000-crore and herbal juices are a ~600-crore market, the functional foods segment is not more than 4-5 per cent, but growing fast. Herbal, for instance, accounts for 40 per cent of the personal care market.

Kapiva is targeting 1-2 per cent of these categories. ‘‘It cannot be a ~10,000-crore brand as the material is limited — there’s only so much wild honey you can source in a year. Plus, we need to source them in an ethical, sustainable way,” says Sharma. The ambition is to build a ~400-~500 crore brand and nurture the supply chain as it grows.

Kapiva Ayurveda recently raised $2.5 million in funding led by VC firm Fireside Ventures, Mohandas Pai’s family office, Madhu Kela and GITS Foods