Drums Food International Pvt. Ltd said on Thursday it has raised Rs 44.5 crore ($6.6 million) in a Series A round of funding led by Belgian investment firm Verlinvest.
Early-stage investment firm DSG Consumer Partners came in as a new investor in this round, Drums Food said in a statement.
Some of the company’s existing investors—Helion Ventures co-founder Kanwaljit Singh, Salarpuria Group’s Apurva Salarpuria and Bollywood actor Kunal Kapoor, who is also co-founder of crowdfunding platform Ketto—put money in this round as well.
The company, which makes Epigamia Greek yoghurt, will use the fund for hiring professionals, expanding production capacity and investing in supply chain.
“Epigamia Greek yoghurt has great health and wellness benefits and we believe that Greek yoghurt and premium dairy in general will become very large categories in India,†said Nicholas Cator, executive director at Verlinvest.
This is a rare venture-stage investment for Verlinvest as it typically looks at larger deals in the $50-100 million range in India and globally.
DSG founder Deepak Shahdadpuri said it would like to partner with Drums Food to develop and build a portfolio of new brands in the healthy snacking segment.
Verlinvest is also a limited partner in DSG’s second fund DSGCP II. This is one of many examples where the LP is leading or co-investing with an Indian private equity or venture capital firm in a local firm.
Drums Food was founded by Mirchandani, chef Ganesh Krishnamoorthy, Milap Shah and Uday Thakker in 2008. It brought in the concept of mixing ice-creams on a cold stone slab, giving customers the choice to create their own flavours. Besides, it also launched Greek yogurt under the brand Epigamnia in 2015 as part of its diversification plan.
Its Hokey Pokey ice-cream brand has presence in six cities, including Delhi, Mumbai and Bangalore. The company sells its ice-creams through 1,500 outlets such as Godrej Nature's Basket, Foodhall, Big Bazaar, Reliance Fresh and Hypercity as well as e-commerce platforms such as BigBasket.
It also runs seven company-owned ice-cream parlours and four franchised parlours in Delhi, Bangalore and Mumbai. It had launched its first outlet in Mumbai in 2008.
It has doubled its revenue last fiscal year after it changed the pricing and distribution strategies for its flagship product. The company earlier used to sell its ice-creams at Rs 250 for a 250-ml pack through franchisee partners and company-run parlours. It now sells the product at Rs 50 for a 90-ml pack mainly through neighbourhood kirana shops and modern retail outlets.
The new strategy drove the company’s net sales higher to Rs 5.2 crore in 2014-15 from Rs 2.2 crore the year before.
The company is also looking to expand the reach of Epigamia yogurt. The product is already being sold through 300 retail points in Mumbai, Pune and Bangalore, and will be launched in Delhi soon.
Hokey Pokey competes with a host of branded homegrown and international players such as Cocoberry, Amul, Kwality Walls, Mother Dairy, Vadilal, Cream Bell and Baskin-Robbins. While Häagen-Dazs, Baskin-Robbins, London Dairy, New Zealand Naturals and Hokey Pokey cater to the high-end market, the likes of Amul, Vadilal, Cream Bell and Mother Dairy sell products at wide-ranging price points.
In July 2015, Gurgaon-based Cocoberry, which runs a frozen yogurt chain positioning its offering as a healthier alternative to an ice cream, raised fresh money from one of its existing investors to expand its presence in the country.
According to consultancy firm Technopak Advisors, the ice-cream category has been growing at 10-15% annually. The segment has high growth potential considering India’s annual per capita consumption of ice cream, around 300 ml, is a tenth of China’s.
Like this report? Sign up for our daily newsletter to get our top reports.