By M. Sriram
MUMBAI (Reuters) – Indian yoghurt maker Epigamia, backed by French dairy giant Danone, has shelved plans to sell its inflation-hit business and is now looking to expand to new markets, its CEO said in an interview.
Founded in 2015 and backed also by Belgian investor Verlinvest, Epigamia is a small Indian startup which became popular in urban centres by marketing flavoured Greek yoghurt and fruit-based drinks to health conscious customers.
But the company has been operating mostly in the red – its struggles a striking example of how surging costs are biting small consumer goods startups in India.
Epigamia’s decision to not proceed with a sale comes as many startups, which rode a valuation boom in recent years, focus on profits amid a funding crunch and increased investor scrutiny.
“We had a couple of (sale) conversations because the obscene inflationary environment put some pressure on us,” CEO Rohan Mirchandani said. “We got carried away in the last four years. We never saw profits as a target until now … We should have had a focus on profits from day one.”
Epigamia eked out its first-ever tiny operational profit in April and closed the fiscal year with $24 million in revenues, after recently slashing marketing spends by 75%, cutting distribution by around a third to 25,000 stores and laying off around 2-3% of its workforce, Mirchandani added.
The yoghurt maker now plans to grow its revenue 50% to touch $36 million this fiscal year to April 2024, with plans to launch products in the Middle East market by 2025-26.
In India, milk prices have jumped more than 15% over the past year, the fastest pace in a decade. Still, India’s $159 billion dairy market offers immense growth for upmarket yoghurt and milk products where Epigamia competes with the likes of Nestle and local majors Amul and Mother Dairy.
“We are clear that we are a slightly premium product. So the objective is not to be everywhere, but to cater to the top 100-150 million Indians,” Mirchandani said.
In a move seen as an attempt to lure younger customers, Epigamia has also roped in popular Bollywood actress Deepika Padukone as an investor.
Padukone, who starred in the 2017 action film “XXX: Return of Xander Cage” with Vin Diesel, has featured in several online video advertisements to promote Epigamia’s chocolate spreads.
Epigamia was valued at $93 million in 2020, latest available data on Pitchbook shows. The investment arm of Danone, the world’s largest yoghurt-maker, participated in a $22 million funding round in Epigamia in 2019.
(Reporting by M. Sriram; Additional reporting by Rajendra Jadhav; Editing by Aditya Kalra and Himani Sarkar)
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