Juice brand Paper Boat loses steam, sales down 12.5%

MUMBAI: Ethnic drinks brand Paper Boat seems to be slowing down finally after sailing high for almost seven years, as health-conscious consumers cut back on sugary products in a slowing economy.

Hector Beverages, maker of Paper Boat, posted a tepid 12.5% growth in sales in the year ended March 2017 after doubling its sales in the previous year.

Hector Beverages reported sales of ₹69 crore and net loss of ₹78 crore for 2016-17, as per its latest filing with the Registrar of Companies (RoC). It had posted sales of ₹62 crore and net loss of ₹84 crore in the previous year.

Rival beverages makers PepsiCo and Coca-Cola, too, have been struggling to grow their sales while top confectioners Mondelez and Ferrero India posted one of their slowest sales growth last year.

Hector Beverages has had a successful run since Neeraj Kakkar and Neeraj Biyani, both former Coca-Cola employees, founded it in 2010. While its first product was energy drink Tzinga, the company shifted complete focus on the ethnic drinks segment two years later, and managed to create a niche for itself, growing three times between 2012 and 2015.

Its success prompted packaged juice category leaders such as Dabur’s Real and PepsiCo’s Tropicana to bring out traditional flavours such as coconut water, jaljeera and mosambi.

ITC has announced new launches within its B Natural brand with region-specific fruits.

This rising competition, according to experts, may have affected Hector’s sales.

“The novelty factor in terms of product and packaging seems to be waning,” said Abneesh Roy, senior vice-president, institutional equities, at Edelweiss Securities. “Also, the price doesn’t appeal to mass consumers and the initial sales were boosted by Indigo Airlines tie-up,” he said.

Hector Beverages didn’t respond to an email query sent to the company as of press time Thursday.

Shifting consumer tastes are prompting beverages giants, including Coca-Cola and PepsiCo to diversify away from traditional soda and high-calorie juices.

Two years ago, Hector Beverages spent about ₹30 crore to set up its second manufacturing unit in Mysore to cater to southern and western markets. The company has also partnered Japanese food giant Indo Nissin Foods to strengthen its distribution and brand presence in tier II cities and rural markets.

It entered ethnic snacks market last year by launching peanut chikki.Backed by multiple investors such as Sequoia Capital and China’s Hillhouse Capital, Hector Beverages has so far raised nearly ₹300 crore.

Growth has slowed in the ₹22,000-crore carbonated soft drinks market as consumers increasingly switch to healthier beverages such as juices, energy drinks, flavoured tea, fortified water and dairy-based beverages.

While Paper Boat sells non-carbonated drinks, the products are still high in sugar and aren’t considered healthier than other beverages such as fruit juice.


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