Prataap Snacks also happens to be in the right place, quite literally, at the right time. It is located conveniently in Indore in the centre of the potato-producing Malwa region, which offers it more than just raw material. Indore is a consumption market, which means trucks loaded with goods come to the city, and they often have to go back empty. Amit Kumat says that allows Prataap Snacks to leverage the “reverse logistics” and get a better freight rate.

The stars are aligned, so to speak, for the company. The timing couldn’t have been better for them. Owing to urbanisation and growing income levels, the snack market and the overall packaged food industry in India have immense growth potential. The company estimates the market for organised snacks will grow at a CAGR of about 14.6% between 2016 and 2021. A Credit Suisse report says the total branded packaged foods market will grow from $40 billion to $200 billion over the next decade. “Affordability of products is important for growth in most categories in India due to the low per capita income levels,” says the report.

And that is where the sweet spot lies for Prataap Snacks. It is delivering value products that are either priced lower than bigger brands, or offer more per pack. Amit Kumat says Prataap Snacks started out by giving more value to consumers. So, when Frito-Lay was offering 22 grams in a Rs 5 pack, Prataap Snacks offered 30 grams for the same amount, which has helped the company grow at around 20% to 25% in the past five-six years. Its pricing strategy pushed several bigger companies to also offer value packs in an effort to stay ahead in the market.

Amit Kumat believes Prataap Snacks succeeded in building a strong business because it was ahead of the curve in creating the right taste, in innovation, and in giving value to the customer. But not all small and medium businesses are able to achieve that. “In India, for the smaller player to start, to create an organisation, to create a company has become extremely difficult, because of the competition, innovation and money required in the business,” he says.

He’s right. Prataap Snacks isn’t in an easy industry. Being a small player has its own pitfalls in the snacks business. Fluctuating commodity prices are a big issue: While big companies have the option of importing potatoes, for instance, if the crop fails in India, smaller companies suffer. Numerous small businesses that have tried to sell snacks have either died, or become suppliers for bigger brands. Prataap Snacks itself uses third party factories to manufacture its products.

Standing out in a crowded market isn’t easy either. “A big challenge for this kind of a company is also brand recognition. If they are expanding and targeting new markets, we need to see how the brand works there, how the brand grows there, and how it is perceived by the consumer,” says Tejashwini Kumari, senior research analyst at financial services company IIFL. Prataap Snacks, to an extent, took care of that when it hired Bollywood actor Salman Khan as its brand ambassador in 2016.

Increasing competition and the capital needed for growth are perhaps the reasons why Prataap Snacks accepted a $30 million investment from Sequoia Capital in 2011, nearly two years after the investment firm had first approached the Indian snack maker. Amit Kumat says Prataap Snacks decided to bring on Sequoia because it thought the funds would help it grow faster and the investment firm would bring systems and processes to the Indian company which listed on the stock exchange last year. And Sequoia has done that with a 48.4% stake in the company. “Sequoia helped us prepare for the IPO over the years,” says Sumit Sharma, chief financial officer of Prataap Snacks. “In terms of running the business, I don’t think big changes have happened post the IPO. Earlier, we were answerable to maybe 15-20 people, now it is more than 10,000-15,000 shareholders.”

So, what’s next? Taking over the country. Literally. The company caters to about 1.7 million outlets and wants to double that in the next threefour years. Its co-founder and president, operations, Apoorva Kumat, says the company is going to ramp up its retail coverage significantly in the next few years. It has a strong distribution network of more than 200 super stockists and 3,800 distributors. “We want to be a major force in the category, and with multiple plants, we can cover pan-India. Currently, we have about 33% of the market in the east, and 25% in the north, but we believe we holistically cover only 50% of the country,” Amit Kumat says.

Does Prataap have plans to get into healthy snacks, the bandwagon most large snack food companies want to get on? Not right now. Although Nielson data showed healthy food and drink sales grew at 10% in 2016, Amit Kumat isn’t going there yet. He is a healthy eater himself, but believes health food is attractive only on paper. Prataap Snacks ventured into the healthy snack segment with quinoa chips, but the product was not successful. Basu adds that their core clientele is mass market kids, who are not interested in healthy products. “Our core clientele is not looking for quinoa chips, and getting into someone else’s core clientele will be a huge investment. For such a niche product we cannot invest that much,” he says.

Health food might not be on its plate for now, but Prataap Snacks hasn’t stopped adding to its menu. Last year, it stepped out of the business of savouries and entered the sweet snacks market with Yum-Pie, its version of Britain’s iconic Jaffa cake. “India is the biggest consumer of sweets in the world. There is no way a sweet snack won’t work in India,” says Amit Kumat.

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