ASTANA – Small and medium-sized enterprises (SMEs) are the backbone of economic development in Kazakhstan. They spearhead innovation and create a dynamic market environment. In an interview with The Astana Times, an entrepreneur Amir Davletov shared a personal story of launching a food tech business from scratch in the Kazakh capital.
Food tech is a rapidly evolving sector, driven by ongoing technological advancements and changing consumer preferences. Davletov’s main focus is the Eat&Fit company, a healthy food organization and delivery service.
The Eat&Fit project
Eat&Fit specialists develop meal plans with a particular focus on fitness and nutrition goals, such as weight loss or muscle gain.
“It is a little difficult to get used to this nutrition format due to muted tastes. As soon as the receptors are ‘cleaned’ and become more sensitive to the real taste of products instead of flavor enhancers, it starts to feel comfortable. Our clients forget about the severity, overeating, and heartburn. There is no need to think about what to eat for lunch today, spend time cooking, waiting for couriers or standing in lunch queues in cafes,” said Davletov.
Eat&Fit is still in the formative stage. There are 10 people in the office team and nearly 60 people in production facilities and delivery systems.
“It seems to me that we still do not have a clear organizational structure. We understand the need to test new products and approaches in such a fast-paced market. The structure is also constantly changing. Many things can be outsourced in modern business,” he said.
The opening of Eat&Fit was initiated by three people, both partners and friends.
“We founded the company in 2015 after the food tech sector started to develop in Russia. We were pioneers in this field in Kazakhstan. Unfortunately, we could not maintain partnership and friendship, and now I am the only owner,” noted Davletov.
The entrepreneur recalled the rapid growth he observed in the launch stage. Later, similarly to other startup stories, Eat&Fit encountered the death valley curve, the challenging period between the company’s initial funding and its first revenue.
“Just as we started to get out of this difficult phase, quarantine restrictions appeared due to COVID-19. The relevance of the subscription model during the pandemic was very low. At that time, all restaurants and cafes entered the food delivery market. Besides, our client stayed at home with plenty of free time,” said Davletov.
The largest customer category consists of high-level specialists and top managers, the company’s customer development methodology shows. Most often, they focus on careers and developing their professional skills, according to the Eat&Fit founder.
“Our audience values their time, yet it takes a lot of effort to form a varied diet on their own. It does expand, but not as fast as we would want. As an entrepreneur, I have ambitions to build a big business, but unfortunately, we have a very narrow market in this segment,” said Davletov.
He noted the lack of high demand for the Eat&Fit product.
“Let’s be honest, healthy food with subscription delivery is not the basic need of every person. People live on credit without their own housing and sophistications, no matter how sad it sounds. Therefore, if we talk about what goals our product covers, then this is rather one of the ways to make life more comfortable when the basic needs are already covered,” he said.
The food tech industry in Kazakhstan
Comparing Russian and Kazakh food delivery markets, Davletov highlighted that Kazakhstan will ensure a similar infrastructure for developing this area in the short run.
“In Russia, most players in the grocery store market with their own brands sell healthy food in boxes. The delivery infrastructure makes it easy to order and receive lunch within 15 minutes,” he noted.
As a case in point, Davletov brought an example of Mealty, the Russian ready-to-eat meal delivery service.
“Mealty is represented in many business centers in Russia. Healthy food is available almost everywhere. I think Kazakhstan will soon have a similar story. For instance, Kaspi Bank and e-Magnum [the Magnum E-commerce Kazakhstan project] have already concluded respective agreements,” said Davletov.
Accelerated digitalization in Kazakhstan covers the food retail industry as well. Apart from other features, Kaspi Bank’s e-grocery system has risen in demand among the population. Last February, the bank gained operational control over e-Magnum. It decided to invest 70 billion tenge (US$15 million) in the development of the e-Magnum joint venture in the next three years and received 90% ownership of the company.
“There is also a raft of new startups, including Chocofood, Airba Fresh, Arbuz.kz, and Clever. So far, they all specialize in products. To increase the repeatability of orders, one way or another they will introduce ready-made food, including healthy meals,” he noted.
Given Davletov’s willingness to promote wellness among citizens in his own way and make this objective the company’s mission, the entrepreneur said he doubts people need it.
“My good friend and successful entrepreneur Ilyas Isatayev said that we are engaged in a countercultural business. It is now a trend to have breakfasts in coffee shops or dinners in hookah bars. We constantly face the objection that 8,000-9,000 tenge [US$18-19] for five meals a day is expensive, while these same people leave twice as much money for hookahs and alcohol,” said Davletov.
“The situation is still a bit unclear. On the one hand, people care more about their health. On the other hand, we are experiencing financial difficulties: over the past couple of years, food and packaging materials have become very expensive. Overall, life has become much more expensive, affecting the increase in the entire wage fund, but the purchasing power is still decreasing,” he added.
Another project Davletov runs is a photo studio called Krai Sveta (The World’s Edge), where his spouse Gulnara Davletova organizes photo sessions. When asked about family and work, he said it is difficult to combine partnership and family relations in business.
“First, I expected my wife to be in charge of the studio. Later, I realized that it was more important for me to make her feel comfortable than for the studio to earn more. So she’s just doing what she loves and what she’s good at – photography,” he said.
Davletov shared three factors that differentiate his studio from others in the city.
“Due to the facility’s remoteness and low rent per square meter, we could open three halls at once instead of one. Secondly, we chose a model with interior halls for a specific theme, rather than locations with decorations. We made the interior minimalistic so that it would not lose relevance for as long as possible. Thirdly, we have also focused on videography, because in this area the price is higher, and the trend is growing,” he said.
The entrepreneur continues to study the experience of foreign companies, saying that he understands “the need to refine or change the business model, as the company now faces limitations when scaling.”
In 2024, Eat&Fit plans to introduce a precedent for a radical change with a preliminary action plan. Davletov addresses various scenarios given the significant influence of external factors on the course of events.