Introduction
Haldiram is one of the most iconic brands in Indian business history. While most of us are familiar with American food chains like Domino’s and McDonald’s, few know about the world-class business strategies employed by homegrown Indian brands. Haldiram is a prime example of a brand that started as a small sweet shop in Bikaner and has grown into a billion-dollar business.
Haldiram’s Global Presence
Haldiram has expanded its reach to over 80 countries and employs more than 1,500 people. In the fiscal year 2019, Haldiram generated sales revenue of $1 billion.
The Unique Strategy Behind Haldiram’s Success
Despite the existence of thousands of sweet shops across India, Haldiram managed to build a billion-dollar business. What exactly set them apart? What business strategies were used to achieve this level of success? These are the questions that business students often ask when examining Haldiram’s growth story.
Lessons for Business Students
Haldiram’s journey offers valuable lessons for business students. Understanding the factors that contributed to Haldiram’s success can provide insights into building a successful business, especially in the context of a competitive market like India’s.
History of Haldiram
Early Beginnings in Bikaner (1990)
The story of Haldiram dates back to 1990 in Bikaner when the future founder was just 11 years old. At that time, he worked at his grandfather’s bhujia shop, a traditional Indian snack shop, and as a Marwadi, he began seeking ways to earn money for his family.
The Commoditization of Bhujia
In 1990, bhujia in Bikaner was a highly commoditized product, with hundreds of bhujia shops offering similar items. This led to intense competition based primarily on price rather than quality. This environment posed a significant challenge for a small bhujia shop.
Haldiram’s Early Work and Interest
Haldiram began by doing odd jobs around the shop, such as chopping and cleaning the kitchen. However, he soon took an interest in the process of making bhujia. Initially, one of the family’s daughters-in-law created a particularly tasty version of the snack. Recognizing the potential, Haldiram’s grandfather brought this version of bhujia to the market, where it quickly became a hit.
The Drive for Quality and Innovation
While the family was delighted with the newfound success of their bhujia, Haldiram was not satisfied with either the modest profits or the quality of the product. He believed that bhujia could be improved and distinguished from the hundreds of other versions available in the market.
Experimentation and the Quest for a Unique Product
Motivated by an intense desire to create a high-quality product, Haldiram, despite his young age, began experimenting with various ingredients and methods. His goal was to create a bhujia that stood out from the rest—a product that would not simply be another version among many. This determination and innovative spirit would eventually lead to the creation of the world-renowned brand Haldiram.
1st Piller: Three Changes That Defined Success
After many iterations, Haldiram made three significant changes to the bhujia recipe that forever changed his family’s destiny. These adjustments not only set Haldiram apart from the competition but also laid the foundation for a successful business.
Change 1: A New Ingredient
The first change Haldiram made was to switch the base ingredient from besan (gram flour) to moth ki dall (moth beans). This simple change made the bhujia extremely delicious, turning it into a delicacy almost overnight. Additionally, he made the bhujia crispy and fine, enhancing the eating experience and providing a unique texture compared to other bhujia in the Bikaner market.
Change 2: A Premium Price
Given the commoditized nature of bhujia, Haldiram decided to sell his version at a premium price, charging 5 paise per kilo—150 percent more than the market price, which was 2 paise per kilo. Despite the higher cost, customers were willing to pay extra due to the perceived quality and unique flavor of his product.
Change 3: A Distinctive Name
Haldiram named his bhujia “Dungar Sev,” after the then Maharaja Dungar Singh. Although the name had no direct connection to the Maharaja, it served as a form of brand ambassador, enhancing the perceived value of the product. The exotic name made people curious and more inclined to try the bhujia.
The Superpowers of the Changes
These three changes gave Haldiram distinct advantages over his crowded competition:
- Enhanced Perceived Value: The name “Dungar Sev” suggested a premium product, attracting more customers. The association with a Maharaja added a touch of royalty and exclusivity.
- Premium Pricing Justified: Because of the perceived value, customers didn’t mind paying a 150 percent premium. They assumed they were buying a higher-quality product.
- Genuine Quality: When customers tasted the bhujia, it genuinely met their expectations, reinforcing their perception of a premium product. This led to increased demand, with Haldiram’s Dungar Sev becoming a hit within weeks.
The Marketing Principle Behind Haldiram’s Success
Haldiram’s success is a textbook example of a marketing principle that states brand perception plus tangible value delivery results in brand value. By creating a strong brand perception through the name “Dungar Sev” and delivering a product that exceeded expectations, Haldiram’s bhujia became a leader in a highly commoditized market. The higher price, justified by the perceived quality, became the brand value of Haldiram’s bhujia.
The Birth of a Leading Product
Thanks to these strategic changes, Haldiram’s bhujia quickly became a top seller, with hundreds of kilos sold in no time. This marked the beginning of Haldiram’s journey to becoming an iconic Indian brand.
2nd Pillar of Haldiram: Shiv Kishan Agarwal and His Expansion Strategies
Background
Mr. Shiv Kishan Agarwal, the driving force behind Haldiram’s growth in the late 1960s, belonged to the third generation of the Agarwal family. By this time, the family had split into three distinct businesses based in Bikaner, Kolkata, and Nagpur. While Bikaner and Kolkata were thriving, Shiv Kishan struggled to sell bhujia in Nagpur due to a low demand for snacks in Maharashtra.
Market Research and Discovery
To understand the market dynamics, Shiv Kishan conducted extensive research into the food habits of Maharashtrians. This involved numerous visits to popular stores in Nagpur, allowing him to identify three major opportunities for market expansion.
Limited Savory Snack Options
Shiv Kishan observed that Maharashtrians had limited exposure to savory snacks, creating a significant opportunity for Haldiram to enter the market as a first mover. However, being a first mover also posed challenges, as customers were hesitant to try new products.
Underdeveloped Sweets Market
Another discovery was that Maharashtra’s sweets market primarily offered a narrow range of traditional sweets, like bhalushahis, Gujarati pedas, Mysore pak, and ladoos. Shiv Kishan saw this as a chance to introduce new sweets to the region.
Scope for Sweets from Other Regions
Shiv Kishan recognized that the limited variety of sweets in Maharashtra presented an opportunity to introduce sweet delicacies from other regions, offering a diverse range of products to the market.
Launch of Kaju Katli and Its Success
Shiv Kishan decided to make his favorite sweet, using milk, sugar, dry fruits, cashew nuts, and saffron. This sweet, known as Kaju Katli, became an instant hit in Maharashtra. Shiv Kishan promoted it aggressively by giving out free samples and encouraging customers to taste it. The word-of-mouth popularity of Kaju Katli led to skyrocketing demand.
In interviews, Shiv Kishan mentioned that customers initially bought small amounts, like 100 grams, but quickly increased their purchases to 200 grams and eventually 500 grams. This surge in demand led to a significant increase in sales, with sales jumping by 400% in just three years.
Expanding into New Markets
With the success of Kaju Katli, Shiv Kishan introduced other popular sweets from Bikaner and Kolkata, such as malai ladoo, rasgulla, and rasmalai. His Maharashtrian customers eagerly embraced these new sweets, contributing to the rapid growth of Haldiram’s business.
Diversification into South Indian Cuisine
After gaining a strong foothold in the sweets market, Shiv Kishan turned his attention to savory snacks. He noticed that South Indian dishes like dosa and idli were popular in Nagpur. To capture this market, he opened a South Indian restaurant. This restaurant served as a gateway for introducing more Haldiram products, eventually expanding to samosas and kachoris, which became staple fast foods in Maharashtra.
Business Strategy: Building Trust and Introducing New Products
Shiv Kishan’s approach to business involved building a “golden bridge” to move customers from skepticism to delight. He initially established trust by offering familiar products, then gradually introduced new and unique dishes. By doing so, he gained customer trust and then delighted them with innovative products, setting Haldiram apart from other vendors who stuck to traditional offerings.
Shiv Kishan’s innovative strategies and customer-centric approach played a crucial role in transforming Haldiram from an unknown vendor to a trusted brand known for its variety and quality.
The 3rd Pillar of Haldiram’s Growth: Packaging and Location
Key Innovations by Manohar Lal Agarwal
The third pillar of Haldiram’s growth revolved around innovative changes in packaging and strategic location choices. This transformation was driven by Manohar Lal Agarwal, another member of the third generation of the Agarwal family. His execution of these changes resulted in exponential growth for Haldiram, thanks to the concept of brand recall value.
The Impact of Brand Recall
Manohar Lal Agarwal understood the power of brand visibility and recall. Similar to how a large presence of Zomato-branded food delivery personnel builds trust, or how frequently seeing a specific book cover might encourage you to read that book, Haldiram used packaging as a tool to strengthen its brand. By putting the brand’s name and logo on the packaging, customers became familiar with the brand, leading to increased trust and recognition.
Packaging: The Mini Billboard Strategy
In the 1980s, packaging was not taken seriously in the market. Manohar Lal Agarwal capitalized on this by transforming Haldiram’s packaging into mini billboards, amplifying the brand’s visibility. Each package shipped by Haldiram not only contained a product but also acted as a miniature advertisement, reinforcing the brand’s identity.
Strategic Store Locations
In addition to packaging, Manohar Lal strategically placed Haldiram stores in densely populated areas, such as railway stations. This choice of location significantly boosted sales, attracting large numbers of customers and contributing to Haldiram’s growing popularity.
Exponential Growth and Industry Impact
The combination of innovative packaging and strategic locations resulted in significant growth for Haldiram. Between 1976 and 1981, the production rate increased by 400%, reaching 3,000 kilograms per month. The success of Haldiram spread across the country, with people specifically seeking out Haldiram bhujia wala products.
The Rise of Haldiram as an Iconic Brand
Thanks to these strategies, Haldiram evolved from a small sweet shop into a brand recognized throughout India and beyond. By the early 1980s, Haldiram had established itself as an iconic brand, with customers from all over the country seeking its products. This transformation laid the foundation for the modern Haldiram brand, valued at over $3 billion and with a presence in more than 80 countries worldwide.
The Legacy of the Agarwal Family
The Agarwal family’s dedication and strategic vision played a crucial role in building Haldiram into a massive business empire, now worth over 5000 crore rupees. Despite the challenges faced along the way, the Agarwal family’s innovative approaches to marketing, packaging, and location solidified Haldiram’s position as a leading brand in India and internationally.
Lessons from the Haldiram Case Study
Lesson 1: Brand Building in a Commoditized Market
Many believe that creating a unique brand in a commoditized market is challenging, but it’s precisely in these environments where a strong brand can truly stand out. By establishing a recognizable brand, sales can skyrocket. Haldiram succeeded by creating a brand name for its bhujia among the hundreds of bhujia sellers in Bikaner.
Lesson 2: Catering to Market Demand
While it’s tempting to focus solely on strengths, success often requires addressing market demands first. Shiv Kishan Agarwal, despite his family’s 20-year history in the bhujia business, strategically shifted to sweets to establish trust with customers. He then expanded to South Indian snacks, which ultimately led to sales of North Indian favorites like samosas and kachoris, setting Haldiram apart from the competition.
Lesson 3: Healthy Obsession and Craftsmanship
Work pursued with a certain degree of craftsmanship, even when it involves something seemingly insignificant like bhujia, can turn into art. A healthy obsession with quality and uniqueness can transform any business into a billion-dollar empire. Haldiram’s focus on quality and innovation helped it grow into a global brand.
Recommended Reading
For those interested in learning more about Haldiram’s journey, consider reading “Bhujia Barons.” This book offers deeper insights into the Haldiram story and was referenced in creating this content.