Nutrivative Foods Pvt., which runs superfood brand Nourish You, is set to embark on the inorganic route to unlock its next phase of growth.
The seven-year-old startup is in the final stages of talks to acquire a vegan food brand in a bid to diversify into plant-based dairy products, according to Krishna Reddy, co-founder of Nourish You.
Currently, it has just one product—Millet Milk—under this portfolio. However, the company will enter vegan alternatives of curd, cheese and protein powder when the deal fructifies. It expects to close the deal by the end of this year, Reddy said.
Founded in 2015 by Krishna Reddy, Sowmya Reddy and Rakesh Kilaru, Nutrivative Foods has raised $2 million in its first-ever funding round in January.
The Hyderabad-based startup counts actor Samantha Ruth Prabhuhas, Triumph Group's Y Janardhana Rao, Darwinbox founder Rohit Chennamaneni, Zerodha founder Nikhil Kamath, Gruhas founder Abhijeet Pai and KIMS Hospitals Chief Executive Officer Abhinay Bollineni as key investors.
Nourish You's current portfolio spans quinoa, chia, millets, edible seeds like flax, pumpkin, sunflower and watermelon. The company also has a breakfast range, which includes cereals like oats, muesli and fills.
From Left: Krishna Reddy, Samantha Ruth Prabhuhas and Sowmya Reddy (Source: Nourish You)
The fresh infusion of funds enabled Nourish You to double down its investment towards research and development of new products, diversifying the brand's portfolio and expanding distribution, Krishna Reddy told BQ Prime. The company has expanded its retail reach to 2,500 stores and intends to increase the store count to 5,000 in the next two years.
A part of the fund raised is also allocated for branding and marketing as well the proposed acquisition. The company is yet to spend even half of what it raised, according to Reddy.
From 50 acres to now 5,000 acres of quinoa and chia farms across Madhya Pradesh, Rajasthan and Karnataka, Nourish You has come a long way in its superfood journey. The company has nearly tripled its monthly revenue run rate to Rs 1.5 crore.
Aided by the proposed acquisition, Reddy expects the annual turnover to touch Rs 30 crore by the current financial year. "We aim to double our revenue year-on-year in the financial year ending 2025."
However, he expects profitability to take a hit as the company is spending aggressively as part of its roadmap to become a formidable player.
"As of August, we were a cash-flow-positive company. But we might incur some losses, considering our plans to spend on various aspects, be it distribution, acquisition or marketing.... That said, we don't expect these minimal losses to be a great concern as our fundamentals remain strong," the co-founder said.
Nourish You began its operations by offering homegrown super seeds—quinoa and chia seeds. And later, set its eyes on millets as the coarse grain is making a strong comeback, especially in urban consumption markets.
The production of millets, which were hardly seen on the menus till two decades ago, has been fast overtaken by the demand for these "nutri-cereals", Nourish You CEO Rakesh Kilaru said.
"We are seeing encouraging demand for millets, thanks to the increased awareness," the co-founder said, referring to the Union government's initiative to rebrand millet as "Shree Anna" and the United Nations General Assembly declaring 2023 as the international year of millets. India's G20 presidency also played a major role in the transition that saw Britannia Industries Ltd. launching Millet Bread, Hindustan Unilever Ltd. introducing Millet Horlicks in chocolate flavour and Nestle India rolling out millet-based porridges.
Companies can't afford to miss the millet bus because of its vast potential.
India is the fastest growing health-food market as it expands at a 20% compound annual growth rate, which is three times the global average, according to Avendus Capital. By 2026, it is forecasted to double to become a $30-billion market by 2026.
The investment banking services firm projects the number of health-conscious consumers in India to increase to 176 million in 2026, up from 108 million in 2020, thanks to the massive headroom for growth in the space. It is due to the low health-food penetration as a percentage of total packaged foods and beverages, which stood at 11% in India compared to 31% in the US. Factors that are fuelling demand are rising disposable income leading to increased spending capacity, especially among millennials, and proliferation of e-commerce reducing the traditional barriers to entry for new-age brands.
While there are no studies that capture the size of the domestic millet market in particular, individual experts predict the millet-based packaged-food market to grow at a CAGR of 15–16% between 2021 and 2026.
However, the premium pricing tag is restraining the market, but that could change, according to Kilaru. "The prices of millets have come down to Rs 400 per kg compared to Rs 2,000 per kg seven years ago when Nourish You began operations. As these grains become more and more affordable, it will play a role in making millets mainstream in the long run," he said.
The world is also looking at India for the export of millets, said Reddy.
It was among the many companies that were invited by the government to showcase their millet-based innovations to the member nations. He said that its 'Millet Milk' has caught the attention of many. Nourish You exports to countries like Nepal, Singapore, Kenya, Dubai, Mongolia and Maldives.
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