What’s common between Saiyaara and Lahori Zeera? Nothing much except that both decided to keep things simple and eschewed marketing brouhaha in their early days but were declared sleeper hits.
“The product has gained mass acceptance because we’ve turned a popular ethnic flavour into a carbonated drink and bottled it,” Nikhil Doda, co-founder & COO, Lahori Zeera, says, adding that the company’s strategy has been fairly simple. The seven-year-old brand launched by three cousins in Punjab has seen impressive growth, closing the last fiscal with revenues of 535 crore. The beverage startup secured primary funding of 200 crore from Motilal Oswal Wealth this May, marking a threefold increase in its valuation to `2,800 crore.
Experts note that a major game changer has been the 10 price point for a 160 ml bottle of the drink, something that even Reliance’s Campa Cola leveraged well. “The company had the benefit of a price point that the big cola players had ignored. Coke and Pepsi in their effort to shore up volumes, had vacated the 10 price point,” says Naresh Gupta, co-founder & CSO, Bang In The Middle.
10 price point
Doda doesn’t want to raise the starting price beyond 10 at least for the next five years, explaining that the company has certain levers in place to handle any inflation pressure. “Unlike most major beverage players that use synthetic flavours, we largely employ natural ingredients like jeera, salt, sugar, black pepper and lemon juice. It’s a combination that has been loved for generations,” says Doda, adding that the brand is eyeing the800-crore revenue mark this fiscal.
He notes that the brand would have seen far greater revenue in the last fiscal but was unable to meet consumer demand with a limited production capacity. Currently, the company has a manufacturing unit each in Punjab and Gujarat. A third unit in Lucknow is expected to become functional by next month. The company plans to outsource its bottling operations to six more units by next summer. “We have to plan today for sales that will happen two years later,” he says.
According to estimates, the non-alcoholic beverage market was valued at 1.37 trillion in 2023 and is expected to grow at a CAGR of 7% to reach 2.1 trillion by 2029.
Making a splash
The company has also launched flavours like kacha aam, nimboo, imli and shikanji but its star brand is the Zeera drink that accounts for over 90% of its sales. Doda asserts that the brand wants to own the Indian ethnic flavoured beverage market.
“Lahori Zeera has been riding on sidelined retailers that have often been overlooked by larger FMCG players. Like Campa Cola, the brand has capitalised on the discontent among traditional kirana stores,” observes Ajimon Francis, MD India, Brand Finance. But he adds that it hasn’t grown large enough to compete with the cola giants. “The core carbonated beverage consumer will remain with the colas, while brands like Lahori will continue to resonate with consumers for their fun and nostalgia quotient.”
According to Anand Ramanathan, partner, consumer products and retail sector leader, Deloitte India, the rise of regional players offering culturally relevant flavours has enabled Indian brands to compete more effectively. According to Deloitte consumer research, 45% of Indian consumers prefer purchasing local brands over global ones for food and beverage products.
But, competing with multinational players does present challenges, points out Ramanathan. “Larger global brands have stronger distribution networks, higher marketing budgets, and brand equity built over decades. They also benefit from economies of scale, allowing them to price competitively. Moreover, MNCs are increasingly localising their offerings, launching India-specific flavours and formats, which intensifies competition,” he remarks.
Coca-Cola has relaunched 1980s brand RimZim, Parle Agro is ramping up distribution for Dhishoom, its jeera masala drink, and Bisleri has also launched its own jeera drink Spyci Jeera.
Lahori Zeera recently began advertising last fiscal in its effort to own the category. It spent a meagre `15-16 crore on advertising last fiscal, which is only a fraction of what the big players spend. To take on the giants, experts agree that it will need to invest in brand building and ramp up production and distribution.