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The bottling king of India

Surajeet Das Gupta | June 19, 2004

Ravi JaipuriaWhen Ravi Kant Jaipuria announced that he wanted to become a franchisee for fast food chain Pizza Hut, his family -- especially his father -- was horrified. Like most conservative Marwari vegetarian families, say associates, they disapproved of any business where meat was on the menu.

But Jaipuria wasn't about to be stopped by such trifling considerations. Today, he's Pizza Hut's largest Indian franchisee with 35 restaurants in north and eastern India that are churning out piping hot pizzas throughout the day.

He has already sunk over Rs 75 crore into the burgeoning business and will be opening 10 more outlets by year-end. And he isn't stopping there. Says the portly but suave businessman: "By 2006 I will have 75 outlets in every city and major town in the north and east."

It's an ambitious gameplan that's typical of Ravi Jaipuria, the youngest of the three Delhi-based Jaipuria brothers. First and foremost, he's India's bottling king with eight soft drinks plants sending out millions of Pepsi bottles into the market annually.

Industry experts reckons he has control over 10 per cent to 12 per cent of the soft drinks production in the country -- around 450 million cases. He once won a coveted award as PepsiCo's top bottler in the world. The award was presented by ex-President George Bush Sr and Jaipuria took 16 members of his family for the ceremonies in Hawaii. Pepsi had a tough time finding the right food for the staunchly vegetarian family.

But Jaipuria isn't content with being Pepsi's largest bottler. He has made a series of moves and diversified into everything from ice creams and schools to hotels and real estate. The result is a Rs 1,200 crore empire, which he says is growing at over 20 per cent annually.

If that isn't enough, he has a host of new plans up his sleeve. This week he jetted to London -- close associates say he's always on the move and, therefore, difficult to catch -- to sign on the dotted line with another international restaurant chain.

He is no stranger to London, where he has a close buddy, Avtaar Litt, the high-profile owner of Sunrise, the United Kingdom's most successful ethnic radio station. Litt and Jaipuria once made a failed bid for an FM licence. Jaipuria is also making constant trips to Mumbai to meet merchant bankers because he's thinking of taking one of his biggest companies public in the near future.

Take a look at his ambitious new foray -- ice creams. It's a tough and bitterly competitive business with giants like Unilever and Amul already slugging it out. But that hasn't stopped Jaipuria from launching Cream Bell first in north India and now nationally.

Says he: "With Kwality Walls wavering, it left a vacuum in the market. We had a plant and have the distribution strength to become one of the top two in the country".

Is that wishful thinking? Jaipuria doesn't think so and his gameplan is to grab 20 per cent of the Rs 1,000 crore (Rs 10 billion) (organised sector) Indian market in the next three to four years. His confidence is based on the fact that the Jaipuria family has been producing ice cream for decades at its Agra factory.

They supplied first the Ghais of Gaylord and later Unilever. Says Jaipuria: "We not only produced the ice cream, we also undertook distribution on their behalf so we know this business."

If that isn't enough Jaipuria also has other plans for Cream Bell. In fact, he's hoping to transform it into a complete dairy brand. In the next stage he's planning to launch cheese, paneer and other related products under the same umbrella brand.

Jaipuria says he would have tried to take a gulp of liquid milk and flavoured milk products but couldn't because his contract with PepsiCo doesn't permit it.

In the ice cream business, the big fight currently is for the Delhi market. Already there are four tough competitors -- Unilever, Mother Dairy, Amul and Vadilal -- that are battling for market share.

Jaipuria says he already has 10 per cent of the market (rival Amul reckons he has 8 per cent) and will have 30 per cent by next year. To that end he's planning to saturate the market with 1,500 new carts -- he currently has 700. That's a huge expansion because he currently has only 1,500 carts throughout north India.

Jaipuria has also drawn up a blueprint for expansion to other parts of the country. There are plans for a new Rs 25-crore (Rs 250 million) plant in Goa next year to feed the western and southern markets. And he's hoping to turn Cream Bell into a household name with a Rs 12-crore (Rs 120 million) advertising and marketing budget.

Despite all these plans his rivals still doubt his ability to move into the big league.

"Although they have begun aggressively, I don't foresee them as competition at the moment." says R S Sodhi, general manager, Gujarat Cooperative Milk Marketing Federation which makes Amul.

But don't think that Jaipuria is spending all his time masterminding a battle of cones and ice lollies. In fact, these days he's heavily focused on the burgeoning real estate business. He may be a low-rise pygmy in the real estate game but he is ready to take on the big boys like DLF and Ansals on their own turf -- Gurgaon. Jaipuria and his associates are developing over 1,200 premium apartments in Park View City in Gurgaon over 2 million sq ft.

In Indirapuram, another Delhi suburb, he's part of a project to develop a shopping mall and apartments over 2 million sq ft. Jaipuria reckons that the two projects will need investments of over Rs 550 crore (Rs 5.50 billion).

But Jaipuria believes this won't be a problem because over 50 per cent of the space has already been booked. The Jaipuria family has constructed a shopping centre in Noida, near Delhi, so he argues that he isn't a novice at the game. He also owns a stake in an upcoming hotel chain.

Does that sound like a heaped plate of business projects? Jaipuria obviously doesn't think so. He's also one of the biggest franchisee for his old alma mater, the fast-growing Delhi Public School. He has invested a colossal Rs 100 crore (Rs 1 billion) to set up two DPS schools -- one in Gurgaon and a residential school which is coming up in Jaipur. If that isn't enough he's searching for the right location for a DPS branch in the Middle East.

So, is there a method in this madness? Ask Jaipuria and he merely says: "We are getting into areas where there is good growth. We are a distribution and food and beverage company so ice cream, restaurants and hotels make sense. Only real estate and schools is different."

His argument is simple and uncomplicated. He points out that the per capita consumption of ice cream is only 200 ml annually so there's room for everyone. In the foods business too, Jaipuria says only a few players like Dominos and McDonald's have reach and together they've barely scratched the surface.

People who know him say that Jaipuria is determined to cut his dependence on the soft drink bottling operations which make up about 60 per cent to 70 per cent of his turnover. They say that the pesticides controversy which led to a dramatic fall in soft drink sales convinced him that all his eggs shouldn't be in one basket. Jaipuria won't comment on this.

The Jaipurias, of course, can't wish away their bottling business origins. They live in a joint family house on Delhi's upmarket Prithviraj Road and made their money primarily from bottling (they were originally Coke bottlers, then shifted to Parle and moved later to Pepsi). Also, the family has interests in banking and used to own a large stake in the Bank of Rajasthan.

Though they live together, the family -- the eldest Chandra Kant, Surya Kant, Ravi and father Chunni Lal -- does business separately. S K Jaipuria, for instance, is the sole selling agent of textile major Raymond in north India. Politically well linked, they are known in the Delhi social circuit for their elaborate Holi parties complete with belly dancers flown in from abroad.

But can a bottler become a brand builder with Cream Bell? Jaipuria points out that he has formidable distribution powers because he sells soft drinks to retailers. Says Jaipuria: "We know every retailer and have had a long term relationship with them for decades because we supply Pepsi. So when we tell a distributor we are also selling ice cream he takes us seriously."

That's not all. Jaipuria has also cleverly moved into cities were there is no dominant ice cream brand or only local brands rule the roost. He claims that in Agra Cream Bell has grabbed the number one slot (the city was dominated by unorganised sector brands) and in Lucknow and Kanpur it is doing very well against the dominant local brands.

Again his rivals are not impressed by these moves and say these are minor markets.

He's also trying other marketing stunts to win customers as the battle hots up. Cream Bell is offering better margins to retailers and has slashed prices by offering more value to customers. Jaipuria says the company offers retailers margins that are 2 per cent to 3 per cent higher than rivals.

Two, it is pushing sales of impulse category products (like chocos, sticks, cones and cups) through a promotion package -- you save 30 per cent to 40 per cent if you buy two instead of one. However, rivals like Amul are offering one ice cream brick free to anyone who buys one brick.

He's also going in for cross promotions. So, in some parts of the country, Pizza Hut is running Cream Bell promotions. Jaipuria wants synergy to be taken a bit further. "After all, Pizza Hut is one of the largest buyers of cheese. And Cream Bell will also get into cheese. So there is synergy."

But is he overstretched? And where does the money come from? Jaipuria says it will come from internal accruals, debt and a possible public issue. But some close watchers say his strategy is a recipe for disaster.

Says a CEO of multinational who has worked with him closely for many years: " He is shrewd but has dashed into too many unrelated businesses. And he does not have the management and professional team to pull it through. The problem is he want to take all the decisions himself."

Others say he has the tendency to jump into a new venture rather than stepping in cautiously. Says a close watcher: "He got into bidding for FM radio with partners but made a mess out of it and his money is now stuck."

Also, the competition is likely to get hotter in all his new businesses. In the pizza business for instance, it's home delivery that is growing rapidly rather than dining out which is Pizza Hut India's forte.

Says Arvind Nair, CEO, Dominos Pizza on the rival chain: "We are in a different space though Pizza Hut is also now doing home delivery. But increasingly the market for pizzas is shifting to delivery."

Dominos is also ahead in other ways. It has 90 outlets across the country and is adding another 10 by year-end. Says Nair: "We are in 24 cities and in many of them Pizza Hut does not exist."

The ice cream space could provide an even tougher challenge for Jaipuria. Says Sodhi: "To be an all-India player you need a lot of resources. You also need to have production units in different locations and more importantly have a strong brand."

But Jaipuria is undeterred by such criticism. He also makes it a point to say that he isn't ignoring his core business, bottling. He has put in over Rs 150 crore (Rs 1.50 billion) to set up a new greenfield plant in Rajasthan and is also going in for backward integration. So, he now has a plant that manufactures crowns and plastic crates for his business.

Clearly, he's in a hurry to swig down a bigger share of business. But is he taking too many big bites from too many tough businesses? Or, has he sliced it just right?

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Number of User Comments: 3

Sub: does jaipuria's stocks public available

Do they ahve any company whose stocks are available for public? pls tell.

Posted by Saurabh

Sub: Fashion industry

Will Mr Jaipuria be intrested in Fashion inudstry because in the near furture india will be the hub of fashion world and number of big ...

Posted by Rajan Pillai

Sub: Ravi Jaipuria and his plans

ravi jaipuria is more or less in a similar situation as Jolibee in Philippines. Extremely fast expansion has its own merits and disadvantages. He needs ...

Posted by Anup Dave


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