Indian Milk Delivery Disrupter Raises $2.2m Seed Round from Omnivore

India’s latest farm-to-consumer delivery platform, Doodhwala $2.2 million seed round led by India-focused agtech VC Omnivore Partners. The investment is the first from the firm’s second fund, which closed earlier this month. The Bengaluru-based Doodhwala is reconfiguring the logistics and identity of farm-to-fork eating in India.

Through a subscription-based delivery platform, the company makes daily early morning deliveries of perishable products and groceries. Doodhwala is building its own logistics service, overriding India’s established and complex network of middlemen and dealing directly with farmers. Founded in 2016, Doodhwala currently manages about 400,000 monthly deliveries in Bengaluru and Pune.

Got milk?

The core of Doodhwala’s offering is daily deliveries of milk. The country produces more milk than the whole of the European Union and claims 75 million dairy farms. And like dairy farmers worldwide, Indian milk producers are struggling with fluctuations in the global marketplace that present significant obstacles, especially for smallholder farms.

Dairy cooperatives dominate the industry, but estimates suggest that about half of India’s milk production is consumed by the household that produces it. Organized, private sector sales of milk amount to just 7% of the market overall, while cooperatives manage an additional 8%. Small-scale vendors account for 36% of sales. “The massive milkman market is a highly fragmented and disorganized sector with very low customer satisfaction,” Ebrahim Akbari, co-founder of Doodhwala, told AgFunderNews.

Farmers in India have long pushed back against the middlemen that control markets. A legal framework dating to the 1960s prohibits produce farmers from selling their products directly to buyers – they have to pass through licensed middlemen. Originally, Agricultural Produce Market Committees were intended to maintain fair and consistent pricing across a massive industry, but now many farmers are struggling with insufficient infrastructure and downward pressure on prices.

“India is laden with middlemen,” Akbari said. Typically, there are four segments of the delivery process: farmers sell to agents or auctioneers who sell to wholesalers who in turn distribute through cart vendors and traditional retailers, where the customer purchases the product. The process, which he says takes between 36 and 72 hours, is not only cumbersome but affects the quality of the produce. A lacking cold chain only reinforces the obstacles to accessing fresh food – estimates put post-harvest lost at about 30% nationwide.

Doodhwala manages all aspects of the business, from sales and marketing to logistics and last-mile delivery. Rather than engaging with a massive system of middlemen, the company sources its milk and other products directly from farmers and producers – a practice its founders describe as beneficial to farmers and customers alike.

Fork-to-farm

Through its subscription-based platform, Doodhwala customers set up a one-time subscription, rather than having to place regular orders for goods consumed on a daily basis. Moreover, farmers can anticipate demand and adjust supply accordingly – a relationship Akbari calls ‘fork-to-farm.’ Rather than procuring product based on arbitrary demand, Doodhwala purchases from the farmers based on exact, existing customer needs.

Unlike other delivery platforms working with fresh products, Doodhwala has kept all operations internal since the beginning according to the founders. The company established direct farm sourcing relationships early on. “This proactive approach to vendor management and farm sourcing will allow them to scale their sales and procurement without redesigning their strategy mid-journey,” Reihem Roy, principal at Omnivore, who is now serving on the Doodhwala board, told AgFunderNews. 

Moreover, for many of its vendors, Doodhwala serves as the sole distribution channel, managing all aspects of sales and logistics. “Farms and dairies are able to channel their profits and margins towards growing their capacity,” Roy said. “There is an opportunity for a highly scalable, yet symbiotic relationship here.”

Doodhwala raised a pre-seed round in 2017 from angel investor Tom Varkey of US hedge fund Stonehill Capital.