The company’s popularity was largely driven by the fact that its portfolio of ethnic beverages, inspired by local flavours and home-made beverages, stoked a demand for such products in the market
The company’s popularity was largely driven by the fact that its portfolio of ethnic beverages, inspired by local flavours and home-made beverages, stoked a demand for such products in the market

Paper Boat maker posts 62% jump in FY19 revenue

  • Bengaluru-headquartered Hector Beverages posted a net loss of 59.88 cr in FY19
  • Hector is currently present in five states in India and draws a large part of its sales from states of Maharashtra, Karnataka, and Andhra Pradesh

New Delhi: Hector Beverages Private Limited, the maker of the Paper Boat brand of ethic beverages reported over 60% jump in revenue for the financial year ended March 2019, according to data from business intelligence platform Tofler. Revenue from operations at the maker of packaged drinks and foods jumped 62% to 189.56 crore up from 116.94 crore it posted in the year-ago period as it expanded its distribution to reach more tier-2 and tier-3 markets, and rolled out lower priced stock keeping units as it hopes to reach more households in India.

For 2018-19, the Bengaluru-headquartered company, which launched the popular ethnic beverages brand in 2013 prompting other large companies to follow suit, posted a net loss of 59.88 crore, down marginally from 61.03 crore it posted in the year ago period. In 2017, its losses stood at 78.32 crore.

“The company further reported a net loss of 60 crore during the same fiscal. This is a 2% decrease from the last financial year. The company’s total expenses for the fiscal were reported as 255 crore," Tofler said in a note on the company’s financial.

Founded in 2010 by former Coca-Cola India employees Neeraj Kakkar and Neeraj Biyani, Hector Beverages started with an energy drink called Tzinga, but gradually pivoted to selling ethnic drinks under the Paper Boat brand. The company’s popularity was largely driven by the fact that its portfolio of ethnic beverages, inspired by local flavours and home-made beverages, stoked a demand for such products in the market.

The company’s numbers come as the FMCG market is witnessing a slowdown in demand, especially as rural consumers shy away from discretionary spending.

An email query sent to Hector Beverages remained unanswered.

Hector is working on building direct distribution in tier 2-tier 3 markets after its distribution tie-up with instant noodle maker Indo Nissin came to end an earlier this year, according to a person privy with the company’s plans. In 2015, the maker of Aam Pana, Aam Ras, Thandai, Jaljeera drinks entered a distribution tie-up for tier-II cities and rural markets with Indo Nissin, the maker of Top Ramen noodles. However, earlier this year, the two refrained from renewing their tie-up as Hector seeks to build its own distribution, the person cited above said. As a result, the company is now working on building its own distribution.

Hector is currently present in five states in India and draws a large part of its sales from states of Maharashtra, Karnataka, and Andhra Pradesh.

It has also added more lower-priced variants of its beverages brand priced under 30.

Moreover, the company has also expanded its portfolio over the last two years to include packaged foods under “chikki" and dairy beverages such as flavoured milk shakes as it seeks to compete with large food and beverage companies such as PepsiCo, Coca-Cola, and ITC in the market in markets beyond the five states it is present it.

The numbers come as most of India’s large and small consumer goods makers are complaining of sluggish sales of everything from packaged biscuits to soaps as shoppers in both urban and rural households cut back on discretionary spending. In fact, market researcher Nielsen India lowered its estimates for India’s fast moving consumer goods market earlier this year; lowering its forecast from 9-10% from the earlier 11-12% earlier for the current year.

But for juice makers the news seems more worrisome. In its September quarter earnings packaged goods company Dabur India Ltd, the maker of Real brand of fruit juices, said, citing data from Nielsen, that the market for juices and nectars declined by 7.2% in the second quarter of FY20. This, it added was “due to downtrading to lower price alternatives," the company said in its communication to investors for its September quarter earnings, signalling a dip in demand for juices as consumers opt for more affordable fizzy drinks.

In April, Mint had reported that Hector Beverage, backed by Sequoia Capital, Belgian investor Sofina, and Hillhouse Capital was in talks to raise $30 million led by venture capital firm A91 Partners. Belgian investor Sofina, one of the company’s existing investors, was also expected to participate in the round, with Hector seeking a valuation of about $200 million.


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