Ravi Jaipuria, Chairman, RJ Corp
Image: Amit Verma
Ravi Kant Jaipuria has always been a vegetarian. It’s been the family tradition, and Jaipuria didn’t want to deviate from that. At his palatial home in tony Lutyens’ Delhi, where he hosts legendary Holi parties, Jaipuria never serves non-vegetarian food.
But business and personal sentiments are poles apart, and nobody knows it better than the 64-year-old. That’s why, two decades ago, he set out to serve non-vegetarian food to millions of Indians, much to the disdain of his father. Today, his company Devyani International owns nearly 400, or 70 percent of, KFC outlets in India.
“Sometimes I wonder if I did the right thing,” says Jaipuria. “I don't know. My father was very proud of me except for this. I was very close to my father, so I don't feel great about it.”
Despite the remorse, Jaipuria is also well aware that the next phase of growth for his business empire will come from selling fried chicken to Indians. So, apart from planning an IPO for Devyani International next year, Jaipuria is busy plotting strategies to increase the number of stores across the country, from highways to malls. “The growth is going to be unprecedented. We are already talking about opening between 50 and 100 restaurants a year in India. So, to open another three to four hundred KFC outlets over the next few years isn’t something out of the blue,” Jaipuria says.
Already, in June, Jaipuria bought out 61 stores from Yum! Brands, KFC's parent company. “KFC is going to be our lead brand,” he reiterates. Besides, his Devyani International also owns franchise rights for the pizza chain Pizza Hut, and coffeehouse Costa Coffee. Jaipuria claims to own over 420 Pizza Hut outlets, nearly 80 percent of the number in the country. Besides him, Sapphire Foods remains the only other franchisee for KFC and Pizza Hut in India. The group also has proprietorship of other food outlets, including popular south Indian fast food chain Vaango and Foodie’s Bar, the lounge.
The billionaire’s big bet on KFC also comes at a time when he has already scaled up his beverage business, which forms the foundation of his business empire. Varun Beverages, owned by RJ Corp, is PepsiCo’s largest bottler in India, controlling 94 percent of all the bottling for the cola major. Varun is also PepsiCo’s second biggest bottler globally, and, this year, Jaipuria has bought out the bottling franchise rights for the southern and western Indian markets from PepsiCo, in a deal worth nearly `2,000 crore. With that, Jaipuria controls over 90 percent of PepsiCo’s bottling business in India.
“As far as the Indian market for Pepsi goes, it is well set right now,” says Jaipuria, who presides over the $1.7 billion RJ Corp and is ranked 53 on the 2019 Forbes India Rich List, rising 22 spots from last year. His business empire which he runs through RJ Corp includes carbonated beverages, ice-cream, fast food, schools, real estate, retail, and health care.
“God has been kind,” Jaipuria says about being on the Rich List. Yet, had it not been for a personal tragedy three decades ago, fate would perhaps have charted a different path. *****
The Jaipuria family is among the pioneers in the cola bottling business. Ravi’s father, Chunni Lal Jaipuria, and his uncle Mahavir Prasad Jaipuria were textile traders and, in the 1960s, Chunni Lal became a franchisee for bottling Coca-Cola in the country. However, with Coke exiting in 1977, the family shifted to Thums Up. Jaipuria, meanwhile, went to study in New York, and eventually settled down in Montreal.
“I lived there for about 12 years,” Jaipuria says. “As a kid, I enjoyed the western part of the world. I got married and settled down. I was quite happy, and things were going well until the Kanishka
bombing in 1985.” Jaipuria’s wife was on board Air India flight 182 that exploded mid-air due to bombs planted by Canadian Sikh militants, killing over 300 passengers.
With a young daughter and son to look after, Jaipuria shifted base to India in 1987. His father, meanwhile, split the bottling business between his three brothers, with Jaipuria getting the Agra plant. He continued to bottle for Thums Up, while also dabbling in an apparel export business.
In 1991, as India embarked upon a new economic policy, and Pepsi decided to foray into India, Jaipuria knew he had to move on from Thums Up. “I think the trigger was that Thums Up had about 40 or 50 bottlers. Our territory and the growth opportunity was limited,” he says. Pepsi, with its international presence and financial muscle, made sense for Jaipuria in his quest to expand the business.
The rest is history. After winning franchise rights for the central Uttar Pradesh (UP) territory, Varun Beverages, named after Jaipuria's son, expanded to Rajasthan and western UP. “We had a good team and were always able to do well wherever we went,” he says. Since then, Jaipuria believes that Varun Beverages has acquired a new territory every year or every alternate year, and in the process ramped up its plant count to 36. “We practically own between 93 percent and 94 percent of Pepsi’s India bottling business,” Jaipuria says.
Today, he has expanded Varun Beverages to five other countries including Morocco, Zimbabwe, and Nepal. “It’s a great business,” Jaipuria says. “We are doing extremely well and to get additional territories is not easy. You have to pay a huge price. But Pepsi has been very supportive. We have grown the market for them. It’s a two-way partnership.”
This year, Jaipuria intends to consolidate the business, especially since he bought out newer territories, and in the process added 11 more plants. Jaipuria paid the entire cost through a mix of internal accruals and a qualified institutional placement. “As you grow old, you also become a little averse to taking on debt,” he says. *****
While Jaipuria kept expanding his beverage venture, an opportunity had turned up in the fast food business. In 1997, he took on the franchise rights for Yum! Brands, then part of PepsiCo restaurants, that included KFC and Pizza Hut. Through Devyani International, named after his daughter, Jaipuria began to scale up the restaurant business and today has over 900 restaurants under its umbrella. However, that foray came at a cost: Disapproval from his vegetarian father. “I could never convince him. He was never happy with it. I made him meet the chairman of Yum! and the only thing he said was I wish he could sell it and give the money to charity,” Jaipuria says.
But, even the strain at home couldn’t stop him. “For me, it was a business. I said as long as I am continuing with my tradition and not doing it myself, how does it matter,” Jaipuria says. Today, however, he would have taken a different route, had the opportunity come along. “I mean if I had crossed 64 years of my life without doing this business, then maybe I would have crossed the remaining without doing it,” he says.
Jaipuria is clear about the direction Devyani will take over the next years. Apart from the proposed IPO, it is busy renting entire food courts at malls, instead of just focussing on a few shops, to accommodate all its brands. “And if the mall says they want a different brand too, we will take the franchise for that,” Jaipuria says. That apart, he sees a massive potential in the highways space, where there is a severe shortage of food and refreshment options.
But even as he goes about expanding other brands, KFC remains Jaipuria's trump card. “If you look at KFC, it is the only brand with no competition. You look at burgers, McDonald’s has Burger King or Carl's Jr, Pizza Hut has Dominos' or Pizza Express. But KFC has no competition.” He cites the example of China, where until 15 years ago, there were about 400 outlets, whereas today it is opening 600 to 700 outlets a year. Jaipuria also sees huge potential in emerging markets like Nigeria, where he holds the franchise rights for KFC.
“There is definitely an underlying growth trend that is driven by a change in lifestyles, and an increasing orientation to brands and standardisation of experience,” says Devangshu Dutta, the chief executive of consultancy firm, Third Eyesight. “A QSR [quick service restaurant] meal could be a regular feature for younger consumers who don’t cook regularly at home, or consumers who are travelling for work or leisure, and that means there is a steady growth of QSRs.” *****
Besides Devyani and Varun, Jaipuria is also looking to expand his fledgling medical business: Diagno Labs, a medical diagnostics venture, and Cryoviva, a stem cell storage business largely set up due to his proximity to Naresh Trehan, the founder of Medanta. Jaipuria claims Cryoviva has been quite successful in Thailand and Singapore. “We are number one in Thailand and number two in Singapore,” he says.
While he had also dabbled in the retail store category, by setting up J Mart, he shut that down. “We didn’t have the expertise,” Jaipuria admits. However, he continues to bet on the ice cream and dairy category, where he operates the Cream Bell brand, both in India and abroad. “It’s done extremely well for us,” Jaipuria says.
But, has the economic slowdown affected him? “Of course not,” says Jaipuria. He reasons out that the past year has been a fabulous one for the group. “We have seen one of the fastest growth phases after a long time,” says Jaipuria. Much of that, he believes, is due to an improving electrification across India. “The power situation is improving in many rural parts of the country,” says Jaipuria. “For example, in UP there used to be no power supply for 16 to 18 hours. You can't sell a warm soft drink. Now that there is power, it is helping us penetrate deeper.”
He also sees a potential in the vast untapped market that comes with low consumption of soft drinks in the country. India’s soft drinks consumption stood at 44 bottles per capita in 2016, significantly lower than US, where the per-capita consumption is 1,496 bottles, according to a report by Varun Beverages. In Mexico, the consumption was 1,489 bottles per capita while in developing markets such as Brazil, it stood at 537 bottles.
“There’s only one way to go, and that is up,” Jaipuria says. Along the way, having become Pepsi’s largest bottler, Jaipuria has also managed to rewrite their agreements, allowing Varun Beverages a better say in the running of the cola company. “Now we are running the country, so they have to listen to us. If I’m not happy about something. I won't launch it,” Jaipuria says. As for Varun Beverages, he sees a tripling of revenue over the next five years. “If you look at Varun Beverages’ history, we have tripled the top line and the bottom line every five years. I'm going to try and do that again.”
In FY2019, Varun Beverages had revenue of ₹3,862 crore, while net profits rose to ₹332 crore compared to ₹235 crore the previous year. Since the company went public in 2016, Varun Beverages has also more than doubled its market capitalisation that stood at ₹18,375 crore in October 2019.
As for Devyani, the targets are pretty clear. “When you look at soft drinks, the growth is organic. In the food business, particularly KFC, if I’m able to open another hundred outlets every year, the old and the new stores will grow at the same time,” Jaipuria says.
Experts agree that Jaipuria is on the right track. “The market is overall significantly under-penetrated by QSR chains,” says Dutta of Third Eyesight. “Growth is an outcome of a combination of factors: Growing demand aggregation in more centres, improved connectivity that makes logistics and management significantly easier, and improved electrification that helps maintain temperature control, vital for product quality, consistency and avoiding waste. The growth of highways and rest-stops will help increase QSR outlets, and the share of QSR chains in the market. Given India’s diversity of tastes and cuisines, a mix of formats, brands and menus will be a favourable factor for the Jaipuria group.”
So, where does Jaipuria want to take RJ Corp from here? “We are not going to get into any new business for the time,” he says. “We are going to grow our existing business. We'll look at a few other countries to expand for Pepsi. As for the food business, we’re not looking at too many countries as such, because there is still huge growth potential in India.”
All that means is Jaipuria has no plans to hang up his boots anytime soon. But he will not move at a breakneck speed either. Every year, he takes a week or two off for a spa to relax. “I think I want to take it easy,” he says. “I’m travelling for 20 days a month. I'm going to slow down and I am also grooming my son. In the next few years he should be able to take care of the business.”
As for setting targets, though, Jaipuria has one more. “My birthday is coming up next month. I want to lose a few kilos before that.”
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(This story appears in the 27 December, 2019 issue of Forbes India. To visit our Archives, click here.)