Is Zepto’s meat brand Relish on track to become a Rs 500 crore business? What the numbers say

With an ARR of Rs 150 crore in six months, and a projected revenue run rate of Rs 1,000 crore by March 2026, Relish appeared to be the next big disruptor in the online meat delivery space.

Its growth in six months made people sit up and take notice, considering incumbents such as Temasek-funded Licious, a pure play new-age meat delivery startup, saw revenue flatline at Rs 746 crore in FY23, after nearly ten years of being in the business. 

The focus was especially since Zepto’s co-founder and CEO Aadit Palicha, in recent interviews, said that Relish is nearing a Rs 500 crore business in ARR terms.

But is Relish really a 500 crore business as of October 3, 2024? Here’s what the numbers say.

Relish’s monthly sales have been flat in the past three months, per Zepto’s internal sales documents reviewed by Moneycontrol.

The numbers showed that Relish’s monthly sales were in the Rs 12-15 crore range from April to September, or the first six months of the current fiscal year, which translates to an ARR of Rs 144-180 crore, in contrast to recent reports, where Relish was projected as a Rs 500 crore business.

A current ARR of Rs 144-180 crore is close to the revenue run rate it had achieved in March 2024 which means Relish’s sales have more or less been steady in the last two quarters, the documents showed.

To be sure, the August to November period is typically a slow period for all meat businesses, as Indians eschew meat during the festive season.

In response to Moneycontrol’s queries, a Zepto spokesperson confirmed the numbers but clarified that these numbers do not include eggs.

Eggs have historically not been part of the Relish basket but Zepto has now started including them under the Relish business because of which the recent monthly sales figures will be 2X of the previous months, Zepto’s spokesperson said.

"Without the negative impact the festive season has on meat sales, we are baselining an annualised run-rate of Rs 300+ cr run rate in our meat business. We committed to hitting a Rs 500 cr run-rate by the end of the year and we are quite confident of that milestone," CEO Palicha told Moneycontrol.

Zepto sells eggs worth around Rs 11 crore each month, sources told Moneycontrol. Once the company fully starts adding revenue from egg sales to Relish, the overall business will be bigger. So the ARR number for Relish (including eggs) might trend towards Rs 276-330 crore, but still falls short of the publicly stated Rs 500 crore number.

To be sure, Rs 0-330 crore is still a strong growth trajectory for a business vertical that was launched only a year ago, that too in a crowded space. Zepto’s Relish competes with the likes of Licious, Venky’s, Prasuma, Godrej Yummiez, ITC Master Chef and more.

Zepto, however, earns better margins by selling Relish meat over products from other companies as it is an in-house business (private label). Several companies, like Flipkart (SmartBuy), Amazon (Solimo), Swiggy (Supreme Harvest), Tata BigBasket (Fresho) and others have launched private labels, across categories, to drive up margins. The fact that they control the platform also allows them to showcase private labels more prominently and raise consumer awareness.

Meat delivery has been tough

While companies like Zepto launch private labels to better margins and push up average order value (AOVs), meat has historically been a difficult business to crack.

Players like Swiggy, which tried running a meat marketplace, had to shutter the business. Companies like Good To Go acquired smaller peers, such as TenderCuts.

Companies like Licious and FreshToHome (FTH) have largely catered to the top 15-20 million meat-eating households so far. From an e-commerce point of view, this cohort is from the top 20 cities and their monthly income exceeds Rs 1 lakh, according to industry estimates.

With saturation kicking in with his cohort, companies are now looking to tap newer consumers who are outside these regions and increase revenue streams, which is only pushing up costs in what is already a high-investment business.

However, companies are solving that by going deeper into other regions.

About 70-80 percent of India, or around 200-250 million households from rural and urban regions, consume meat as per National Family Health Survey - 5 (NFHS-5). The differential only shows that e-commerce companies, especially in this space, have the potential to go after a larger customer base beyond the top 20 cities.

The stakes are high for Zepto, one of the most buzziest and well-funded startups in the country today. With a valuation of $5 billion, Zepto has managed to hold its own in the online grocery delivery space, against rivals such as Zomato-owned Blinkit, Swiggy Instamart, Tata’s BigBasket and Flipkart Minutes which are all competing in India's red-hot $5.5 billion quick commerce industry.

It remains to be seen if Zepto can crack the code for Relish, where it will have to compete with new-age startups and local offline meat shops, too.