Yu and its instant food gambit

Two seasoned investment bankers—Bharat Bhalla and Varun Kapur—are betting big on their instant meal bowls' venture. Will consumers take a Yu turn?

By Rajiv Singh Forbes India Staff

5 min read

Published: Feb 8, 2022 12:38:27 PM IST

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Bharat Bhalla and Varun Kapur, Cofounders Yu food labs

When pitched over phone, the hot idea got instantly shot down. When heaved via email, the immediate response was lukewarm. It was some serious, and real, food for thought for Bharat Bhalla and Varun Kapur. The two seasoned investment bankers were trying to find backers for their maiden packaged food venture Yu. Though the product proposition was compelling—instant meal bowls without preservatives, additives, artificial ingredients; refrigeration-free shelf life of 12 months, ready in under five minutes by just adding hot water and value-for-money price range from Rs75 to Rs100 per bowl—convincing investors didn’t turn out to be a cakewalk.

The duo was trying to figure out the missing ingredient. Their background, for sure, was not the weak link. Bhalla started his career at Allianz PE in New York, had a stint with Yes Bank investment vertical and later co-led a single family office investing $200 million in India, the UK and US. Kapur, meanwhile, had 18 years of experience in investment, M&A, strategy, business incubation, financial and regulatory management. The technology used in preserving food—lyophilization—too was a cut from the rest. “Nasa uses this tech to send food to astronauts on space missions,” claims Bhalla, who along with his co-founder was thinking out-of-the-box to crack the food puzzle.

The solution came in the form of a bowl. The investor bankers packed a bowl of gajar halwa, went to the home of one of the potential investors, and requested him to sample it. Interestingly, the investor’s mother too had made gajar halwa the same day. Yu passed the blind test; both the preparation got the same rating, and the VC managed to keep his mom happy!

Well, as the saying goes—the proof of the puddling—or halwa—is in eating—the Yu co-founders started packing bowls, loading them in their cars and visiting homes of VCs. The appetiser, and sampling, worked. Look at the people who have come on-board to back the fledgling venture which hit the market last October. From promoter families of Asian Paints to Nikhil Shrivastava, head of India at PAG Private Equity, Srikrishna Dwaram, partner at TrueNorth Private Equity, and Vishal Sampat, former chief digital officer at Reliance Jio… all have taken a Yu turn. The instant meal bowl venture raised $1 million in its pre-launch stage from a clutch of high-profile angels and HNIs.

For the Gurugram-based brand, the growth has been instant since last October. The meal bowl brand started with three products—pasta, fresh fruit and nut oat and halwa—and has sold over 75,000 bowls. “The target is to reach 2 lakh bowls by March,” says Kapur. The brand provides all-day meal options, including breakfast, lunch, dinner and dessert bowls, is present in retail stores across Delhi-NCR, Chandigarh and Mumbai as part of its offline play, and delivers across the country for those ordering online. The co-founders are now looking to expand into cities of Uttar Pradesh such as Lucknow, Kanpur, Agra, Bareilly and Moradabad, and roll out more products.

But why start with pasta and oats? Why not noodles? After all, instant is synonymous with noodles! The co-founders reckon the move was deliberate. “We decided to enter categories where big players were not present in the ready-to-eat market,” says Bhalla. What they also did was to extensively sample the products over the last few months. In-house chefs visit retail stores, do pop-ups and tasting sessions with consumers. The idea was simple: To break the strong perception that anything in a box, cup or bowl would be cuppa noodle.

Pasta over noodles and bowl over cups, reckon branding and marketing experts, was a smart move by Yu. For any new ready-to-eat brand, entering the market with noodles is suicidal. Equally disastrous is having a me-too packaging. Remember how Hector Beverages differentiated itself with a unique packaging for beverage brand Boat? In noodles, the category is so strongly carved out by a few strong players that consumers won’t flirt with new players, says Ashita Aggarwal, marketing professor at SP Jain Institute of Management and Research.

For Yu, the biggest task was not to take on the big boys of packaged food but to find the niches where it can spend some time with consumers. There is hardly any player in instant ready-to-eat oats and pasta. “Consumers know oats as a breakfast option. So trying it for a meal makes sense,” she says. For a new brand, familiarity is the most crucial thing. “Once you get consumer acceptance, you can enter into as many categories as possible.”

Industry experts reckon that the headroom for growth in ready-to-eat market is massive. Such products are typically cooking aids which enable a consumer to solve the problem of availability (take, for instance, frozen green peas), consistency (such as use of base gravies, cooking pastes) or a lack of skill (specialised dishes, and regional ethnic specialities). As a corollary, the largest markets would be those that address the needs of the centre-of-the plate or those dishes that are mainstream, says KS Narayanan, a food and beverage expert. The dishes cooked up with just the addition of hot water and ones which get ready in 5-8 minutes provide tremendous convenience to the customer. “They play a significant role in filling specific need gaps during the course of the day at home or essential during travel,” he says.

Such products, though, are yet go mainstream. “It requires deep investment in general trade distribution,” says Narayanan. The classic example is the comparison between the ready-to-cook two-minute instant noodles versus the cuppa noodles. “Building the category with just speciality items is extremely challenging,” he says. In order to have a wider appeal, products for such market require consistent communication, a wide portfolio, and an ease of application that ensures consistent delivery of end-dish quality in terms of taste, texture and colour.

Bhalla, for his part, is ready for the long grind. “For us, the biggest challenge is to get somebody to try our product,” he says, adding that the company is planning to roll out more SKUs and products. “We have developed 20 SKUs and launched nine,” he says, adding that the brand plans to do more sampling. “For us, ‘tried and tasted’ is the way to go,” he says.

(This story appears in the 11 February, 2022 issue of Forbes India. To visit our Archives, click here.)