My first encounter with Paper Boat was on a Pune-bound Indigo flight, back in 2018. On being asked the preferred beverage by the flight attendant, my classmate Jyoti recommended me to try Paper Boat over Coke. Unlike other packed juice beverages, the product was unique on its own. Here is a story of four people in Bengaluru, who wanted to create a product which would be a master storyteller, be the reference point of old-world taste in an innovative packaging appealing the new generation.
The making of Paper Boat
Started in 2010, Hector Beverages entered the market with Frissia (protein-water) and later added Tzinga (energy drink) to its portfolio. Both the products were phased out due to low uptake. Their third venture was Paper Boat. Founded by Neeraj Kakkar, Suhas Misra, Neeraj Biyani and James Nuttall, today the Neeraj-duo run the show after Suhas and James decided to exit Hector Beverages.
What did the founders know that Paper Boat, which was conceptualized as an idea to convert Suhas Misra’ Aam Panna packed by his mother in a flask into a product, would command a valuation of $876M and a revenue of Rs. 190 Cr.
What makes Paper Boat so unique? Simplicity in their strategy: Be the product the customers love, communicate like a master storyteller and be with the customer at every juncture.
Becoming of the product the customers love
Started with Aam Panna and Jal Jeera, the reason why Paper Boat stood out from other fruit-juice brands is its relentless focus of giving the original taste. With a vision to provide pure, old-world taste through their product, the founders have gone a long way to emphasize on two key things: – Source the best raw materials and no preservatives.
Be it importing purple carrot seeds from Turkey and growing them in Ooty to make Kanji or pomegranates from California or investing in naturally ripening of mangoes, they take pride in their supply chain.
Every recipe is attempted to be executed with the right raw materials. No preservatives translate lower-shelf life. A combination of both drives costs, thereby making Paper Boat command a premium of 20%+ over its peers.
But this hasn’t deterred the adoption rate of the product. While some credits must go to its packaging too. Brands love to focus on creating a lasting exciting impression through product packaging and design. Paper Boat’s Doypack packaging with a boat-shaped cap has been able to resonate well with the millennials as a cool brand.
Rising on the success, the company entered the market of seasonal drinks. The diversity of India is visible through its festivals. Every festival has an exclusive drink. Entry into this segment, which is largely unorganized through Thandai, Serbat-e-khaas, Panakam has been able to drive double-digit revenues for the firm.
By consistently adding new drinks to its portfolio (both seasonal and evergreen), Paper Boat has been living upto its vision to package old recipes in the new world.
Communicate like a master Storyteller
Every brand has a story. Like for example Amul, has invested a lot in creating an aura around itself as ‘The Taste of India’. But every story must reach the right audience. Paper Boat started with Instagram, later to extend to Facebook/Twitter and mainstream TV ads. The genesis remained the same – Create a nostalgia of childhood innocence around the memories, but in a much relevant way. Paper Boat’s focus has been to convey that they are not just a drink, they are a feeling.
Be it the childhood memories through infographics or ads like ‘Hum Honge Kamyab’, ‘Waiting for Ma’ or the innocent childhood story of Rizwan, Hector Beverages has left no stone unturned. Living upto the philosophy of remaining authentic and alive, they roped in Gulzaar Saab for a Hindi Poem/ voiceover and recreating memories around Malgudi Days to name a few initiatives. It has been consistently re-iterating its brand story – “Drinks and Memories” through such advertising.
Nostalgia is not enough to drive business, distribution still remains the key.
Be with the customer at every juncture
Unlike FMCG brands, Hector Beverages did not have the advantage of a large advertising budget. In its digital bid, their focus was to target the premium segment – middle and upper middle-class audience, for whom buying packaged juices is more habitual compared to a need. For this audience, they somewhere long for the nostalgic taste of the product, which is lost in the fast-paced life.
Considering this, it was made available at all modern retail and e-commerce stores since the product launch. In addition, tie-ups with airlines like Indigo helped them give the product the extra visibility. Despite this, they did partner with Indo Nissin group (of the Top Ramen fame) to distribute the product beyond Tier-II cities from 2015 to 2019, later parted ways from the partnership to setup their own distribution network.
In 2016, they launched Chikki variants across India and reprints of classics like Jungle Book and Three Men in a Boat as an offer with their drinks. They made their foray into dairy segment with flavoured milk shakes. In 2018, it launched a new holographic packaging (Tetra Pak) and shifted its strategy from single serving to multi-serving commodity. This comes as a bid to revive their differentiated pricing model and channel specific serving of products. To put into perspective, the new holographic packaging is focused only for e-Commerce while old packaging is still available in other retail outlets.
What drove the success of Paper Boat?
In one word: – Storytelling. They started to understand that today’s users don’t need a foreign brand to be cool, but a brand which resonates with their own self is the new cool. The focus of storytelling and nostalgia could be invoked majorly in metro cities, where people have migrated off-late and don’t have the time and patience to put effort to make a drink to revive their nostalgic memories.
Be it the digital-first approach or mass-media ads skewedly focused for HD channels, the essence to strike a balance of not being like any other FMCG push brand, to be targeting the customers who value pricing of the taste has done wonders for the brand.
With two plants (one in Mysore, Karnataka and Manesar, Haryana), it has been able to cover the Southern states, metros (including Delhi-NCR) very well. This coupled with no-questions-asked return policy and reducing costs for packaging & transportation (through advertising below the packet, and usage of lighter packaging material) aided its business proposition.
The ability of the brand to do away with products which did not resonate the taste of the end users like Rasam, Imli ka amlana, Sattu, etc. helped them focus on the right products.
Is it going to be so easy? No competitors? No. The fight has just begun.
A little about the Indian packaged juice market
The packaged juice market in India is valued at $200 Million and is expected to grow at 15% CAGR. Dabur (Real brand) is dominating the space with a 55 % market share. Coco-Cola has entered the fray with the rise in demand non-alcoholic beverages beyond carbonated drinks. ITC and PepsiCo are looking at a pie in the share. Paper Boat’s attempt to organize the juice market became a pivot for all players to enter the fray, making it very competitive in the coming days.
With players like PepsiCo (Kurkure) or Kellogg (Rose, Thandai in cereals) shifting product strategy towards Indianized products, this trend is catching up and growing beyond the juice market. With factors like hygiene and health have taken prominence in the lifestyle of the people, the shift is here to stay.
Final Thoughts about Paper Boat
Being backed by VCs like Catamaran, Sequoia, Sofina, A91 Emerging Fund to name a few, Paper Boat’s road ahead is fighting the odds. Unlike an e-Commerce website, FMCG brands don’t get the leverage of using feedback on a regular basis. In addition, the focus to replicate the same taste the end-user is aware is a difficult task, which it found it difficult with Sattu, Rasam and Imli type of products.
But Paper Boat is not leaving any stone unturned. It is a fight on their turf. To make the tastes available across geographies, Paper Boat recently partnered with Accenture to leverage technology to implement potential additional products for their brand. The founders aspire to transform it into an agile company – Bring products quickly to the market and most importantly implement feedback as soon as possible. This is an unlearning experiment for the founders (ex-employees of Coco-Cola), which they have been practising since they started Hector Beverages. With focus to Tier-II and Tier-III cities in the future built on its own distribution network, Paper Boat seems well placed to create a niche for itself.
Low budget for marketing and hyper-focus on products to make it work in a distribution-intensive business like FMCG for a start-up, has been a good roller-coaster ride of relearn, unlearn and implement. It would be interesting to see how they take it forward in the future.