When Shiv Ratan Agarwal, chairperson, Bikaji Foods International, decided to walk out of his family business in the late eighties, it was indeed a bold move. He was exiting the three-generations-old family business started by his grandfather, the iconic bhujia-maker, Haldiram Agarwal. Haldiram Bhujiawala was already a popular namkeen brand across the country in the eighties and starting afresh with a new brand name, Bikaji, was going to be far from easy.

However, Agarwal's rationale of operating under a new brand name was to be able to build a national brand. His father had split the business between his four sons – While the eldest took charge of the business in Nagpur (western India), the third and the fourth sons took charge of the Delhi business (north India), while Agarwal handled the business in Bikaner (Rajasthan). He believed he got a raw deal and to add to that there was a geographical restriction which didn't allow him to sell his products in the territories managed by his brothers. The Delhi arm of Haldiram Bhujiawala by virtue of being headquartered in a bustling metro, was already an over ₹200 crore business in the late eighties, while Agarwal's business was less than ₹60 crore. The territorial divide created animosity between the brothers and Agarwal finally decided to exit the family business. "We would have never been able to grow aggressively had my father not decided to give up the family business," says Deepak Agarwal, MD, Bikaji Foods International.

Today, Bikaji Foods is a ₹1,650 crore business with a 5% (34% share in Rajasthan and over 80% share in the North-East and Bihar) share in the ₹72,800 crore Indian savoury and snacks market. The various factions of Haldiram's continue to be bigger. While Haldiram's Nagpur is a close to ₹3,000 crore business, Haldiram's Delhi generates revenue to the tune of ₹4,000 crore. Between Kolkata (which is managed by Shiv Ratan Agarwal's father's brother's family), Delhi and Nagpur families, brand Haldiram's has a 31% share of the snacks market. The three Haldiram's put together generate a revenue of over $1 billion.

Bikaji Foods has recently announced a ₹1,000 crore IPO at a $1 billion valuation. The private equity companies (Lighthouse Funds, IIFL and Avendus) which have invested in the business are bullish that the company would soon disrupt the Haldiram's empire. The analyst community believes that it's going to be advantageous for Bikaji in the stock market. "The biggest advantage that Bikaji Foods has is that there are no comparable companies in the listed space in the Indian ready-to-eat ethnic snacks category. Generally, Indian stock markets have liked stocks which have no clear comparable and markets tend to assign higher P/E multiples when close proxies are not available," points out Navroze Mahudawala, Managing Director, Candle Partners.

Mahudawala also believes that despite having a much smaller market share, there is substantial room for Bikaji to grow. "There is still a lot of headway from the transition happening from the unpacked unorganised sector to packaged branded foods in this category." The company has also made the right moves in terms of growing the business by strengthening its distribution muscle and setting up manufacturing facilities closer to the market. It has six manufacturing facilities in Rajasthan, Assam and Karnataka. "Our factory in Bikaner is the biggest savouries factory in India. We manufacture 200 tonnes per day and our capacity is 400 tonnes. We started with manufacturing just 1 tonne of bhujia per day and now we manufacture 100 tonnes per day," says the junior Agarwal. The company manufactures 300 varieties of namkeens, sweets and savouries and would shortly be foraying into frozen foods and curries for the export market. It has also invested in brand building by roping in actor, Amitabh Bachchan as brand ambassador.

Not A Cake-Walk

However, disrupting the Haldiram's empire won't be easy. "They need to build a strong differentiator in terms of products and services. Regardless of how they position themselves, if they are me-too to Haldiram's the brand will not sustain the medium term," says Raghu Vishwanath, MD of brand valuation company, Vertebrand.

The former COO of a leading FMCG major agrees with Vishwanath. "Can Bikaji get into the pockets of strength of Haldiram's? Can they convert Haldiram's loyalists? It's not going to be a cake-walk unless Bikaji manages an extremely strong distribution strategy."

Vishwanath of Vertebrand reiterates his point that Bikaji has to work hard in terms of creating new categories in order to overtake Haldiram's. "While I have no doubt that the business will grow and it will also attract investors as the revenue potential in India is immense, the brand value could get diluted unless the company does something truly unique to stand out." The snack food market in India is already cluttered with multiple brands. Apart from Bikaji and Haldiram's there are also other me-too brands such as Bikano which also hail from Bikaner and offer almost the same product as its peers.

The various factions of Haldiram's have also been working hard to stay ahead of the race. Haldiram's Delhi for instance entered into the health food business through a 51:49 joint venture with South African foods company, FutureLife. It has launched a host of products such as granola bars, oats and protein powders. On the other hand, the Kolkata faction has launched a brand called Prabhuji Haldiram which it retails across the country and it is not bound by geographical limitations. The multiple factions of Haldiram's as well as off-shoots such as Prabhuji Halidram and Bikaji does sound confusing. However, Ashish Mishra, MD, Interbrand India, doesn't dismiss these strategies. "Creation of a standalone brand to circumvent geographical restrictions due to the distributed ownership of Haldiram's brand and the family arrangement, is a smart move. Creating multiple brands in the same space (like Prabhuji Haldiram) is a great flanking strategy too. Cornering over half the India market may not have been possible with just one brand," explains Mishra.

The Indian snack food market is also flooded with a host of other regional brands (brands such as Adyar Ananda Bhavan and Pulla Reddy in South or Chitale Bandhu in Maharashtra are household names) and to add to that the pandemic has led to the rise of a spate of online only brands such as Girija Pati's Kitchen, Sweet Snacks and Karam and Mirchi.com. The likes of Pepsico and Parle which first launched western snacks are now also into traditional namkeens and are piggybacking on the huge distribution they have built over the years.

The Agarwals of Bikaji have to work over-time to become ubiquitous. Agarwal (Deepak) says that their strategy of hiring a brand ambassador has helped them immensely in both brand-building and distribution. "The distributors started taking us seriously." In terms of creating differentiated products, Agarwal says he and his team are finding ways of using less oil and also launching baked products.

Haldiram's

Can Haldiram's descendant, Bikaji Foods disrupt bhujia baron's empire?