In Short:
Several direct-to-consumer (D2C) food and beverage brands are receiving a lot of funding and attention from investors. Start-ups like Boba Bhai and Blue Tokai Coffee Roasters are making waves in the industry. In 2023, D2C start-ups raised $635.5 million, and in the first five months of this year, they raised $278.1 million. The D2C model is thriving due to its ability to offer high-quality and personalized food experiences that meet evolving consumer needs. Investor interest in the sector is high due to its potential for growth and returns. Companies like Hocco Ice Cream and Crème Castle have also recently raised funding. The key to success for food brands lies in offering unique and affordable products, especially in tier-2 and tier-3 cities.
Exciting Times for Direct-to-Consumer Food and Beverage Brands
It’s an exciting time for direct-to-consumer (D2C) brands in the food and beverages sector as they are attracting significant venture funding. The influx of new start-ups with innovative product ranges has injected new life into the industry. Brands like Boba Bhai, Blue Tokai Coffee Roasters, Plix, and Pluckk are making waves, backed by investors’ trust.
The D2C start-ups raised $635.5 million in 2023 across 174 rounds, and in the first five months of this year alone, they have raised $278.1 million, according to data from intelligence platform Tracxn.
Meeting Evolving Consumer Needs
As economies grow, consumer spending shifts towards enriching experiences, including food. This has led to a surge in demand for unique and premium food products. Industry executives note that the D2C model is thriving because it meets these evolving consumer needs by offering personalized, high-quality food experiences.
Omni-channel Presence
According to VS Kannan Sitaram, Co-founder & Partner at Fireside Ventures, venture capitalists are showing keen interest in the F&B space due to its potential for high returns and portfolio diversification. Fireside Ventures has invested in promising brands like Frubon, Sweet Karam Coffee, The Baker’s Dozen, Slay Coffee, Yoga Bar, and Samosa Singh. They believe in the sector’s potential and the innovative products these companies offer.
Bengaluru-based restaurant chain Boba Bhai recently secured ₹12.5 crore in seed funding from investors led by Snapdeal founders’ venture fund and plans to deepen its omni-channel presence. With 25 outlets currently, the company aims to have 100 outlets within the next 12 months, all company-owned.
Dhruv Kohli, Founder of Boba Bhai, highlighted the impact of platforms like Swiggy and Zomato in revolutionizing food access, making it convenient for people to enjoy diverse cuisines at home. Investors are increasingly interested in F&B for its scalability and high returns.
Ahmedabad-based Hocco Ice Cream raised ₹100 crore in a fundraise led by the Chona family and existing investor Sauce VC. This investment will help them expand and capitalize on market demand, with participation from angel investors like Ritesh Sidhwani and Farhan Akhtar.
Building Brand Success Beyond Metro Cities
As young demographics in India become more globally aware of food trends through social media, customised bakery start-up Crème Castle believes in the potential for brands to succeed beyond metro cities, particularly in tier-2 and tier-3 cities. Accessibility and affordability are key factors for success in these markets.
It’s evident that the F&B sector is ripe with opportunities and potential for growth, and brands that can leverage modern infrastructure, digital platforms, and consumer trends are poised to make a mark in this evolving landscape.
