Haldiram Created A $2 Billion Empire

Haldiram

The Seekers

2 months ago|9 min read

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Hi everybody. Haldiram is one of the most iconic brands in Indian business history. And, while most of us are taught about the American icons like Domino’s and McDonald’s, very few of us know about the world-class business strategies developed by the homegrown brands of India.

And Haldiram Is one such brand that started as a small sweet shop in Bikaner, but today it has expanded its presence in more than 80 countries, employs more than 1500 people. And in FY 19 alone, Haldiram generated a sales revenue of $ 1 billion. The question is: while we see 1000s of sweet shops every single day, What exactly was so particularly special about Haldiram that they were able to build a billion-dollar business? What exactly was their business strategy and as students of business? What are the lessons that we need to learn from this iconic brand?

1.     Haldirams

This is a story that dates back to 1990 Bikaner. When Haldiram was just 11 years old he worked at his grandfather’s, Bhujia shop and was a Marwari. He soon enough started finding ways to make money for his family. Back then, Bhujia in Bikaner was an extremely commoditized product, which means that, since there were hundreds of Bhujia shops in Bikaner, there was hardly any difference between their products. Therefore, the competition was solely based on the price and not on quality. During this time, Haldiram would take up odd jobs such as chopping and cleaning the kitchen, and he gradually began to take interest in the making of the Bhujia. Originally, the tasty Bhujia was made by one of the daughters-in-law of the family. And soon enough Haldiram’s grandfather realized the potential of this product and he took it to the market.

And as soon as this product hit the market, the Bhujia started, selling very well. And as soon as they started, making more money. The entire family was extremely happy. But Haldiram was the only member who was not at all satisfied neither with the penny profits nor with the taste and quality of their product because deep down, he still felt that Bhujia was not good enough. And he wanted to make something that was far away from the rest of the competition. And he wanted his product to be not just yet another Bhujia among the hundreds of Bhujia in the market. And right away, driven by this insane obsession for a high-quality product. This little boy started working very hard and started experimenting with different ingredients in search of a mind, blowing product.

2.     Haldiram made Several Changes in Bhujia

And that is when many many iterations later Haldiram was able to make three changes to the Bhujia that changed the destiny of his family forever. The first change he made was that, instead of making Bhujia out of besan, he started making it out of Moth Ki Dall. And this made Bhujia extremely delicious, turning it into a delicacy overnight. In addition to that, instead of making them soft, he started making them into a fine crispy mixture so that it could give people an enhanced experience of eating Bhujia and, at the same time it could make the customers feel something different from the conventional Bhujia sold in Bikaner. Secondly, because this Bhujia was extremely commoditized, he started selling his Bhujia at a 150 percent extra cost at 5 paise per kilo as compared to the market price, which was just 2 paise per kilo. And lastly, he named his Bhujia Dungar Sev, which was named after that then Maharaja Dungar Singh.

And these three changes gave Haldiram three superpowers over his extremely crowded competition. Firstly, the name Dungar by default, made this Bhujia sound like a delicacy that people would want to try. And this is because, although the name Dungar did not have any connection to the Maharaja, it acted as a brand ambassador for the Bhujia. Therefore, the perceived value of the product was enhanced to a large extent. Secondly, because of this increased perceived value, people do not mind paying three paise extra, because they by default, assume that they were buying a premium product. And third and, most importantly after we, people pay the premium for the Bhujia after perceiving it as a better product. When they tasted it, the Bhujia genuinely turned out to be delicious.

3.     Haldiram created a brand

As a result, the demand for Haldirams Dungar Sev skyrocketed within just a few weeks. If you see this is a textbook execution of one of the most powerful principles of marketing, which says that brand perception, plus a tangible value, delivery results in brand value. In this case, by hearing the name of Dungar Maharaj, Haldirams Bhujia attracted more customers due to the enhanced perceived value after that, when it tasted great customers and wholesalers, do not mind paying three paise extra per kilo. So if you see the three paise extra or the 150 percent premium, the cost was the brand value of Haldiram’s Bhujia. And this turned Haldiram’s Bhujia into a leading product in a highly commoditized Bhujia market. And within no time hundreds of kilos of Haldiram’s Bhujia started to be Sold. This was the founding pillar of the incredible Haldiram story.

The second pillar of Haldiram's growth was led by Mr. Shiv Kishan Agarwal in the late 1960s. And he belonged to the third generation in the Agarwal family. Until this point, the family have separated into three discrete businesses, which were in Bikaner, Kolkata, and Nagpur, and when Bikaner and Kolkata were doing very well, Shiv Kishan was struggling to sell Bhujia in Nagpur, because of the demand for snacks, in general, was not very high in Maharashtra.

4.     Different Regions, Different Problems - Maharashtra

Therefore, he decided to take a step back and got back on the ground to do thorough market research about the food habits of the Maharashtrians, and that is when, after making countless visits to the most popular stores in Nagpur, Shiv Kishan identified three major opportunities in the market. The first thing he realized, was that Maharashtrians had not been exposed to more than a few savory snacks. And this presented him with a huge opportunity to be a first-mover in the market. But at the same time, just like any other. First mover. The trust factor or the hesitancy of the people was a major obstacle to market penetration.

The second gap he identified was in the sweets market and he noted that the most popular shops in Maharashtra mostly sold only Bhalushahis, Gujarati Pedas, Mysore Pak, and Ladoos. This is when he realized that the Maharashtrians had a sweet tooth that could be exploited further. And thirdly, Shiv Kishan realized that, because the variety of sweets available in Maharashtra was very less, there was immense scope for hundreds of sweet delicacies from other regions. That could be leveraged for market penetration.

5.     New Products for Market Penetration – Kaju Katli, Samosa, and Kachoris

So he started by making his favorite sweet using thickening of milk, sugar, dry fruits, cashew, nuts, and saffron. – And this is what ladies and gentlemen gave rise to the iconic Kaju Katli in Maharashtra. And Shiv Kishan started aggressively Promoting the dish by giving out free samples and by encouraging every customer to taste the dish. Soon enough, word of mouth spread, and the sweet began to achieve extraordinary levels of popularity. In fact, in one of the interviews, Shiv Kishan said that it first started with people buying 100 grams. Then it went up to 200 grams and gradually people started buying 500 grams of Kaju Katli per customer. The flavor was so well accepted and loved that they were flooded with demand for Kaju Katli. Soon enough he introduced the delights from Bikaner and Calcutta like malai, Ladoo, Rasgulla, and Rasmalai. And not so surprisingly, his Maharashtrian customers couldn’t get enough of Haldiram Bhujia sweets. And within just three years, their sales shot up by 400 %, going from just 100 rupees Per day to 500 rupees per day, which in today’s world is, by the way, equivalent to 12,000 rupees of sales per day. Now, while most of us would be extremely satisfied with this crazy amount of sales, Shiv Kishan did not stop there.

After serving the market further he realized that South Indian snacks, like Dosa and Idli, were extremely popular in Nagpur. So he immediately started a South Indian restaurant for customer acquisition reasons. And when more and more people started visiting his restaurant, he slowly introduced Samosas and Kachoris. And this time it did not take a lot of time because samosas and kachoris became standard fast foods in Maharashtra. This is how Shiv Kishan achieved market penetration in a seemingly unknown market, with his brilliant business strategies. Now in business terms. What he did was that he build a golden bridge to move the customer sentiment from skepticism to delight.

So initially he was an unknown vendor selling unknown dishes because of which people are skeptical. As a result, market penetration was extremely difficult. So what did he do? He first started selling known dishes and establishing trust with the customers. And as soon as he owned the trust of the customers. He brought in the X-Factor that no other known vendor had. And that were the brilliant dishes that were completely unknown to the audience. As a result, the customers embraced his dishes with open arms. They were super delighted because a trusted guy was brilliant enough to present many new dishes. While the rest of the known guys were presenting the same old stuff. This was the magic of Shiv Kishan’s execution.

6.     Packaging led to Huge Sales

This is what brings me to the third pillar of Haldiram’s growth. That was nothing but packaging and location. And these two changes were brought about by another third-generation member named Manohar Lal Agarwal. And when executed it led to exponential sales because of something called brand recall, and value. Long story short. When you see a lot of guys delivering food wearing Zomato t-shirts, you automatically tend to believe that Zomato is a trusted brand. When you see a lot of images of the same book cover on social media and many other places, that might likely be the first book you read. A very simple example of the same would be Dale Carnegie’s How to Win Friends and Influence People and the subtle art of not giving an F. Similarly, when you see a lot of people buying or gifting Haldiram Bhujia Wala sweets, they automatically become mini-banner ads to make you feel that the Haldiram brand is extremely trusted. And this strategy, was a game-changer back then, because, in the 1980s, nobody in the market took packaging seriously. So when Manohar Lal executed this strategy, Haldiram Bhujia Wala was not just shipping 1000s of products, but they also shipped 1000s of mini billboards that made the brand stand out and establish trust both with the customers and the sellers. And when this was combined with the strategic placement of stores in densely populated places like the railway station, the sales numbers went crazy. To tell you about it In just five years.

By 1981, the production of Haldiram had shot up by 400 % to 3000 kilos per month, and people from all across the country came in and asked for Haldiram Bhujia, Wala, specifically, and soon enough. The brand logo started traveling through the length and breadth of the country. And this is when people of Bikaner and Nagpur view Haldiram Bhujia Wala as not just a small sweet shop but an iconic brand in the making. And from here onwards. Despite many challenges, there was no looking back for the Haldiram brand. As a result, today, Haldiram is a humongous brand, valued at $ 3 billion, with the signature dishes making an impact not just in India but in 80 countries all across the world. And this is how three generations of the Agarwal family laid a solid foundation to build a 5000-crore business. Empire.

7.     Lessons from the Case Study

Now, let’s talk about the lessons from the case study and the study materials to help you dive deeper. Lesson number one. While most people think that there is no scope for brand building in a commoditized market, you need to realize that a commoditized market is perhaps the best place to build a brand, because once you do it you’re going to stand out, and that is going to skyrocket. Your sales in no time. In this case, it was Haldirams acumen to build a brand name for his Bhujia among the hundreds of Bhujia sellers in Bikaner.

Lesson number two, while most of us love to play on our strengths. Sometimes we need to realize that, to play our strengths, we first need to cater to the demand in the market. In this case, if you see even after 20 years of running a family business just around Bhujia, it was Shiv. Kishan’s strategic approach is to first establishes trust with the customers by selling sweets. And then he came full circle by selling South Indian snacks, eventually selling North Indian dishes like samosas and kachori.

And this eventually helped him stand out from the rest of the competition. And lastly, we all need to realize that healthy obsession often turns work into art. And regardless of what you do, if it is pursued with a certain degree of craftsmanship, even if you’re selling something as seemingly insignificant as Bhujia, it can help you build a billion-dollar business. And before I say goodbye for further reading, I would highly recommend it read this wonderful book called Bhujia barons, which is what I referred to while curating this content.

 

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