While pursuing his MBA at the Indian School of Business in Hyderabad in 2013, Harish Mohan went on a three-month exchange programme to Duke University in Durham, US. While there, Mohan, 34, would often visit the health centre where he sampled a range of affordable enriched water beverages such as honey water or vitamin-enriched water. Upon his return to India, Mohan joined his family business, Scientific Remedies, makers of pet healthcare products such as tablets, sprays and syrups for skin care, coat care and maggot control. “But the mandate was to find new avenues of business that the company could get into," says Mohan, who was inspired by his experience in the US to launch a similar product. “In 2014, there was only one other brand in India, Blue, in this space. But we didn’t want to be a me-too product," the Baroda-based businessman adds. After two-and-a-half years of research, he launched Sipwise Beverages in May 2017 with three better-for-you (BFY) beverages—a green tea cooler and a herb cooler under the brand name, What!f, and 1947, an energy drink made from natural caffeine extracted from tea.
Mohan believes this is a good time for companies like his to venture into the functional beverage space. “Globally, there is de-growth of the aerated beverage segment and the only double digit growth is in the BFY beverage category. This is because consumers have more disposable income and have become more discerning. The size of the pie is going to grow bigger and only companies that have a distinct edge will be able to capture a bigger slice of the pie," he says. Talking about how they operate on the “philosophy of differentiation", Mohan says that their strategy is to become a category creator on the lines of how Red Bull has captured the energy drink space.
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To this end, they created the green tea cooler, which aims to deliver all the benefits of green tea minus the bitter aftertaste. “Even though everyone acknowledges the fact that green tea is good for health, a large section of people are put off by its bitterness. Our cooler comes in different fruit flavours and is fortified with acerola, a rich plant extract of vitamin C, which helps boost immunity," Mohan adds. The herb coolers, on the other hand, contain both Ayurvedic and other herbs such as brahmi, ashwagandha, lemon balm and rosehip mixed with a proprietary fibre called inulin (extracted from chicory which aids gut health and acts as a sweetener). “This range of coolers is meant to help de-stress," he says. With the energy drink, 1947, they claim to have lessened the caffeine levels by half and used a natural caffeine source—tea. As Mohan says, it is being “positioned as the healthier energy drink". Targeting the millennial consumer between early 20s to 35 years, Sipwise has already touched a crore in cumulative revenue since 2017.
Challenges in the segment
As with most startups in the functional beverage space, consumer awareness pertaining to this category is low. “You can develop a world class product but if you can’t convey it to the consumer in 45 seconds, it doesn’t mean anything," Mohan rues. In order to explain the benefits of their drinks to customers, Sipwise has invested in promoters who act as an interface between the consumers and the company at stores and supermarkets. “We train them and give them reference material as well as a FAQ sheet on how to approach customers in supermarket aisles and deal with any queries they might have regarding the product," he adds. Available in four cities—Bengaluru, Mumbai, Pune, and Goa, 70-80% of their sales comes from modern trade retail outlets.
Future of functional beverages
According to Mohan, the size of functional beverage market in India ranges between ₹100 to 250 crore (depending on what one defines as functional). “By 2025, the industry is expected to reach ₹1,250 crore growing at a CAGR of 25% between 2018 and 2025," he says, adding, “This means that in two-three years, we will see more and more players getting into this category. These startups will have to identify the right niche and cater to different needs." He also predicts that stalwarts in the beverage industry such as Pepsi, which has invested millions in plant-based research in China, will probably enter the market in a big way.
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Currently, Sipwise is developing two more drinks that will focus on hangover cure and sexual health. “We have invested in two labs in Chennai and Trivandrum for research on plant extracts and natural ingredients. And we are also investing in patents to take our products to the global market," Mohan says. From the consumer point of view, he reckons, people will soon be spoilt for choice when it comes to buying healthier beverages.
Cheers To That is a series which looks at beverage start-ups set up by millennials and how they deal with trials and triumphs.