It is not just a startup, it is an FMCG startup. An FMCG startup that sells beverages. It is unique. There are not too many of them around. Hector Beverages started with retailing an energy drink called Tzinga. Yes, we haven’t heard of it either. But soon after losing cash and momentum, the company changed its focus to juices. And that helped it take off. It is probably the only star in Catamaran’s portfolio. Paperboat’s popularity within the urban populace has been meteoric and it has found space on shelves of all top supermarket chains. For a while, it had everything that a company needed: a hot new product, a market that was waiting to get its hands on a healthy non-fizzy drink, founders who knew what bottling was all about and, most importantly, an absolute absence of competition. But things have changed, Dabur got into the game with Hajmola Yoodley. Its packaging is very similar to Paperboat. Things have started to heat up and customers await a lip smacking fight.

Total funding

  • $37 million

Hector Beverages

Name as per MCA records

Niraj Kakkar

CEO

Bengaluru

Headquarters

Investors

Sequoia Capital

Catamaran Ventures

Compeititors

Dabur Yoodley

What has it been up to, in the last year?

Early in the beginning of FY16, Paperboat made a huge splash and raised close to $30 million. And with that it started to ape the apparel sales idea to its beverage business. It meant that the company dished out special flavours during festivals. This improved stickiness and it got better shelf space. So, with every festival Paperboat releases a new flavour to capture the essence of the market. It is a high risk, high reward strategy. If it sells, Paperboat manages to capture a whole new market, if it fails, the short shelf life means, the stock is wasted and the company needs to take huge losses. Paperboat’s soaring popularity means it takes up over 75% of Hector’s revenue.  Recently, Kakkar announced that Paperboat will be making a foray into snacks, a segment which is full of well-established players selling ethnic nibbles.  Bikanervala and Haldiram await its entry.

Results

Rs 72.49 crore: Revenue Hector Beverages clocked in FY16. More than double what it made in FY15.

Rs 63.25 crore: Revenue from operations. The other Rs 9-odd crore comes from payoffs from investments. It almost doubled from FY15.

Rs 27.42 crore: Salaries paid to its employees. A massive increase from Rs 8.34 crore last year. An effect of opening a new bottling plant.

Rs 44.10 crore: Spent on marketing and advertising by Hector Beverages, which helped it double its revenue. It spent Rs 11.7 crore in FY15. A four-time increase in spends.

Rs 14.33 crore: Spent on getting the juice from the bottling plant to supermarket shelves.

In partnership with Tofler

Rs 84.04 crore: Loss on Hector Beverage’s books, which is four times higher than FY15. The increase in revenue came at a cost.

Rs 143 crore: Accumulated losses weighing down Hector Beverages.

Correction: The copy has been changed to correct an error. The salaries paid to employees of Hector Beverages in FY15 was Rs 8.34 crore not Rs 83.4 lakh as earlier reported. 

AUTHOR

Patanjali Pahwa

Patanjali has spent over seven years in journalism. He last worked at Business Standard as Principal Correspondent, where he wrote on startups, e-commerce companies and venture capital. He has worked at an array of institutions, which include Forbes India, Caravan and Outlook Business. He is a Mumbaikar, born and brought up. Patanjali did his BSc in IT from Mumbai University and then got his journalism degree from IIJNM in Bangalore. He is enamoured by Ernest Hemingway and Tom Waits and may try to sneak in references to them in his stories.

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