Swiggy pilots new private labels, doubles down on cloud kitchens

Swiggy is piloting new private labels for its food business named Soul Rasa and Stuffed mostly in southern cities including Bengaluru and Chennai and is looking to launch a few more brands, say people with knowledge of the matter. Moreover, the foodtech major is now doubling down on cloud kitchens so as to strengthen its existing private label brands but concurrently rationalising its costs and optimisation with the key goals of efficiency and profitability. 

“They are launching new cloud kitchens for these new brands as well as their old ones, but very cautiously treading the way and being very cost conscious,” said a person aware of the matter. The launch of the new food brands have been in works for months now.

Private labels are brands which are sold by the company under its own name. These generally help companies with better margins and revenues. Swiggy already operates brands like the Bowl Company, Breakfast Express and Homely.  Pre-pandemic, these brands contributed 20% to Swiggy's revenue, say a person in the know. 

Swiggy did not respond to Moneycontrol queries till the time of publishing this.

Reportedly, the sale of Swiggy’s private brands dropped to Rs 83.3 crore during FY21 from Rs 237.1 crore in FY20.

In 2020 after the pandemic struck, Swiggy downsized its cloud kitchens and even laid off employees citing focused on growth and profitability across our kitchens. Around 800-900 employees were then laid off and cloud kitchens were also shut.

This new move comes at a time when the sector is seeing intensified competition with quick commerce taking it a notch higher. Ola has shut down its quick commerce business Ola Dash while Zomato has acquired BlinkIt to take a pie of the quick commerce market share. 

Earlier this year, Swiggy raised $700 million at a valuation of $10.7 billion, doubling its valuation in six months and becoming the fourth decacorn. Moreover, amid the funding winter and when startups are looking to conserve cash, Swiggy said it will be buying back shares worth $23 million issued under its employee stock option program (ESOP) from about 900 employees.