1. Startups

Foodtech Outlook 2023: Balancing Brand Aggregator Strategies and Positive Economic Units

A number of foodtech startup players and investors share their views on this year's strategy and business outlook

The food and beverage (F&B) industry continues to grow, as does customer behavior and preferences. Especially in the digital age, consumers are more informed and demanding than ever before, so it's important for businesses to understand and adapt to these changes in order to successfully capture market share.

One of the biggest trends shaping customer behavior in the F&B industry is the health aspect. The pandemic has made most consumers more interested in knowing the ingredients and nutritional information of the food they eat; and many are choosing healthier, plant-based and organic options.

On the operational side, F&B players take advantage omnichannel must also begin to have an overall strategy to be able to expand their services and add to their brand options. Whether by way of acquisition or strategic cooperation.

Omnichannel strengthening the F&B business

Apart from health factors, today's consumers are also starting to demand convenience, variety and personalized experiences. To meet these demands, many F&B businesses have adopted the approach omnichannel.

In particular omnichannel refers to a seamless, integrated shopping experience across multiple channels, including physical stores, online delivery, and other applications. The goal is to provide customers with a consistent and cohesive shopping experience, no matter how they choose to interact with brand The.

Menurut President Director of Dailybox Group Kelvin Subowo, after 2 years of the pandemic, orders via delivery services have stagnated. This is because the character of Indonesian people is attached to togetherness, so they cannot rely 100% on delivery service strategies, especially in cities. tier 2 and 3.

During the pandemic, the company recorded 80% sales turnover Dailybox comes from an online food delivery service.

"In our opinion, purchasing F&B products via delivery services is no longer a seasonal trend, but has become a habit. It's just that the frequency will not be as high as in the early days of the pandemic. Therefore, Presenceoffline also needs to be improved," said Kelvin.

He added, currently several o Dailybox Group which is just a concept takeaway or grab&go, slowly transformed into a concept dine-in so people can come directly.

In the F&B industry, strategy omnichannel can help business. Among other things, improving the customer experience, by offering multiple ways to order, pay and receive their food, customers can choose the most convenient option. The approach can also help businesses reach new customers and increase sales by offering a wider variety of products and services through multiple channels.

According to Co-Founder & President hangry Andreas Resha, so far the company has continued to explore various ideal channels. Currently the company's focus is on improving services online, which they claim continues to experience positive growth. Nevertheless, channels offline as dine-in or takeaways also began to show massive growth.

"Even though PPKM was lifted and offices reopened, the attraction is deep channel food delivery online stay strong. "This proves that the shift in preferences towards food and drinks that are more practical, easily available and of good quality is not just a temporary or seasonal trend," said Andreas.

Other things also play an important role in implementation omnichannel is technology. Technology plays a big role in shaping customer behavior. Starting from ordering and delivery online to mobile apps and loyalty programs.

Using your own application, Haus! The brand, which is in the New Tea & Boba category, hopes to get around 25% of the 50% of customers online which currently exists.

It was discussed whether in the future more customers would make purchases with options pickup or offline, according to the Co-Founder & CEO of Haus! Gufron Syarif, there will still be customers who choose to make purchases online, but it is a choice pickup and directly to the counter is also expected to increase.

Potency brand aggregators

Judging from consumer demands for convenience, variety and personalized experiences, the trend of brand aggregation or brand aggregators Currently, many F&B business people are starting to pay attention to it. With this strategy, the company manages several brand food and drink, usually from different product categories or cuisines. Apart from developing/incubating their own business units, several players carry out M&A strategies.

The aim is to be able to offer a wider range of products and services to customers. Going forward, aggregation trends brand The F&B industry is expected to continue to grow, as businesses seek new, innovative ways to reach customers and increase their market share.

According to CEO Prasetia Dwidharma Arya Setiadharma, brand aggregators will create value, if there are some business processes that can be simplified throughout brand. In the F&B industry, this can mean centralizing central kitchen or centralize the marketing team/Branding. If no value is created by the aggregation process, it will not be successful in the long run.

Prasetia Dwidharma himself has currently invested in Haus! which has expanded its products through the sister brand "Hot Oppa" which was released in November 2022. Food product variants in the future will be the company's focus to increase growth stores and sales vertical.

By combining several brand and food and beverage products, businesses can meet demand and offer customers for all their food and beverage needs.

According to Kelvin, the F&B industry in Indonesia is currently very advanced saturated, so the presence of a brand aggregator can help brand that exist to further develop from the distribution, production to marketing side.

For markets like Indonesia, customers are very active in using social media. According to Vertex Ventures SE Asia & India Partner Gary Khoeng, the future is ahead brand aggregators will take more advantage of the growth in social media.

"Omnichannel as a strategy it is predicted that it will also continue to grow and we see that the company will focus on driving a consistent and best customer experience across all channels. Businesses will also deepen their data collection and analysis capabilities to make data-driven decisions," said Gary.

Currently Vertex Ventures is one of the strategic investors supporting the growth of the Dailybox Group business. It is noted that Dailybox's business growth was not hindered during the pandemic, their gross income as a group in 2021 grew quite rapidly. This achievement also made the Dailybox Group noticed by a number of investors and finally succeeded in getting it Series A pendanaan funding in July 2021 during the pandemic.

"In the past few years we have acquired brand which has storefront or exist on offline platforms, such as Breadlife and Lu'miere. "In the future, we will introduce several new brands that can support our multi-platform strategy," said Kelvin.

Agar brand aggregators successful, companies must continue to evaluate and optimize their brand aggregation strategies based on feedback customers and data analysis. This includes regularly updating technology and offerings to ensure that services and products remain relevant and meet changing customer needs. In conclusion, the trend of brand aggregation in the F&B industry will continue in the future, as businesses seek to maximize their reach and increase customer loyalty.

Unit economics and factors driving VC investing

The F&B industry has become one of the pillars of the global economy, and in recent years, has attracted significant investment from venture capital (VC) firms. With the growth of the industry, VCs are looking for opportunities to invest in F&B businesses that are promising and have the potential to grow and expand. This includes companies that have a proven track record of revenue growth and a clear strategy for expanding their customer base.

VCs also often look for F&B businesses with strong unit economics, meaning the cost of producing and shipping each unit is lower than the revenue generated from its sale. This allows businesses to generate positive margins and reinvest profits into growth and expansion.

According to Arya, every brand need to understand their unit economics. Is the company profitable at store level?, Which stores are not profitable and why?, How much break-even sales and break-even unit?.

"During the expansion period, every brand must be able to provide reasons why the proposed location is good. Location data is an important factor before developing. Brands need to understand what their customer demographics are," said Arya.

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In the F&B industry, unit economics is an important factor in determining growth potential and scalability. Looking at businesses with clear growth strategies, innovative offerings, and strong unit economics, VCs can identify and invest in businesses that have the greatest potential. In conclusion, growth focus and unit economics are key considerations for VC firms when investing in the F&B industry.

According to Gary from Vertex Ventures, business foodtech those supported by VC generally consist of online and offline components. Online business models are evolving so VCs can't determine the growth targets or unit economics a startup needs to achieve before investing.

"In general, what we see is consistent and healthy monthly growth rates, healthy customer retention and profit contribution margins, if startup founders are able to minimize variable costs," said Gary.

He added, usually the service is online offline also complete the service online. When the pandemic subsides, you will start to see customers returning to stores offline, not only to buy food but also for the direct experience of enjoying a meal at the location.

Metrics that are then looked at by VCs in this case include, if there is consistent sales revenue growth per store/restaurant, sales growth (%) per store/restaurant, how long it takes each new store to achieve break even and achieving profitability, including the amount of capital expenditure required for the new store.

"This includes their food distribution strategy, for example the central kitchen model, whether they optimize it for economies of scale and what happens when they reach maximum capacity, versus individual kitchens in restaurants, whether the operations are optimized," said Gary.

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