On a cold Friday morning in 2003, as 63-year old KD Paul, founder-chairman of the Rs 700-crore biscuit brand Bisk Farm, fidgeted around his Siliguri hotel room overlooking the hills, he got a call from the managing director of one India’s prime national biscuit company for a takeover offer. Struck by this bolt from the blue, Paul mulled over the proposed partnership, discussing the issue with his son-in-law Vijay Singh. It was Singh who convinced Paul to turn down the tempting offer. “He explained why it was a bad idea to dilute our brand identity by joining hands with a bigger player. It didn’t matter how big the potential partner was; it was more important for us to maintain our individuality,” says Paul. A decade later, this resolve was severely tested as retail czar Kishore Biyani came calling. Over a cup of tea at Paul’s office on Sarat Bose Road, Biyani offered to truck the 4,500-employee-strong Bisk Farm’s products across the country to all its retail distribution outlets, adding that he respected the company’s strong brand ethic and equity, popularity across east India and the variety on offer. Much like the earlier offer, Paul turned this one down too, this time because of challenges posed by transportation costs, then hovering at around Rs 40,000-Rs 50,000 for 800 cartons in a single truck.
Saj Food Products, on the other hand, manufactures biscuits under the Bisk Farm brand. Bisk Farm benefits from Saj Food’s strong market position in the Indian biscuits industry, backed by an established portfolio, regular introduction of new products and distribution heft across geographies. The company offers around 75 varieties of biscuits and other bakery products in around 130 stock-keeping units (SKUs), and maintains its profitability through a mix of price increases and new product/SKU introductions. Bisk Farm is also a contract manufacturer for Nestle’s noodle brand Maggi in eastern India, which contributes 1% to the company’s revenue.
Rising To The Top
“It seems like just yesterday when, over dinner, I broached the idea of starting a biscuit company of our own with my family. Vijay was really enthusiastic about it, and we have never looked back since then,” says Paul. Saj Food Products, part of the Kolkata-based Aparna Food Products empire, started life with Paul and Singh as its promoters and a seed capital of Rs 10 crore, which was raised partly (Rs 7 crore) by selling Paul’s 28% stake in Calcutta Chemicals to Henkel in 1999 and partly (Rs 3 crore) via bank loans. The Aparna Group is a leading distribution house in east India, engaged in delivering consumer and pharmaceutical products to reputed companies in the region for over 35 years. At that point Paul felt that if he could leverage his distribution network for the benefit of other brands, why not create a brand of his own.
This was an especially tough transformation, given the industry Bisk Farm operates in. The Rs 12,000-crore domestic branded biscuit industry is dominated by organised players such as Britannia, Parle Products and ITC, which account for 70% of the market. While there are local players such as Kwality and Priya, the unorganised sector — comprised small bakery units, cottage industries and household-type manufacturing — dominates the other 30% of the market.
A significant landmark for Bisk Farm, then, was the year 2004, when the company was able to push sales to Rs 25 crore, from Rs 9 crore the previous year. This came on the back of improved distribution, manufacturing and a smart media strategy. “We spent around Rs 2 crore on advertising and promotion that year; we got into the television advertising space with a vengeance. We occupied prime-time space on well-known channels, broadcasting creative and interesting commercials with the help of the ad gurus of the time,” explains Singh. The carpet-bombing continued in the print space as well. Backed by a strong distribution network now, the company reaped the benefits of a revamped brand strategy. “What helped was the fact that we were known for constant innovation across the spectrum, with brands such as Top and Googly being the most popular among customers,” says Singh.
But a big change post-2007 was the introduction of new categories such as rusks and cakes. “There was a clear shift in consciousness. We were evolving from a regional player to a player with an eye on the national space,” says Singh.
Parle Products’ general manager for marketing Pravin Kulkarni believes that Bisk Farm has made its mark in the biscuit industry because of the attention it pays to minute details. “The determining factors for success in this field are out-and-out innovation or being the first in each category. Bisk Farm has an advantage over its bigger rivals, thanks to its understanding of local nuances and innovations,” says Kulkarni.
Another factor that drives Bisk Farm’s mass appeal is its popularity with urban housewives. “Urban middle class families are developing a taste for products that have aspirational value and this segment has grown to become a big driver of volumes for us. For now, we are focusing our attention on this segment,” says Singh.
Growing at a 15-20% annual CAGR, the Indian packaged food industry — which includes snacks, ready-to-eat food, health food and functional food — is likely to touch $30 billion by 2015 from the current level of $15 billion, according to a study by Assocham. Some of the factors that are fueling this growth are the arrival of food-related MNCs in India, the rising popularity of quick-service restaurants, modern retail trade and changing urban lifestyles, adds the report. The snack and beverages segment includes several big domestic and MNC brands right from Hindustan Unilever to home-grown Halidrams.
But Bisk Farm isn’t banking on such unpredictable factors alone; in future, it plans to drive growth through product innovations and improved quality, Singh adds. The company plans to open three more outlets of Just Baked, its confectionery retail store, across Kolkata by the end of this year, and 20 more by next year-end. The idea behind the model was to add the company’s own range of bakery products. “We will invest Rs 12 lakh-15 lakh in each store,” says Singh.
Analysts, however, don’t predict a smooth journey for the company, as the fate of the snack food industry is tied to the state of the economy. The weak, inflationary environment has hit all snack food makers equally, with a dip in demand due to lower volumes and a rise in fuel costs leading to a decline in operating margins. But Singh points out that the pain is common: be it for Bisk Farm or for the biggies. “The cost of our main ingredients such as flour, milk and sugar went through the roof. Plus, fuel costs shot up, leading to an increase in operating and logistics costs as fuel constitutes 10% of our overall costs. Hence, if this situation persists, we and everyone else will suffer,” says Singh. The management though is banking on sales volumes to offset the pressure on margins. “We have shifted our focus to tier 2 and tier 3 cities,” Singh adds.
Bisk Farm is also looking to expand its footprint to nineteen states in the next year-and-a-half. “By 2015, we should be done with our plans for building a national footprint, at a cost of around Rs 250 crore,” Singh concludes. For a regional brand that came back from the brink, Bisk Farm does have the right ingredients to make itself count.
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