In an earlier blog, we celebrated Indian drinks brand Paper Boat as a shining example of ‘a brand born distinctive’: every element of the mix was distinctive, including the promise, packaging, graphics and communication. It caught India’s imagination by bringing alive the simple yet evocative idea of ‘Drinks & Memories’, linking the brand to nostalgic and fond memories of childhood. The brand soon was a toast of India’s startup industry. However, there are murmurs that sales haven’t really reached the potential the brand promised. Sales of Rs.800 million are small compared to Rs.30,000 million for the #1 beverages brand, Maaza; and there are many brands with sales of s of c. Rs. 10,000 million. Furthermore, losses of the holding company increased by four fold in the latest year, according to this report.
Below we do a ‘brand health check’ on Paper Boat to see how the brand is doing and suggest ways to unlock more growth.
1. Growing the Core
We can use our Grow the Core framework to work through different growth drivers for Paper Boat in a systematic way, to help diagnose where the issues might be.
The product itself has been a mixed bag. Paper Boat focused on reviving beverages that had been fading from public memory, with traditional Indian varieties like Jal Jeera, Aam Panna, Aamras and Anaar. However, whilst some flavours taste authentic, others don’t. And some flavours disappeared as fast as they were introduced; evidently consumers didn’t take to them.
Price is potentially a big issue. At Rs.30 for a 250ml pack, Paper Boat is over twice as expensive as favourites like Coke and Pepsi. Is Paper Boat’s proposition strong enough to negate the product challenges mentioned above? Perhaps not. They are finally introducing a Rs.20 pack this summer on one of their variants to get the absolute price point lower, and a bigger 1L pack to get price/ml down. But is this a case of too little, too late?
In terms of activation, the brand has belatedly started sampling in the last 2-3 months that in large superstores, which should help drive the penetration key to growth.
And what about distribution? A year ago, CEO Neeraj Kakkar announced, “We need to extend our retail reach as fast as possible but logically. From about 15,000 retail touch points, we are aiming to cover about 50,000 by the end of the year”. Now, that is still scratching the surface in a large and diverse country like India. Which could actually be good news: a lot of growth could come from expanding distribution once the product and price issues outlined above are addressed.
Range extensions in the form of new flavours have been another challenge. India is a diverse country with so many separate taste preferences, that very few SKUs have national appeal (nostalgia and memory structures don’t exist uniformly). The resulting range is complex, making logistics and forecasting of demand by flavour tough. Could this be part of the reason for the four-fold increase in losses in the latest year reported?
Furthermore, the launch of flavours targeting small children is perplexing. The benefit of ‘no preservatives’ is apparently designed to appeal to parents who are increasingly concerned about soft drinks full of preservatives. An animated ad is about to air on kids channels. But how does targeting mums and kids, who have no nostalgic memory of the past, make sense for the brand idea of ‘Drinks & Memories’?
Core growth summary: the ‘Drinks & Memories’ concept still seems sound and there is plenty of distribution to go for… but Paper Boat has some product and pricing fundamentals to address before it can achieve full potential.
2. Brand stretch
We urge companies to focus on the core and stretch their brands selectively. And at first sight Neeraj Kakkar seemed to be on the same page. “We will be, as much as possible, sticking to our core – traditional Indian drinks made from local fruits, spices, flowers and even pulses,” he announced back in March 2015. However, a recent move to stretch the brand into ‘Chikkis’, traditional sweet snacks using peanuts and other nuts/grains, rings warning bells for us: the brand is indeed sailing into dangerous waters in our view.
First, its hard to see how sweet snacks bring to life the brand idea of “Drinks & memories” Indeed, the CEO’s comments suggest that this is a move to smooth sales over the year, rather than strategic moves to boost brand and business performance. “It’s on strategy, helping offset the seasonality of the beverage business,” Kakkar announced. Second, the risk here is that time, talent and energy are diverted away from the core drinks business at a time it needs focus. The Innocent brands ill-fated stretch from smoothies into veg pots shows the risk for Paper Boat’s core. Several years after launch, Innocent finally sold the meal business to re-focus on the core, as we posted on here.
Brand stretch summary: the snacks launch feels tactical and risks diverting effort from the core drinks business.
In conclusion, although Paper Boat continues to grow sales, we do think choppy waters are ahead. The core business has some issues that need fixing, and the stretch into snacks risks diverting time, talent and money just when it is needed. Unfortunately, the brand at the moment reminds me of a conversation from Alice in Wonderland:
Alice: “Would you tell me, please, which way I ought to go from here?”
The Cheshire Cat: “That depends a good deal on where you want to get to.”
Alice: “I don’t much care where.”
The Cheshire Cat: Then it doesn’t much matter which way you go.”
