Paper Boat : Paradigm shift in Packaged Beverage Industry

In India historically functional ethnic beverages have ruled the taste buds of people before the advent of packaged carbonated beverages changing the nature of cultural socializing over just tea. There was lack of hygienic, packaged beverage options in mass produced ready to consume drinks. So the saga of beverage migration got hued in colours dominated by giants like Atlanta’s Coca cola and New york based Pepsi, as a preferred choice of carbonated cold beverages.

During 1956, Coke had 100% equity in India but no regulations were in place till 1973. The Foreign Exchange Regulation Act (FERA) which was enacted in 1974 stated that foreign companies selling consumer goods can have upto 40% equity stake in its Indian associates. Not giving in to the pressure of giving 60% operational control and of sharing technical know-how, Coca Cola left the country with a whooping 250 million rupees (about $ 8 million) as profit in the twenty years of operating with a investment of only Rs. 6,00,000.

Endeavors to breathe in new life and cater to a gaping demand in consumer beverages – Pure drinks started by Late. Sardar Mohan Singh in 1978 emerged with the brand Campa Cola. The Parle Brothers – Ramesh Chauhan and Prakash Chauhan also diversified their beverage portfolio with ThumsUp, Limca and Orange Gold Spot. Seeing this opportunity Pepsico. crossed the threshold to enter India in 1988 through a joint venture with Punjab Agro Industrial Corporation and Voltas India Ltd, thus launching Lehar Pepsi. But again after the pesticides case in 2003, ban on carbonated drinks in some states again posed a challenge thus nudging consumers towards healthy drinks. The predicament remains one can only choose when one has the luxury of time or options. Under the rainbow of homegrown beverages there were but a few options like frooti, jumpin, rooafza, rasna, banta. But now in 2016 we see a lot of players trying to make it big with an array of healthy drinks, brilliant advertising and packaging solutions. Bottled water stands as the largest category by off-trade volume sales, with sales at 12 billion litres compared to carbonated drinks (3 billion litres) only after energy drinks and packaged non aerated drink category. According to Nielson Report 2016, juices and healthier beverages are overpowering fizzy aerated drinks in the grapple.

Despite of the growing demand, Achilles heel remains the high entry barrier for new players in beverage sector because building trust beyond well marketed known branded products, who’ve already bonded with consumer sentiments takes a solid strategy to be noticed and create a platform for itself. Nexensus explores Hector Beverages founded in 2009 gaining momentum, known popularly for its brand Paperboat and Tzinga. From 2009 to 2016 India’s homegrown Paperboat has sailed afar in a short span of time with International presence in countries such as Singapore, France, Canada, Malaysia, Netherlands, UAE , Australia ,UK and US.

Global presence of paperboat-Map Packaged Beverage Brand

Paper Boat : Seizing the Market opportunity as First Movers

Paperboat founders Neeraj Kakkar, Suhas Misra, James Nuttall, and Neeraj Biyani began their journey by leaving a footprint through storytelling medium on digital and social media, the marketing slowly expanding to mass media. Associating the procedure of making paper boats in the monsoons as a happy memory from the past, trying to connect to the customers emotionally by their first sense of accomplishment and first sense of loss when the paperboat sailed or drowned. The first life lessons about staying afloat under harsh circumstances. A paperboat signifies a lot of firsts. Another first was their innovative and quirky spouted pouch packaging done by Scholle IPN India Packaging Private Limited as a element in their brand strategy.

Packaged Beverage Brand Paper Boat

Nexensus observes that Hector beverages has infused capital into the new range of packaged beverages which has gathered a strong foothold. The brand has clearly hit some right chords as its revenue has doubled each year and currently stands at INR 318 Million from INR 40 millon in 2012, increased by eight manifolds between 2012-2015. Hector beverages continues to pump investment in this capital intensive sector and has already drawn plans to set up its second factory unit in south India. Ambitious promoters have driven the company towards quick expansion to become a market leader in the space. Growth has come from intensive capital burn causing the bottom line to be in red despite aggressive sales and a healthy top line.

For Hector Beverages the procurement of raw material like tamarind and purple carrot has been challenging- so they are experimenting growing the purple carrots in Ujjain,Himachal Pradesh,Ooty for now. Earlier Hector beverages relied on external agencies and universities for research on food science technology but now they have their own R&D facilities coming up in Whitefield , Bengaluru  and manufacturing facility in Mysuru planning to ramp up milk-based beverages like almond milk as well as coconut water.

Hector beverages is focusing mainly on the youth in metro cities and tier 1 markets right now. Their products have already found a way to retail outlets like Barista, Airlines , Multiplexes, Food courts, Hotels like Westin and Trident, Bars serving mocktails and a online presence as well. Since their distribution needed a ramp up, Hector beverages as a solution have partnered with a startup in Logistics- Delhivery to power the entire supply chain. Delhivery is to offer end to end operations including express shipping, cash on delivery payments , catalogue management, inventory management, multi-city fulfilment, reverse logistics, processing of requests and customer support as value added services.

Profit and Revenue of Hector Beverages Packaged Beverage Brand

New Players in the Packaged Beverage Sector in India

For any new player in packaged beverage sector the ardous journey presents hurdles whether to stick to age old or developing new recipes, procurement and sourcing of ingredients as well as processing of beverages economically at manufacturing plants.Branding, marketing, set up automation costs and fixed costs are initially high but rewarding. With a increase in health conscious working urban consumer base it has become a tug of war between carbonated drinks, energy drinks and health drinks to sustain the competition. Infact hector beverages in its campaign for Paper Boat directly takes on carbonated drinks with is tag line “Its a recipe, not a formula”.

Thus owing to ever increasing exponential demand for healthy drinks Paperboat has infused capital and forayed into eclectic products -ready to drink traditional flavours like chilled rasam, ginger lemon tea, tulsi tea, aamras, jaljeera, kokum, jamun kala khatta, aam panna, Golgappe pani, and has a few more traditional, zero-calorie drinks in the pipeline like sattu ( traditional drink from Bihar), and kaanji, a black carrot drink originally from northern India.

This change in the trend of packaged beverages has not gone unnoticed as many seasoned manufacturers enter this market with a focus on health and natural ingredients.

Serial NumberBrandsSub Classication FocusManufacturers
1Tender Coconut juice Ready to drink (RTD) healthy beverageNature’s First India Pvt Ltd
2MangoSip and FruitsUpMango flavoured RTD beverageManpasand Beverages Limited
3Maaza , Minute maidReady to drink (RTD) beverageCoca-Cola
4Nimbooz,Tropicana , Slice,GatoradeLemon flavoured drink,Fruit Juices, Energy Drinks,Ready to drink (RTD) beveragesPepsiCo India
5Amul kool , Amul lassiFlavoured milk based Ready to drink beveragesGujarat Cooperative Milk Marketing Federation Ltd.
6SofitSoy Health DrinkHershey India Pvt Ltd
7UrzzaEnergy drinkBisleri International Pvt. Ltd
8Xtra PowerEnergy drinkUniversal Group
9Frooti Mango-flavoured Ready to drink (RTD) beverage Parle Agro
10Real JuicePreserved Fruit Juice Dabur India Ltd
11OnjusReady to drink (RTD) beverageTunip Agro Ltd
12Paperboat Ready to drink beverages Hector Beverages Private Limited
13Priyagold FreshGold Juices and TreatReady to drink (RTD) beveragesSurya Food & Agro Ltd.
14 B-NaturalReady to drink (RTD) Fruit JuicesITC Limited
15Delmonte Fruit DrinksField FreshFoods Private Limited
16 Juizee Ready to Drink Fruit Juices Taj Agro Products Limited
17VitaMeLow-calorie flavoured water with anti oxidantsValencia Nutrition Pvt. Ltd.
1824-MantraFruit Drinks and Packaged JuicesSresta Natural Bioproducts Private Limited

A few startups to look out for in the near future for health drinks are..

startups in beverages

Stay tuned to find out which investors see a long term gain in packaged beverage sector and have been alongside the visionaries who incepted Paperboat.

 

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