Haldiram’s, India’s favourite ‘chakna’ maker, has just become a billion-dollar brand. In its remarkable growth story – of taking on both multinational food giants and the corner halwai and beating them at their own game – lies a salutary lesson for any global company that wishes to crack the 1.4-billion-strong Indian market: listen to the Indian consumer or perish.
Global giants that have come to play the long game in India have learnt this the hard way. When Coca-Cola re-entered India by buying out local entrepreneur Ramesh Chauhan’s beverages business, it may have thought it was only a matter of leveraging Chauhan’s bottling and distribution network to push their brands. But consumers stubbornly voted with their feet for Chauhan’s erstwhile brands, Thums Up and Limca. Today, both are billion-dollar brands in their own right, outselling Coke by a margin.
Rival Pepsico too, had to bow to the Indian consumer. When Frito-Lay, the food division of Pepsico, bought the local chips brand Uncle Chipps – which at one time had a 70% market share – it found the brand impossible to dislodge from its portfolio despite restricting its distribution to North India for a decade. Uncle Chips refused to die because, with its unique insights into local consumer preferences, it had products that addressed niche needs and preferences. For instance, its ‘sendha namak’ (rock-salt) variant is a hot seller during the Navratra period, when religious Hindus observe a diet that prohibits cereals and processed salt but allows potatoes and rock salt.
Although Indian consumers are great experimenters and take to foreign foods with gusto, they also demand a certain ‘Indian-ness’ in what they consume. So, even as affluent, top-of-the-pyramid consumers are trying exotic cuisines from Vietnamese to Japanese and Lebanese, even mass-market consumers can be seen lining up at roadside carts selling Tibetan momos and Indianised chow mein. In fact, ‘Indian Chinese’ is a global phenomenon, and features on the menus of restaurants from Sydney to London.
Maggi’s biggest seller is veg masala noodles, and for Lays it’s ‘magic masala’ chips. McDonald’s has an aloo tikki burger, KFC serves ‘biryani’ style rice bowls, Domino’s has a paneer pizza, and Starbucks offers South Indian filter coffee.
It’s not just about catering to the palate, though. One could argue that Haldiram’s, with its range of Indian sweets and savouries, had a readymade market to tap into, but it was not as simple as that. The company had to take on and beat local sweets and snacks sellers at their own game. Every town – actually, virtually every locality – in India boasts of a shop with a certain ‘X’ factor in its signature offering. This ensures a constant throng of customers thanks to word-of-mouth recommendations.
New digital shopping technologies and modern logistics opened up a national market for some of these players. One of India’s most successful startups during the pandemic was The State Plate, launched by three young students at Delhi’s Shri Ram College of Commerce. They decided to tap into this nostalgic market for regional specialities by supplying local delicacies such as Chitale Bandhu’s bakarwadi from Pune, Osmania biscuits from Hyderabad, and ‘Congress’ peanuts from Bengaluru’s Iyengar Bakery.
What Haldiram’s has managed is much more challenging. It took time-tested traditional favourites and applied Western methods of standardisation, mass production, packaging and marketing to beat both the ‘halwais’ and MNCs. It delivered on a standardised experience to the consumer while remaining competitively priced against both packaged and unpackaged rivals.
Over the years, it has evolved into India’s largest packaged snack foods retailer while also building a thriving nationwide quick service restaurant (QSR) business that contributes 15% of its revenues. While salted snacks contribute the bulk of revenues in the packaged food business, they now straddle more than 400 products covering regional preferences from every corner of the country.
It’s no wonder then that global giants are eyeing Haldiram’s. American breakfast cereal giant Kellogg’s made a play a few years ago at a valuation of $3 billion, but the deal fell through as the brand ownership was disputed between the three branches of the original firm – Kolkata, Delhi and Nagpur. Recent reports of a bid by Tata Consumer to acquire a 51% stake at an enterprise valuation of $10 billion sent Tata Consumer’s stock surging, although both parties were quick to deny that any negotiations were on.
For the moment, Haldiram’s remains what it has been for years now – a uniquely Indian success story that has perfected the difficult art of marrying Eastern sensibilities with Western processes and discipline to build India’s most valuable food empire.