Hamdard Laboratories, makers of Rooh Afza, diversify into spices, edible oils

Breaking the fast during the holy month of Ramadan with a cold glass of Rooh Afza is sacrosanct in most Muslim homes in India. During the hot summer months, Rooh Afza is considered a great way to hydrate. At beverage stalls in traditional localities like Chandini Chowk in Delhi, Rooh Afza milkshake or lassi are invariably the bestsellers. Bartenders often use the ruby red beverage as a cocktail ingredient. The 117-year-old brand has been a ubiquitous part of Indian culinary culture, especially in the northern part of the country.

However, the legacy brand began to lose its sheen among the younger generation which considered it old school. That is when the manufacturers of Rooh Afza, Hamdard Laboratories, felt the need to contemporise. In the last couple of years, Hamdard launched a slew of new-age products such as ready-to-drink beverages (Rooh Afza milkshakes and lassi), a sugar-free variant of Rooh Afza, as well as Fusion, which is Rooh Afza infused with fruit juices. As a result of the portfolio improvisation, the Rs 600-odd crore food business saw a topline growth of 90% in the past year. The legacy brand is now eyeing a Rs 1,000 crore turnover in the next two years.

For the business to scale up, dependence on a single product category isn’t a great idea. The beverage company has, therefore, forayed into newer categories such as spices and edible oil. “Shifting to a new category meant we had to remain true to our Hamdard heritage, which is to be affordable. We wanted to be priced well, be a mass premium brand, and focus on health. We didn’t want to dilute any of these propositions. Spices and edible oil fitted well,” says Hamid Ahmed, CEO of the domestic food business of Hamdard.

Hamdard started way back in 1906 as a Unani medicine clinic. It was known for its affordable medicines and Rooh Afza was a one-off beverage launched by the family, which went on to become the company’s identity. “Rooh Afza is anchored in the philosophy of making a consumer’s life a lot better. There are a lot of other things in a consumer’s kitchen which are also anchored in a similar philosophy. Hence, we looked at edible oil and spices,” explains Sanjesh Thakur, partner, Deloitte India, which has been part of Hamdard’s food business’ recent makeover.

But aren’t categories like spices or even edible oil cluttered with intense competition? Deloitte’s Thakur says spices is an over Rs 100,000 crore market and only 15% of it is branded. “In a category like spices, the shift from loose to package creates a huge runway for the next 20 years. The income of the middle class is growing. If the consumer shifts there is a huge opportunity for Hamdard.”

Lloyd Mathias, investor and business leader, says Hamdard brands such as Rooh Afza or Safi (a blood purifier) have a strong health connotation, so adjacencies such as spices or even edible oil make perfect sense for the brand. “Rooh Afza was formulated in the good old days to maintain hydration during summer. Spices also have connotations of nature and health. As long as they stick to the health domain, it is good for the legacy company.”

The problem will arise only if the brand enters segments like snacking, says Mathias. “The brand has a loyal set of consumers, I don’t think growth should be a challenge as long as they stick to their brand promise of offering healthy products rooted in tradition.”

Hamdard’s spice brand Khaalis, currently sells in the North, which has been the company's traditional stronghold. In fact, Rooh Afza is a household name in Pakistan too. During the partition of India, one of the Hamdard family members chose to migrate to Pakistan and launched the brand there.

A third-generation entrepreneur, Ahmed claims that purpose and philanthropy were an integral part of Hamdard’s business model much before the term became fashionable. “A large proportion of our revenues goes into charities. One of the reasons we chose to diversify our business is to fund our various philanthropy initiatives. We build hospitals and support education,” he says.

Even in the spices business, the company has backward integrated. It grows crops such as red chillies which go into its spices. The company, says Ahmed, is evaluating other categories in the food and grocery space.