š Balaji Wafers' Recipe for Success!
Hereās the story of how homegrown brand Balaji Wafers has emerged as a strong competitor to international FMCG companies.
What comes to mind when you think of chips? Lays (did someone say āairā?) or probably Kurkure?Ā
Well, chances are that if you go to a local shop to buy Lays, the shopkeeper will hand you this:
Yes, Balaji Wafers is giving Lays tough competition. It is the third-largest chips manufacturing company in India (10.7% market share)!Ā
How did this home-grown company rise to challenge giants like PepsiCo and ITC?
Well, the recipe for this success includes conviction, jugaad and plain old entrepreneurial spirit.Ā
Sit back, grab a bag of chips and read on!
š The Munchies Data Points
The Indian savoury snacks industry is divided into:Ā
ethnic snacks (such as namkeen, bhujia)Ā
western snacks (such as potato chips, puffed and extruded snacks)
Pan-India, PepsiCo holds the largest market share in western snacks. However, in western India, Balaji Wafers has defeated PepsiCo by gaining a 60%-70% market share in Maharashtra, Madhya Pradesh and Rajasthan.
In the words of Mr. Chandubhai Virani, the founder of Balaji Wafers:Ā āOne area at a time, one fight at a timeā.
The brand has come a long way. But how did it all start?
š The Origin StoryĀ
This goes back to 1972.
It all started in drought-struck Gujarat. Chandubhaiās father, a farmer by occupation, realised that farming in the dry lands will be no less than a battle. So, he sold his ancestral land and gave Rs. 20,000 to his three sons (Bhikhubhai, Chandubhai, and Kanubhai).Ā
The brothers saw this as their ticket to city life: they went to Rajkot and started a business of fertilisers and farm implements. Ah, little did they know about the dark side of the business world!
They were duped with fake fertilisers by a trader. They lost all their capital!
But, it was only capital that they had lost. The spirit to do something of their own was not lost.Ā
Or you could say the fear of returning home to their fatherās wrath was not lost. After all, fear is the biggest motivator of all.Ā
Chandubhai (along with his younger brother) started selling refreshments at a cinema hall in Rajkot. Four years later, looking at the perseverance of Chandubhai, the cinema owner handed over the canteen to the brothers on a contract basis.Ā
They sold various items in the canteen, including a homemade āmasalaā sandwich and potato wafers. Both the products were a hit for the consumers. Except, there was a problem with potato wafers.
They were sourced from a third-party supplier, who was always late. After having changed the supplier three times, Chandubhai took over the job himself.
As Mark Twain saidā āThe secret to getting ahead is getting started.ā
With an investment of INR 10,000, Chandubhai set up a tiny shed in the courtyard of the house and began the trial of producing wafers. The packaged wafers/ chips were picking traction and saw significant demand from in and around Rajkot. This continued till the year 1989.
This was the birth of the lip-smacking flavours that we consume today.
š Setting up of a Dynasty
In 1989, Chandubhai set up the first factory worth Rs. 50 lakh (earnings and a bank loan). It was then Gujaratās biggest potato wafer plant!
A great investment? Naah, an unwanted hurdle.
The machinery installed in the factory faced operational issues and engineers failed in resolving them.
What now? Chandubhai studied the machine himself and repaired it!
With the start of these machines, started the only-upwards growth of Balaji.Ā
Another takeaway: A college degree cannot guarantee success, but your efforts and willpower will.
Towards 1995, Chandubhai registered āBalaji Wafers Private Limitedā after āLord Balajiā and extended its product line to namkeen and other snacks.Ā Ā
Source: ForbesIndia
š§ Balaji: A Lip-smacking Delicacy for Competitors?
It was the year 2014. Balaji was growing at an insane pace, and could soon take over the competition. Thatās when a giant snacks and beverage maker (allegedly PepsiCo) proposed to acquire Balaji Wafers at a whopping price of Rs. 4,000 crores. At that time, the revenue of Balaji Wafers was just around Rs. 1,000 crores.Ā
Giving up such a tempting offer was testimony to the true entrepreneurial spirit of Mr. Chandubhai Virani.
A funny conversation around the buyout offer:
Someone called up Chandubhai and said āYou know, companies are like daughters. After a particular age, you need to get them married and send them to their new home.āĀ
A classic response from Chandubhai āThis company is my daughter and my son. And I donāt sell my family.ā
What next ā This paved the way to triumph!Ā
In 2020, Balaji Wafers had clocked a revenue of Rs. 2,400 crores. It also set up multiple factories across Gujarat, Indore and expanded to 65+ products range.
āļøThe Masterstrokes
Some growth strategies simply outperform everyone elseās:
Regional market segmentation and customisation: When you attempt to sell to all, youāll more likely end up selling to none ā or at least a lot fewer than you could. Balaji Wafers understood this and targeted Western India by bringing customised flavours as per their regional taste. For example, spicier snacks for Rajasthan, āGathiyaā for Gujarat and āChaat Chaskaā flavour for Maharashtra.
Distribution network: Building a powerful distribution network has helped the brand reach even the most remote areas. Today, Balaji Wafers is working with Salesforce to build a dealer management system that will streamline the distribution process.
Maintaining quality: The company thrives on the basic principle of maintaining consistent quality. For the longest time, Chandubhai ensured his visit to the office daily and toured the plant in Rajkot to keep a quality check.
Pricing: One of the most important āPsā of marketing. Consumer behaviour is largely influenced by the pricing of the product. Offering more quantity at the same price as a competitor was a brilliant strategy by Balaji Wafers.
š¤ Future Plans?
After claiming the title of āFortress Balajiā in Western India, the company plans to spread its wings pan-India.Ā
However, with increased awareness towards healthier indulgence, Balaji could find itself on unfamiliar ground.Ā
Other competitors like Snackible, Guiltfree Industries (who own the brand āToo Yummā) are heavily invested in creating a healthy snacking experience for consumers. PepsiCo has also reduced its sodium content in Lays, Kurkure by 5%-25% and aims to further reduce sodium content in other products by 2025.Ā
Balaji Wafers is new to this space but has started introducing healthy products such as Dum bar (made of peanuts and jaggery).
Will this strategy work out for the company? And will Balaji also soon dominate other regions of the country?Ā
Let us know if you liked today's piece. If you did, please share this with your friends, and get them to subscribe :)
See you tomorrow, smarty! š¤
If you are coming here for the very first time: Join us on WhatsApp and never miss an update! š
balaji should dominate because thus is our gujararti company