Hector Beverages

Beverages and Energy drinks market in India:

While the size of total beverages market in India is about Rs. 1800 Cr, only about Rs.

300-350 Cr. is the market for energy drinks. The energy drinks market in India is growing

at a rate of 25% per annum, as per an article in Business-Standards dated February25,

2013.

Of the total energy drinks market, Red Bull controls about 80%.

Indian energy drinks market is unique as here energy-drinks market is only about 0.8%

of the carbonated drinks market, whereas globally this ratio stands at 16%.

About Hector Beverages:

Industry: Food & Beverages

Specialties: Health Taste Beverages (Energy Drinks and other functional beverages).

Type: Privately Held

Headquarters: Gurgaon, Haryana, India

Values: The Firm believes in three core values which it lives by:1. Audacity2. Rooting for the Underdog3. Integrity

Founded in: October, 2009

Founders: Neeraj Kakkar and Suhas Mishra

Key People: Neeraj Kakkar, CEO

Suhas Mishra, COO

James Nuttall

Neeraj Biyani

Location and Plants:

The startup has a manufacturing facility out of Gurgaon and is about to start another

plant in Mysore, Karnataka.

The Manesar, Gurgaon plant can produce 1,70,000 cases of 12 packs a month, while the

plant being established in Mysore will have a capacity to produce 5,00,000 such cases.

Brands, Products and Target Groups:

It started out with Tzinga in 2011.

Later, the company decided to launch Paperboat.

Brands include Tzinga (three flavors- Mango Mint, Tropical Trip and Mango Strawberry)

and Paperboat (seven flavors- Aamras, Jaljeera, Kokum, Jamun, Aam Panna, Imli,

Golgappe ka pani).

Tzinga offers its energy drink at Rs. 25 for a pack of 200 ml, beating hands down rival

Red Bull which is priced at Rs.85-100.

The tagline for Paper boat is “Drinks and Memories”.

While Tzinga was targeted at the youth, Paper Boat was introduced with a 30 plus target

audience in mind.

Hector has conceptualized several sampling activities for Paper Boat, including one

where it asks prospective consumers to make a paper boat and if the consumer is

successful, the company makes a donation on his / her behalf to an NGO that supports

children’s education.

The monthly sales of Paper Boat have crossed the 2 million mark.

As per Neeraj Biyani, “Six months ago we were selling a million packs a month but today

we do close to two million in a month”

Hector introduced a new 1 liter pack for Rs. 120. Rival Dabur sells a 1 liter pack of Aam

Panna for Rs. 80.

Some more traditional, zero-calorie drinks in the pipeline include Sattu, a traditional

drink from Bihar, Tulsi tea, Ginger tea and Kaanji, a black carrot drink originally from

northern India.

Competition:

Red Bull is the ruling brand in this arena.

Then there are others in the market- from Coca-Cola's Burn, Goldwin Healthcare's Cloud

9 and Monster Beverages’s Monster to Pepsi's Sobe.

Reach and Roadmaps:

Today, it has a reach of about 7000 outlets through 15 distributors.

The company plan to reach over a lakh outlets within the next 18 months.

Tzinga has a fairly good retail presence in New Delhi and Bengaluru, apart from progress

being made in Jaipur, Jodhpur, Kota and Hyderabad.

In Bangalore and other major cities of south India, Tzinga commands the 2nd position in

the market.

It has a partnership with Indigo Airlines to distribute its Paper Boat brand on the airline.

Later, Jet Airways started selling the product on their flights too.

The next step according to Hector is to expand into some of the neighboring countries,

including Sri Lanka, Bangladesh etc.

They are also planning to launch an online shop next week and four new flavors within

the next three months, as per an article in Mint.

One of the biggest challenges before them is to convince small Kirana stores for stocking

Paper Boat.

Investments, News and Awards:

Infosys founder N. R. Narayan Murthy’s venture capital fund “Catamaran Investment

Private Limited” along with Footprint Ventures and four other angel investors have

placed their bets on Hector Beverages, in its 1st round of funding.

Hector Beverages also raised $8 million from Seqouia Capital and other existing

investors in May, 2013.

Hector Beverage was a finalist in the 2010 Wharton Business Plan Competition.

In July 2013, Paper Boat was nominated for Kyoorius award for design innovation.

Trivia:

Team strength of Hector Beverages is around 275 people.

With monthly sales of close to two million packs per month, it is already disrupting the

market for established beverages giants.

Co-founders Neeraj Kakkar and James Nuttall bumped into each-other at their class at

Wharton. Nuttall, later became Tzinga’s secret weapon as the person behind its

innovative and flexible packaging, bringing down costs.

Hector Beverages, which expects to almost triple its revenue to Rs.100 crore in the next

two years, has nearly doubled its sales in the past six months, after it introduced Paper

boat in August.