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INTERVIEW

“We developed traditional drinks that are disappearing”

Tuesday, 17 February, 2015, 08 : 00 AM [IST]

Hector Beverages’ Paper Boat brand is given a classic Indian flavour that transports the consumers back in time. Apart from giving a new twist to traditional Indian beverages, the brand is known for its innovative packaging and use of natural ingredients. Neeraj Kakkar, founder-chief executive officer, Hector Beverages Pvt. Ltd, in a telecon interaction with Nandita Vijay explains in detail the innovative brand that has given traditional drinks a fresh lease of life. Excerpts:

Your company has been known for Tzinga energy drink. But the company’s Paper Boat brand of traditional beverages is now seen to have a measurable impact on the market. How did this happen?
The company’s traditional beverages under the brand Paper Boat are focussed on a new generation of ethnic flavours that have a strong connect with childhood memories. We mapped the traditional beverages across different parts of India. Our beverages are Aamras, Jaljeera, Jamun-Kalakhatta, Aam Pana, Kokum, Imli Ka Amlana and Golgappe Ka Paani. Recently, we brought to the table variants like spicy chilled Rasam, India’s first all natural, true brewed, gluten- free iced tea. The iced tea was developed with ingredients that Indians have always loved in chai: Ginger-Lemon and Tulsi. All these beverages are available across Mumbai, Delhi-Northern Capital Region (NCR), Pune, Hyderabad, Kolkata, Bengaluru, Chennai and Lucknow. Paper Boat can also be ordered online.

How did you opt for the Paper Boat brand? Give us a peek into the success of this innovation. What are the key strengths of this product?
Now do you remember tearing paper to make boat in school, and trying to sail it in any small puddle which was inspiring. We decided to develop traditional drinks that have disappeared or disappearing from the Indian home-made beverage scene and which rekindle our memories. The objective was to bring back these classic beverages that were nutritious and safe for consumption, like the ‘Kanji’ which continues to be much sought after. So we worked towards developing a brand that was creative, innovative and quirky. It was given a classic Indian flavour that transports the consumers back in time. All Paper Boat products are devoid of preservatives, colour and carbonation. Our beverages are made of natural ingredients and are functional. They come in packages that are hygienic and attractive.

Which are your fastest growing markets in the country and abroad?
In India, we are popular across the country. However, southern India is a catalyst driving our sales. The innovative design of our brand spurs consumers to make the first buy. Thereafter, the flavour that is relished enables us to retain consumers. We also export to the US, UK, Canada, Australia and the Middle-East. We are currently catering only to Indian consumers in these regions. However, considering the current trend towards flavoured beverages across the globe, there are plans afoot to woo the non-Indian population in these countries.

The company recently launched a new range. How is this faring?
It would be too early to comment on that. But among our existing brands, Aam Pana is the fastest growing followed by Jal Jeera and Kokum. We also have to compete on the shelves with soft drinks and fruit-based beverages. But we have an edge in the beverage market based on our traditional home beverage offerings.

How do you hope to generate growth in this competitive arena?
Our strengths are innovation in product development and ensuring the original flavour and taste of the traditional beverage. There is a positive and overwhelming response. Now with the new beverages, there is considerable demand for iced tea and we are competing with Lipton in this space. Rasam is an indispensable item on the menu of south Indians. However, we need six months to assess its preference and sales in the southern markets. But we are confident that this will also kindle the taste buds of people from north and east India.

Provide a few details of your manufacturing facility in terms of capacity and expansion.
1. Our first facility is at Manesar. The second greenfield manufacturing unit is at Mysore where we have invested Rs 25 crore. This facility is designed to scale-up our production capacity by around three times from 80 bottles to 220 bottles. We are the first company to take up research and development in the traditional beverages which is cautiously tread by only a few companies to invest in this space. The aim was to develop a successful traditional beverage. Therefore, we did not ape the West like most beverage companies in India do. Our R&D aims at true innovation. This is not easy and the effort to produce a quality and tasty product was a massive task spanning a couple of years. The right, qualified talent is hard to get. But in our case, we managed to attract candidates who worked at large beverage firms and were keen to work for start-ups. There is need for comprehensive training to achieve a quality product. We identified Mysore because institutions like the Defence Food Research Laboratory (DFRL) and the Central Food Technological Research Institute (CFTRI) are easily accessible and we were looking at a location from where we could reach Bengaluru, which is among the key markets.

How do you view the Indian beverage market’s growth prospects?
The beverage sector offers immense growth prospects. The potential for developing beverages in India is great since it is a tropical country. The country’s beverage market is still in its infancy and it will take a while for a significant range to emerge. There are a whole lot of beverages prepared from fruits and vegetables besides combinations of grains and cereals that can be explored. Besides, efforts can be directed towards reviving traditional home-made beverages that were prepared during each season.

Do you see mergers and acquisitions as a visible trend in this sector?
There is a huge scope for market consolidation in the Indian beverage market. However, in the case of the four-year-old Hector Beverages, the focus would only be on organic growth and not mergers or acquisitions. We do see that in the long run, there is scope for strong growth prospects and we hope to maximise it.

How receptive are venture capitalists (VCs) and private equity (PE) players to this sector?
The VCs and PEs are extremely receptive to this sector. For instance, we received fund infusion from Catamaran Ventures, Sequoia Capital and Footprint Ventures. However, we are not looking for any financial assistance for a few years. The current strategy is to introduce more beverages, open up new markets and increase the research and development efforts.

What are the challenges for beverage companies in the country?
The biggest challenge for beverage manufacturers is the logistics. For instance we source Kokum from Goa and the Konkan region. The lack of cold chain infrastructure adds to the woes of preserving the fruit. We face a similar problem with Jamun. The supply chain management is not robust enough to match the demand for our beverages.