New FMCG Billionaires Pack A Punch

RAJKOT’S FAMED VIRANI FAMILY’S love affair with potato chips started way back in early eighties when Chandubhai Virani, MD, Balaji Wafers and his brothers Bhikubhai Virani and Kanubha Virani managed the canteen of Astron Cinema, the local movie theatre. Having earned a reputation for quality potato chips he sold at several school and college canteens in the town, Chandubhai went on to acquire land on the outskirts of Rajkot in 1989, and set up a manufacturing plant for potato chips. A decade later Balaji Wafers was an established brand in Gujarat and had started expanding into adjoining Maharashtra. By 2010 it was a formidable competitor to market leader PepsiCo (Lays) and had started grabbing market share in western India.

The snack manufacturer has spread its wings in the north and south. “Our market share may be lower than Lays, but our growth is twice theirs. Our growth and market share are higher than ITC (Bingo!),” says Virani.

When Covid-19 hit the country in 2020, Balaji Wafers had a revenue of ₹2,500 crore. By the time the country was completely out of the grip of the pandemic in 2022, the company had more than doubled its revenue to ₹6,000 crore. “All odds were against us. Not only did the pandemic disrupt the supply chain, we were also impacted by the Ukraine-Russia war as edible oil prices went up 150%. I told my team we needed patience. With many companies cutting down on production due to disruptions caused by the pandemic and the geopolitical situation, we saw an opportunity. There was demand as consumers were locked up in their homes and were looking forward to healthy snacks. We hired more people and doubled our production. We also dialed up our distribution muscle,” says Virani. “We did suffer initial losses, but eventually our revenue soared to ₹6,000 crore,” he adds.

Balaji Wafers along with DS Group, Suguna Foods and Shri Dutt India are some of the newest entrants in Fortune India’s list of FMCG billionaires 2024. These companies have battled consumption slowdown, low volume growth, volatility in input prices, margin pressures and emerged victorious. In fact, the cumulative net worth of India’s FMCG billionaires, old and new, went up to ₹6.40 lakh crore from ₹5.03 lakh crore as the number of billionaires went up from 13 to 20. Ravi Kant Jaipuria (Varun Beverages) tops the list with a net worth of ₹1,29,456 crore, followed by Asian Paints’ late Ashwin Suryakant Dani & family (₹62,431 crore), and Marico’s Harsh Mariwala and Kishore Mariwala (₹50,730 crore).

Though all these companies have varied product portfolios, the one thing that cuts across businesses is the appetite to grow despite a challenging environment. From widening their product portfolio to embracing technology to improve business efficiency and strengthening distribution, all of them have been on an aggressive growth path.

Exponential Growth

Rajiv Kumar, vice chairman of the $1 billion DS Group, says the spices and salt (Catch) and confectionery businesses have both touched ₹1,000 crore each in revenue. “The confectionery division of DS Group has grown over 20% in the last three years while the industry has grown 9%. Plans are on to accelerate business with a CAGR of around 30% over the next five years through organic and inorganic growth. Catch Salt and Spices has grown 24% YoY for the past two years and aims to grow 30% annually over the next five years. Today DS Group has one of the largest distribution networks in India with a reach of more than three million retail outlets (direct and indirect),” says Kumar.

Covid-19 taught these companies the importance of resilient supply chains, deeper distribution and smart inventory management. “Our strategic focus on enhancing indigenisation, expanding product portfolio and leveraging a vast distribution network while expanding further into Tier-II and III markets has been instrumental. We adopted an omni-channel strategy, encompassing traditional retail, e-commerce and quick commerce to ensure accessibility of our products across platforms,” explains Kumar.

For Virani, the greatest learning has been better preparedness for adversities. “During monsoon, for instance, we tell our team to supply extra, so that in case there are disruptions due to rain and products reach two days late, the dealer would not be out of stock. We even procure extra raw material so that we don’t fall short in case there is a calamity.” Like DS Group, Balaji Wafers has also strengthened its distribution. The company, which had 1,000 dealers before the pandemic, increased the number to 2,000 by 2024 end. It currently has 700 sole distributors from 400-odd in 2020.

Suguna Foods, which formalised poultry as a viable business in India by introducing contract farming, has spread its wings to Kenya, Bangladesh and Sri Lanka, where it sells processed chicken. It has also launched its click-and-mortar brand, Delfrez, which houses diverse poultry products. The company has invested over ₹100 crore in the brand.

“Suguna Foods launched value-added products such as nuggets and kebabs much before the likes of Liscious which gave higher realisation,” says Angshuman Bhattacharya, partner and national leader, consumer products and retail, EY.

Bucking Slowdown

The FMCG industry has been deeply impacted by consumption slowdown in the last six quarters. Low volume growth has hit businesses. Yet, it hasn’t impacted these billionaires. “My strategy has been to rise to the occasion, understand consumer needs and solve them,” says Balaji’s Virani. The company launched 21 products during and after the pandemic. It even forayed into categories like instant noodles. “We capitalised on adversity, found out new ways to satisfy our consumers and became more powerful,” says Virani.

Contrary to his peers cutting down on grammage as potato prices soared, Virani gave his consumers additional grammage of chips. If PepsiCo’s Lays offered 15 gms of chips in a ₹10 pack, Balaji offered 22 gms and that changed the game in its favour. “The Balaji business model is concentric, centered around its manufacturing facilities. The strategy is to deepen distribution around their plants rather than saying they will distribute in Delhi, Mumbai Kolkata. The national players have a top-down model which creates a lot of inefficiencies,” explains EY’s Bhattacharya.

Similarly, Kumar of DS Group feels the company has managed to counter the slowdown by offering high-quality products. “We have avoided the grind of the industry and commodity driven market. The strategic focus on delivering superior products to customers has proven advantageous and we have not seen a dip in volume. Both our spices and confectionery divisions have exhibited 24% YoY growth each, outpacing industry averages,” he adds.

Embracing Digitisation

Ask these FMCG entrepreneurs what has made their businesses efficient, and the unanimous response will be digitisation. “We have automated production and godowns. This has helped in minimising wastage and increased sales. Most of the top packaged food companies fill their product cartons manually, our cartons are filled by robots,” says Virani.

“DS Group is focused on tech innovations. Some examples include introduction of robotics and automation to enhance efficiency and reduce operational costs, implementation of digital systems for inventory management, supply chain optimisation, and quality control,” adds Kumar.

But, how are these homegrown FMCG companies different from their global peers? Balaji’s Virani says he does business with his heart and not mind. “We don’t set sales targets, neither do we discount, nor do we give incentives to sell. Our costs are low and, therefore, profit is good. We think about how to satisfy consumers, not to generate sales.”

So, what’s the lesson here for corporates? When the bulk of the industry recorded value growth on the back of premiumisation, these firms did what they know best — roll up their sleeves, deepen penetration and generate volume growth.