Regional Goliaths: The making of a national brand

In 1974, when Chandubhai, Bhikhubhai and Kanubhai Virani bid goodbye to their village in Jamnagar and landed in Rajkot scouting for work, the brothers had zero business experience. Paucity of rain forced the Viranis to migrate from their ancestral land. All they had was ₹20,000 handed over to them by their father after selling the parched land. The trio quickly exhausted the kitty when their maiden venture in farm equipment and fertilisers bombed.

With the entrepreneurial dream snuffed, the brothers started working at a movie canteen in Astron Cinema. Chandubhai didn’t mind serving potato wafers and snacks at the theatre, which was playing Amitabh Bachchan-starrer Kabhi Kabhie in 1976. “I loved movies. I still love movies,” recalls Chandubhai, breaking into a crisp laughter. A year later, in 1977, when the brothers got the contract to manage the movie canteen, little did they know that they would inadvertently be part of a future blockbuster.

Fast forward five years. The first scene started from a small one-room house from where the trio started making potato chips. The product first got sold at the theatre, which had struggled with wafers’ shortage due to irregularity of the old salesman supplying them. The Viranis founded their own brand—Balaji Wafers—and started putting it on the shelves of the nearby kirana store. Next, the brothers loaded wafer bags on their cycles, and moved deep into the hinterland… one shop at a time, one village at a time, and one region at a time. Balaji Wafers was slowly, but steadily, moving from zero to one. 

Cut to Jodhpur, Rajasthan. Almost 25 years later, Hemant Jalan was starting from a scratch. “I started absolutely with zilch,” recounts Jalan, who was making a modest beginning from a rented small industrial shed. “I didn’t come from a wealthy background, nor did I have any bank loan,” he says. Undeterred, Jalan took a stab at manufacturing cement paint, a low-end product that didn’t require much capital. Paucity of money made him keep his focus intact on one state with his product, Indigo Paints. “We started with West Bengal,” he says. Every year, the company kept adding one differentiated product, and entered one new state.  

Meanwhile in Ludhiana, Punjab, Sahil Bansal started hunting for his silver bullet in 2006. After finishing his MBA from the UK, the second-generation entrepreneur joined the family business of soaps and detergents in 2002. Two years later, younger brother Salil too joined him. The duo hoped to scale the five-decade old business. There was one small problem, though. The venture was not going anywhere. Started by their father Sanjeev Bansal in 1956, National Soap Mills, which sold laundry soap and detergent brands Saheli and Raj, struggled to grow, crawling to some ₹40 crore by 2002.

Over the next four years, the business stagnated. The duo knew the problem: There was no innovation in the product. Their laundry soap was a me-too product, quite like any other soap bars, which were usually blue, brown or yellow. “We wanted one big differentiation,” recalls Sahil. The duo ended up adding two: A white soap, which was perfumed. Rolled out in 2010 in the hinterlands of Punjab, Raj Super White was a bold gambit by the brothers. The beauty, as well as a potential problem, of being the odd one out is that the outcome can be disproportionately odd: A massive hit or a huge flop. The brothers were one step away from knowing their destiny.

A decade later in Kanpur, three young directors at Goldiee Masale were brainstorming to change their destiny. While the spices brand had amassed a turnover of ₹648 crore in FY19, missing for the two-decade old company was recognition and respect outside its biggest state, Uttar Pradesh. Started in 1980 by friends Som Goenka and Surendra Gupta, Goldiee had grown at a fast clip in the Hindi belt; now the second generation entrepreneurs—Akash Goenka and his brother Sudeep, along with Shubham Gupta—were confronted with a unique problem. The baggage of Kanpur—famous for leather and textiles and infamous for pollution and illegal firearms—was too heavy to shed, and was turning out to be a huge impediment in their aspirations to build a pan-India brand. Enter Bollywood actor Salman Khan as brand ambassador in 2019, a first for any spices brand in India. 

Cut to 2021. The zeroes of yesteryear are now number 1 in a few states. Let’s start with Balaji Wafers, which has morphed into a ₹2,374 crore-brand. It has punched above its weight to become much bigger than rivals PepsiCo and ITC in Gujarat, Rajasthan and Maharashtra, and is now expanding its national footprint. Indigo Paints has become the fifth biggest in the decorative paint industry in terms of revenue. Its IPO was subscribed 117 times recently, and the scrip got listed at ₹2,607.50 apiece on BSE, a 75 percent premium over its issue price of ₹1,490.

Goldiee Masale is now the biggest in Uttar Pradesh, Madhya Pradesh and is getting a warm reception outside its bastion. Raj Group has whitewashed Punjab and Rajasthan with its white perfumed laundry bar. Discount apparel retailer Cantabil has mushroomed across tier 3 cities and beyond in a few North Indian states as well as Maharashtra. VKC Group, a Kerala-based footwear maker, which had a sales of ₹50 crore in 2005, has morphed into a ₹2,100-crore giant, operates a battery of 14 brands, and gets 70 percent of its revenue from South India.

India is in the midst of a regional churn. The old narrative of one David popping up in one of the states to take on the might of a big player is dead. Davids have become Goliaths. Aspirations of consumers across smaller towns and rural India (Bharat) for value-for-money brands (neither cheap nor copycats) have fuelled the rise of regional superpowers who are fearless in their ambition. They have bold dreams, they want to rule every state, and they are smartly going about their plans by unleashing the power of one… one village, one town, one region, one state, and 1 percent market share. 

Jessie Paul decodes what 1 percent means. In most industries—soap, FMCG or paint—branded players own around 60 percent of the market share while the balance is taken by various small and local players, usually dubbed as ‘unorganised’. The paints industry, for instance, is estimated at ₹78,000 crore. “Grabbing even 1 percent of the market share would create a large company of ₹780 crore,” says the CEO of Paul Writer, a marketing advisory firm.

Bharat has emerged as the breeding ground for Regional Goliaths. Paul explains: India is a scarcity market, with availability of goods unable to keep up with aspirations. This is because of the high growth economy, albeit on a low base, coupled with a young demographic. Capital is relatively scarce, limiting scaling of production, and distribution challenges erect a barrier around cities and states. This created an environment for the rise of companies catering to the tastes and aspirations of the upwardly mobile outside the metros. Their playbook is distinctive. They make a humble beginning, with access to less capital and in small towns. Then come superior products, but at a low price. Next is building a solid distribution network through personal relationships and a reputation for reliability. The focus then shifts to adjacent markets. “Once they are big enough in revenue terms [1 to 10 percent of market share], they invest in a celebrity and mass media to build visibility and brand preference,” says Paul.  

Forbes India takes you through the fascinating journey of a clutch of brands that were born local but started rubbing shoulders with big national and foreign rivals to emerge as Regional Goliaths. Interestingly, for all, it’s still Day One.