Whatever we launch must have an Indianness to it: Paper Boat’s Neeraj Kakkar
Hector Beverages CEO Neeraj Kakkar on Paper Boat’s first food product—chikki, and the start-up’s overseas expansion plans
New Delhi: Neeraj Kakkar, chief executive of Hector Beverages Pvt. Ltd, studied engineering at the Government College of Engineering, Haryana, and later business management before joining Hindustan Coca- Cola Beverages Pvt. Ltd (a 100% subsidiary of Coca-Cola India Pvt. Ltd). The entrepreneurial bug bit him while he was studying at Wharton in the US. Given his background in beverages, he returned to launch Hector Beverages, which sells energy drink Tzinga as well as ethnic Indian beverage brand Paper Boat. This month, Paper Boat is introducing its first food product—chikki, the traditional snack made out of peanut and jaggery. In an interview, Kakkar talks about the company’s food venture and its overseas plans. Edited excerpts:
You are entering the food category with chikki. What kind of snacks are you eyeing?
Our overall thesis is that we are protectors of traditional recipes. We intend to keep launching old, traditional recipes in contemporary packing. We did this first on the drinks side because of our background in beverages. But for us recipes are recipes… So many traditional food items are either extinct or are being made by the unorganized sector—on the street, which may not be hygienically prepared. We want to change that.
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So chikki is the first snack we are launching and are contemporizing it. It has been under development for two-and-a-half years as our R&D team was working on it. We are getting the peanuts from Rajkot in Gujarat. We have also been working with jaggery makers to develop the right quality processes. We will launch aam papad in summers.
How does the snack category fit into your drinks portfolio?
Our brand focus does not change. Basically the front-end does not change at all. But we need to be nimble in manufacturing. Since beverages have seasonality, in winters the manpower capacity is not utilized 100%. So you can push other products. Chikki will replace aamras, for instance, whether it is in sales or marketing.
Would you do the routine salty snacks like chips?
As a start-up we are not at liberty to say no to anything. However, our focus is on traditional snacks. For instance, we will not do corn chips. Whatever we launch must have an Indianness to it. We will not launch chocolate for instance.
What is the size of the market that you are operating in and what market share are you eyeing?
We are competing in the overall juice market where mango juice alone is a Rs6,500 crore segment while the other fruits are more than Rs2,400 crore. In all it is a Rs9,000 crore market.
We are not even looking at market share targets yet. We run our business on passion. Of course, we want to build a sustainable business but we haven’t looked at such targets. It is an unchartered territory and we are trying to figure out the market as we grow.
Right now our distribution is limited. Right now we look at market share at an outlet. We have fewer outlets and price premium also does not allow us to go to the last outlet which is available. We are touching 10-12% market share in some modern trade outlets.
What about your distribution tie-up with Indo-Nissin Foods?
It’s the Japanese company we tied up with more than a year ago. Minus the top few cities, the company is our partner in all other towns. Currently we get only 10-15% business from them. They will reach smaller towns for us, say a Meerut or a Gorakhpur. We would not have gone to Gorakhpur on our own for the next few years. Eventually we expect to get 60% business from them.
Do you plan to get into the rural market?
No, not right now. But eventually one will. And then one can look at smaller packs and lower price points. Right now we still need to tap the urban markets. We are in top outlets in the National Capital Region. Then we will look at the next level of outlets.
What are your growth rates?
We are three years old and have been growing 100% year-on-year. But as we gain size, it will be difficult to grow at that rate. We now expect 50-60% growth rate year-on-year.
Are you interested in the global markets?
We explored the US and UK for some time. There was interest but the logistics did not work. It takes two months to reach the product there and with their shorter shelf life, it’s not a viable proposition. So we are focused on the Middle East for the time being. It takes 10-15 days to reach the product there. It has potential.
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