Made in Karnataka Paper Boat seeks to preserve old drinks for future

Towards the middle of 2014, Neeraj Kakkar decided to move his company headquarters to Bengaluru, from Gurugram.Many tech companies that started elsewhere have subsequently made Bengaluru their home, which is understandable.But Kakkar's company Hector Beverages ­ better known by its brand Paper Boat ­ sold traditional Indian non-aerated drinks like anar, aamras, jaljeera and aampanna.

So why did they move? As much as 40% of Paper Boat's sales were coming from south India. “It did not make any sense to transport 40% of our products all the way south from Manesar (Haryana)," says Kakkar, who had a three-year stint with CocaCola as area sales manager in Bengaluru during the 2000s.

“I like Bengaluru. The bureaucracy moved pretty fast and we could get land and other permissions quickly .The Mysuru production facility became five times bigger than the Manesar plant," says Kakkar. The head office had only 15 employees and 13 were happy to move to Bengaluru.

Hector Beverages, founded by Kakkar together with Neeraj Biyani in 2010, started by selling Tzinga energy drinks. In less than a year, the company raised funding from Infosys co founder NR Narayana Murthy's private investment arm Catamaran Ventures, and earlystage venture fund Footprint Ventures. It subsequently raised investments from Se quoia Capital, Hillhouse Capital and other individual investors. The lat est funding valued the company at around $100 million.

“Catamaran also had a small role in us shifting base," says Kakkar, who grew up in a small town in Karnal district of Haryana. Kakkar graduated from an engineering college in Karnal, and then received a management degree from MDI, Gurugram. After more than a six-year stint at Coca Cola, he went to Wharton School for an MBA. While Kakkar had a few offers to work in the US, the pull of entrepreneurship brought him back to India in 2010.

While Hector Beverages' first product, an energy drink, was a success, the lack of clarity on regulations on energy drinks made the company look at other avenues. They hit upon the idea of healthy and traditional drinks, and the first of these, jaljeera, hit the markets four years ago. Aamras, anar, kokum and aam panna followed, and propelled the company to over 100% annual growth rates over the next three years.

“Paper Boat gives us great satisfaction because we are preserving the centuries' old drinks of India for future generations," says Kakkar. The company has an R&D centre in Bengaluru, where research on 15 new products happens simultaneously . It takes around two years for a product to hit the market.

For most traditional drinks, there are several variants and flavours. The company chooses one that it thinks will have a mass market. “We need to look at the inputs required, the machinery we can use, the scale we can achieve, the shelflife of the products, and also ensure right cropping practices,“ says Kakkar.

The beverages are priced at a premium level, so 75% of sales comes from the six biggest cities. But the brand is gaining popularity across the country .Paper Boat receives mails from remote locations on local drink recipes. “We take those seriously ," says Kakkar.

Today , his firm employs over 800 people, with 400 of them in factories and another 250 in sales. It has a portfolio of 13 drinks and had cumulative sales of 60 million units over the past year. With the suggestions they receive and the R&D they do, Kakkar and Biyani hope to significantly expand that portfolio in the coming years.

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