The European fast-moving consumer goods (FMCG) market is at a crossroads. The Russian invasion of Ukraine has exacerbated a pandemic-driven increase in transport, packaging, and raw material costs. This, in turn, is squeezing household budgets, which are already struggling with higher energy prices. Companies, therefore, are forced to pass these price increases onto consumers, which is causing mass-market brands to worry. If they raise prices too much, consumers will switch to cheaper products. As Alan Jope, Unilever’s CEO, put it, “It is inevitable you will see pricing accelerate through the rest of the year… Has Unilever’s pricing peaked? No, not yet”. As we have seen in previous crises, while mass-market goods struggle, niche markets tend to thrive. That is why companies like Kazidomi have thrived recently.
Read between the lines
Kazadomi, a name derived from Latin and meaning “like at home”, was founded by Emna Averard, an ambitious and particular 23-year-old. Based on her childhood, it was not too much of a stretch for Averard to found the membership-based startup that sells healthy products at wholesale prices. According to the CEO, when she was a child, she loved playing a game with her father, a nutrition expert, while walking through the supermarket. He challenged her to decipher product labels to reveal which products were the healthiest and contained the least amount of harmful ingredients. So, by her early adulthood, Averard was acutely aware of how difficult it was to find healthy products at affordable prices. The e-commerce platform was launched not only to facilitate customer purchases by offering only quality products but also by making these products, who are often on the more expensive side, accessible and affordable. Their model has been successful: they were among Europe’s Top 50 Fastest-Growing companies from 2017-2020 according to the Financial Times.
The platform offers buyers healthy, organic, vegan, gluten-free, and lactose-free products online at reduced prices. These items are selected by nutritionists, allowing members to shop online in a convenient and user-friendly way while meeting their specific nutrition and food allergy needs. Their experts “filter out the bad stuff”, meaning every product on the site is assessed with a holistic approach to evaluate their impact on customer health and the environment. In more direct terms, that means that they offer no refined ingredients, palm oil, parabens, or petroleum derivatives, and all of their products are cruelty-free and environmentally friendly. These assurances allow selective shoppers to shop in ways that align with their worldviews. A key element of Kazidomi’s business model is ensuring that once members purchase their items online, they receive them quite quickly. Though they currently cater to Benelux, France, and the Netherlands, the company is set to expand throughout Europe, and they are not relying on a simple expansion strategy to do so.
Launching its own brand
Kazidomi is now launching its own brand of products. Why is the membership-based startup going into this new area instead of keeping its focus? As opposed to many other companies, Kazidomi is a mission-based platform that was created to make healthy products affordable. Therefore Kazidomi launched its membership, to help people access the best products at the lowest prices. Now that Kazidomi is reaching a critical mass of customers, other aspects have been key for its development: service, product catalogue, logistics processes, etc. As a result, tremendous work was put in to incrementally increase the quality of the experience. Today, Kazidomi is offering its products all over Europe to thousands of happy customers, therefore accumulating useful data about best sellers and customer preferences while building market knowledge and expertise.
Kazidomi now faces a new challenge; the prices of some products simply can’t be lowered further because of the many intermediaries in the value chain. There is indeed a clear issue with the value chain in the organic market in Europe today. Producers sell to brands, brands then sell to wholesalers, wholesalers sell to stores, and stores finally send to consumers. Every step of this value chain is an increase in price for the customers with little real value added. Kazidomi decided to tackle the issue by avoiding all these intermediaries and working directly with local producers. If Kazidomi can make this transition successfully, they have the potential to disrupt Europe’s FMCG sector.