What's The Future Of The Food Industry?
A guest post by Stephanie Denning, who writes about leadership issues from a Millennial perspective.
The Internet has revolutionized countless industries, from finance to fashion. Now it’s starting to revolutionize the food industry. The biggest change has been the ability to order online. “In 2013,” Fortune reports, “venture capitalists poured $2.8 billion into food-related startups.”
A large part of this change has been driven by millennials. An article earlier this year in Adweekdescribed it in the following way: “It’s debatable whether millennials are special, but one thing is certain: Their relationship with food is. They want it to be authentic, they want to know how it was produced, and they want it to be a shared experience, preferably involving small plates eaten at communal tables.” McDonald's MCD +0.41% Global Chief Brand Officer, Steve Esterbrook added. “The millennial generation has a wider range of choices than any generation before them.”
The newest trend is cooking convenience delivered to your door. Blue Apron is one of the biggest players. You order a dish and Blue Apron delivers all the ingredients for a fresh meal with top-quality ingredients. “Our food is a major differentiator for us,” says Blue Apron’s CEO Matt Salzberg. “We source from the same wholesale providers who supply high-end restaurants, so the quality is extremely high.”
While Blue Apron has helped define and pave this new space in the market, there are still gaps in their model. They are selling convenience. And freshness. But taste? For many of the millennials who comprise their customer base, taste is key.
Enter Saffron Fix.
Saffron Fix delivers to your doorstep all the ingredients, spices, bread and rice to cook an Indian meal at home. Saffron Fix is one of the first in the space to focus on a specific cuisine: Indian food. The project was founded by Ankita Sharma and Madhuri Sharma. Ankita just finished her MBA at NYU Stern School of Business. Prior to that she worked at Bloomberg and Apple AAPL +0.23%. Madhuri complements Ankita, having gone to culinary school and previously working for the Food Network.
Saffon Fix’s specialization in Indian food will help to differentiate it. The project is still in its infancy phase, having been born earlier this year, with the help of a campaign on kickstarter. Contributors also get a box from Saffron Fix.
Recently I spoke with Ankita to learn more about their business and how they plan to compete against the bigger players in the market.
Stephanie Denning: What is your vision for Saffron Fix?
Ankita Sharma: Our motto is Indian cooking made easy.
Denning: How did you come up with the idea?
Sharma: When I came to the US, I was trying to cook an Indian dish and realized it was impossible! It was very difficult to find good naan, the rice, the spices. And it was expensive. There are Indian spices at Whole Foods now, but they can cost up to $15 just for a tiny bottle of spice. The time and cost of making this dish was ridiculous. I was thinking: it shouldn’t be that hard!
In the Indian food market, there isn’t a solution for people who want to cook Indian food at home. Saffron Fix offers accessibility. And we demystify the cuisine. I think that’s the market we’re going after. We’re taking a bite of that food market.
Denning: What convinced you it was a good idea?
Sharma: I talked with the president of Preferred Brands International, which owns Tasty Bite, Hans Taparia. Getting confirmation from him gave us confidence. He told us when he launched Indian fast food, he thought it would only be for the Indian Food market, but it turned out to be much bigger than that. There are so many ways people actually mix and match Indian food with other types of food, such as curry with chips.
Denning: Is there anyone you admire in the space?
Sharma: Blue Apron and Plated are the industry leaders and are doing it right. But there isn’t one company we want to be like. We look at all the startups coming up in the space. They all have something special that they do, and we want to take the best from each one of them. We want to make sure we deliver on the things our customers value.
Denning: What do you think of Blue Apron?
Sharma: Yes, they do certain things well, but not everything. Blue Apron is great, but they tend to have less variety and the portions are small. I tried the Masala Chickpea Stew, which is kind of like an Indian Curry, but it didn’t taste anything like it. It’s as if they stuck the word Masala in there to make it sound Indian.
Denning: What are the greatest risks you’re facing?
Sharma: It’s competition. There’s always the possibility that a newcomer enters the Indian food market quickly. Then again I don’t see that happening any time soon because most companies are focused on broad food offerings, like Blue Apron, and acquiring new cities and new states. Adding a new cuisine is not on their agenda.
Denning: What about the logistics and operations side?
Sharma: Being a small player, and dealing with big shipping companies doesn’t always give you the best deal. For example, there aren’t many shipping companies that will ship your box in one day. There are all these new small shipping companies that are trying to solve the problems that UPS and FedEx haven’t. As a small player, getting the best and getting exactly what we want is a challenge.
Denning: Do you think an MBA is helpful to start something like this?
Sharma: I couldn’t have done this without business school. It’s one thing to think of an idea. When it came to execution and refining the idea, both friends as well as professors spurred me on. I came from a tech engineering background, and just launching a business before business school just wouldn’t have been natural to me.
Denning: What do you draw from your past experiences?
Sharma: At Bloomberg, I gained an understanding of finance and how to use analytics to make business decisions. At Apple, I met such a wide range of developers, which teaches you about the kind of smart, intelligent people out there, the talent you can tap into, and how you can make a product that no one has made before.
Denning: Lessons learned over the past few months?
Sharma: The first has been the importance of marketing. Many people think just making a good product and putting it on the Internet is enough. Or just doing marketing and the rest will take care of itself. But it doesn’t. You have to be the one to give out the right information to people. And then leave it to the people to decide if they want it or not. The second is I realized logistics are pretty challenging. There are certain gaps that the industry hasn’t filled yet.
Denning: Do you think you’ll spur any copy-cats?
Sharma: Maybe Thai food, Korean, or Middle Eastern food. I feel people are getting more and more adventurous. New Yorkers have more types of cuisines in a week than people in any other state in the country. It’s pretty high for California too. People are used to eating different types of cuisines and want to cook in their home every day too.
Denning: Where do you think the food industry will go in the future?
Sharma: The food industry is all going online. Right now you have physical stores and physical restaurants. But the future of the food industry – which has been validated by the success of Blue Apron, Plated, and Fresh Direct – is online. Whether you’re buying cooked food, or whether you’re buying ingredients or recipes, people will rely less and less on physical stores, physical restaurants, frozen food, and more and more on online delivery.
The idea behind every food tech company is basically to take the food business online. There are so many startups popping up in the space. Munchery and Sprig send you pre-prepared food. Blue Apron, Plated, and Saffron Fix eliminate the grocery shopping step. None have a physical presence.
The exact model will evolve over time. And especially for the next few years, all these models will co-exist. But eventually much more food will be online.
As companies like Blue Apron and Saffron Fix vie for customers, restaurants, will have to rethink the true value they are adding for their customers.
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