It requires immense hard work, patience, and determination to establish the brand in a market where similar products are already available and have been claiming decades of undisputed leadership and more so it stands true in the food & beverages sector. Today, despite its own dominant position, Manpasand has not stopped striving. Proudly informs Dhirendra Singh, Chairman & MD, Manpasand Beverages Ltd, “The Rs700 crore plus turnover Manpasand Beverage has the unique distinction of being the only pure play company in this sector in the Indian capital markets”. Speaking about his vision, he says that he wants to make his enterprise a global, multi-brand retail corporation with roots firmly in India. Excerpts of an exclusive interaction…
Gujarat is truly an entrepreneurs’ paradise and I am sure you would also vouch for this fact. What are the factors that really go well with the state?
The genesis of Manpasand certainly started when I was working in Vadodara. The ‘business spirit’ of Gujarat definitely caught my attention and after that there has been no looking back. I had a strong belief that any business related to food and beverages will never be out of season. For the first few years, we were outsourcing our manufacturing process and trying to get a sense of the business operations. After gaining some foothold in North and Western Indian markets, we set up our own manufacturing unit in Vadodara in 2005. The air of Gujarat is entrepreneurial in itself. One cannot get away with it because that’s what you inhale all the time. Besides, Gujarat is power surplus state, so we do not have to worry about frequent power cuts. If we have production capacity, we can keep our plants running day and night. In addition, road connectivity is also very accessible throughout the state and also inter-state. If we talk about the cost of operations and manpower, then Gujarat has cost effective labor, that too in abundance. Gujarat also has the longest coast line in the country with the highest number of ports. We have also observed that products with the ‘Made in Gujarat’ label were very highly regarded in Uttar Pradesh. So, our company was registered in Gujarat.
How did you plan to venture into fruit beverage business which is a very crowded category and dominated by big players?
We hail from Varanasi and no one in our family had ventured into business earlier (most of family is into farming in UP). I was a government employee of ONGC in early 1980s. I bagged the job through sports quota as I was an excellent Volleyball player. A few years later, I ventured into real estate business but soon realized food and beverages sector will never be out of season. When I started the business, there were no mentor or capital reserves available for me. Unlike today, where there wasn’t a conducive environment for entrepreneurs; I had to arrange everything from scratch to form my ‘start-up,’ so to say. Personal savings and help from friends/ relatives formed the basis for initial capital. We started outsourcing manufacturing for our mango based fruit juice from a unit in Mumbai and launched the mango drink brand ‘Mango Sip’, which is our first product.
Swimming against the tide, we chose to launch Mango Sip in rural and semi-urban markets, like in tier II and III cities. We realized these markets were under penetrated by leading beverage brands and wanted to fill the gap. Our company also made its products available in Indian Railways, the lifeline of India.
While steadily marking our presence across rural markets, amid growing demand, our company launched its first manufacturing unit in Vadodara in 2005, along with setting up an additional line to produce tetra pack fruit packs in 2007. Henceforth, it launched one more manufacturing unit in Vadodara and one each in Varanasi in Uttar Pradesh, Dehradun in Uttaranchal and Ambala in Haryana over the years. A coincidence was, our brand ‘Fruits Sip’ entered the market just a day after Prime Minister Narendra Modi talked about increasing the soft drink content in aerated beverages.
What were the initial challenges faced and how did you overcome them?
In the initial days, we focused on staying local and targeted the markets in and around Varanasi only. Thus, apart from initial hiccups that any business faces, our main challenge was to establish our brand ‘Mango Sip’ in a market, which was already dominated by major mango drink players. We slowly expanded our reach while staying close to rural markets. We did not have any advertising budget and it was through good relations with distributors that we survived in a brand driven competitive market.
How do you perceive this category and how are the growth dynamics?
Owing to changing lifestyles and disposable incomes, the fruit juices have created a place for themselves in household consumption, social gatherings, and snacking. Due to their accessibility and convenience, and anytime-consumption, out of home consumption of fruit juices are becoming increasingly popular. Studies have also shown that small size individual Tetra packs are mostly preferred over PET bottles. Among flavors, mango is the popular one with an 80 percent market share by volume. In rural areas, consumers are generally price sensitive and mostly prefer conventional, homemade beverages, soft drinks, etc. However, in the recent times, consumers in rural markets are also starting to move towards innovating products with a healthy tag, which is expected give boost to fruit juice market.
You have recently ventured into packaged fruit drinks. How’s that segment shaping up in India?
Manpasand Beverages is one of India’s fastest growing fruit juices manufacturing company. We are also India’s only listed pure-play company in the beverage sector. Our flagship brand ‘Mango Sip’ is extensively spread out in rural and semi-rural regions and now it is being brought into urban markets through modern retail and tie-ups with various food and ice cream retail majors. With a view to expand its product portfolio and target the urban markets, in 2014 we launched its ‘Fruits Up’ range of products which offers premium fruit juices and carbonated fruit drinks in different flavours. Without any synthetic base, 'Fruits Up' is made up of natural ingredients. With ‘Fruits Up’, the company plans to capture part of the huge carbonated drinks market, which is estimated to be worth around 25,000 crores.
The market size of beverage industry in India, which consists of juices, carbonated drinks and bottled water, is estimated to be worth around Rs65,000 crores and this market is estimated to grow at CAGR of more than 20%. The Indian packaged juice industry size is about Rs8,000 crores and it has been growing at more than 30% per annum in the last few years and will maintain that pace in future as well.
How do you plan to work on your retail presence and on-the-shelf strategy?
Since our listing in 2015, we have adopted an aggressive expansion strategy wherein our main focus is on the penetration in the urban market. Firstly, we have tied-up with major QSR players to develop stronger brand recognition for our products among the consumers. Some of the major ones have been Barista, Goli Vada Pav, Heritage Group, etc. To increase the availability of our products across all retail formats, we have been forming key alliances with various domestic and global companies to further such as SPAR, Reliance, Metro Cash and Carry, etc. Our flagship product, ‘Mango Sip,’ emerged as one of the fastest-selling fruit drinks at SPAR’s retail outlets last year. We have also tied up with IRCTC e-catering.
You are majorly targeting rural and semi-rural markets. Tapping those markets is a logistical nightmare. How are you planning to manage that?
Currently, we have built a strong network of more than 4,00,000 retailers, over 2,500 distributors, and over 250 super stockists covering 24 states. Also, with our 4 new plants coming up across India, we plan to address the logistics issue with our manufacturing facilities being closer to the target markets.
What are the USPs of your company that set you apart from the rest and specifically the giants who are ruling the market share for quite a long time?
The Rs700 crore plus turnover Manpasand Beverage Limited has the unique distinction of being the only pure play company in this sector in the Indian capital markets. Our strong distribution network pan India & our strong presence in rural and semi-urban markets give us an edge. Also, the company has adopted the winning formula of focusing on categories and price bands where there is no competition virtually.
How are you streamlining supply chain networks for your organization?
To keep our supply chain streamlined, we are planning to expand our production capacity in four different locations of the country. Manpasand has formalized plans to set-up four new manufacturing units, out of which construction work has already begun for new plants in Sri City, Vadodara & Varanasi. This decision is taken keeping in mind a lot of factors. Primarily it’s decided to keep our supply intact that might have affected because of logistics time and also cost. Another reason is the strategic benefit to the company and also the consumers. Selling our products from Gujarat to Tamil Nadu will increase both, time and costing, which will be ultimately on the customer’s shoulders. We don’t want to do that. In addition, just increasing production capacity at one place is no more feasible. India is developing from all corners, and to match that pace, we too have to expand in all corners of the country.
How is GST slated to impact your business growth momentum?
Placing fruit juices under the 12 per cent tax category is a good move and provides an incentive for juice manufactures to increase their capacity to cater to the rising demand from consumers. Wholesalers and retailers will now be online and it will be easier to track them and service them. Hence the system will become more transparent. In terms of aerated drinks being taxed at 28 per cent, there might be some short-term pinch, but in the long run, will benefit all the organized players of the beverage industry. Moreover, focusing on strengthening the distribution network and realignment of supply chains is the key to making businesses GST ready. With GST in effect, companies will have to focus on logistics and relook at the procurement process subsequently. Moreover, there might be a need to train vendors and distributors with what to expect from GST roll-out.
What are the missing links that you feel entrepreneurs in India face while starting a business and how can those be eradicated?
Major challenges that entrepreneurs in India face while starting business include lack of alternate funding options, mentorship, government policies surrounding regulatory entry and supportive exit policy. We would say these challenges are weak links and not missing links as there is an improvement in all of above factors, though there are scopes of major improvement if the government wants to raise India’s ranking in Ease of Doing Business. Government’s schemes of Startup India, Skill India, Digital India and Make in India are intended to lessen these challenges for entrepreneurs.
What do you feel about the government’s recent initiatives to offer a conducive business environ?
Government is aware of the role of entrepreneurs in improving employment scenario in India and offering a conducive business environment. Above mentioned Government schemes have been designed to improve India’s overall ranking in ‘Ease of Doing Business’ and generate awareness about opportunities in the manufacturing sector in India. Necessary reforms are required in two criteria where India is facing challenges and is ranked low – enforcing contracts and registering property. We believe over the course of next few years, India’s rank will definitely improve.
What are your future plans?
While we continue to increase our significant presence in rural and semi-rural markets, we have also started aggressively tapping into the urban markets where our presence was minimal until recently. With the set up for new plants, we are looking at doubling our current production capacity. We will also come up with more new plants in the coming days to meet the rising demands of the consumers.
What’s your advice for the new age entrepreneurs?
With the advent of technology and globalization, the world is changing fast and new-age entrepreneurs have to bring in adaptability, innovation and passion to cautiously tread this journey. Unless the entrepreneur is missing any of above three, his/her journey would be mired in the ever-changing world of business.