Hector Beverages’ Paper Boat: Diffusing Innovation through “Drinks and Memories”
“The company (Hector Beverages) sells nostalgia, 250ml at a time.”
– Diksha Madhok, Ideas Editor, Quartz
Paper Boat, an ethnic drinks brand launched by Hector Beverages in 2013, found a ready audience among the urban Indian consumers who used to relish variants such as aam panna (a juice made from raw green mangoes) and jaljeera (cumin water) in their childhood but no longer had access to them in the urban areas. Besides developing variants that satiated the emotions of consumers, Hector Beverages increased the consumer base for Paper Boat by selling its products on airlines and five star hotels. Besides offering tastes that rekindled memories of one’s childhood, Paper Boat’s products contained no preservatives on account of using best practices available globally in packaging. This was a facet that also appealed to consumers. Stylish and elegant packaging and facility to order its products online also resulted in Paper Boat gaining prominence in the ready-to-drink beverage category. Hector Beverages also created advertising campaigns that adroitly established linkage between Paper Boat’s variants and consumers’ memories of their childhood. However, would Paper Boat be able to overcome the challenges related to sourcing of its unique ingredients and have the wherewithal to expand beyond the urban centres? ......................
Paper Boat: Floating with Innovations
Hector Beverages (HB), a company started by four friends (Neeraj Kakkar, Suhas Misra, Neeraj Biyani and James Nuttall) in 2010, launched an energy drink called Tzinga in 2011. Priced considerably lower than the market leader, Red Bull, Tzinga quickly pole-vaulted to the position of being the second largest energy drink brand in India. However, the very nature of energy drinks implied that Tzinga had only a few variants, resulting in increasing distribution expenses for HB..............
An Era Gone by
Neeraj Kakkar (Kakkar), Hector Beverages’ CEO remarked, “We have a treasure trove of ethnic drinks in India. They are immensely popular locally but unheard of in the rest of the country. We wanted to turn these local hits into national sensations…They (the ethnic drinks) have been traditionally had in pockets across the country. Our products cater to those who grew up with those drinks.” Several cool drinks prepared from local fruits, spices, flowers and pulses were a part of the country’s wide and deep footprint...........
Going from Strength to Strength
Since their debut, Paper Boat’s products witnessed heavy demand from the rich, urban Indian consumers. Buoyed by the success of the two Paper Boat variants of aam panna and jaljeera, HB launched the variants of aamras (a juice made from ripe mangoes), jamun kalakhatta (a juice made from jamun, a purple Indian berry), kokum (a berry found in Western Ghats in India), golgappe ka pani (concocted water forming a part of a renowned Indian Street food) and imli (tamarind)..............
“Drinks and Memories”
The indigenous beverages offered by Paper Boat triggered memories of a not-so-distant past when life in the country moved at a slower pace and when the impact of globalization was not as profound. Paper Boat’s tagline “drinks and memories” was reminiscent of the days gone. Shripad Nadkarni, Director, MarketGate Consulting and also the person behind the Paper Boat brand’s DNA observed,” Life has got very complicated with too many options and we all yearn for simpler times.”...........
Superiority in Other Key Aspects
Paper Boat did not use any preservatives and artificial drinks which also contributed to the rising demand for it among consumers. As Paper Boat’s variants majorly used natural ingredients, they faced challenges of withstanding hot Indian conditions and the possibility of a fruit juice’s chemical composition being altered. According to Kakkar, Paper Boat employed nature-identical flavoring to increase the robustness of its juices and minimize the possibilities of chemical changes..........
Invoking Nostalgia in its Marketing Campaigns
Paper Boat, in terms of the variants it offered and its positioning, tried to rekindle consumers’ memories of the days gone by. It evoked stories of how consumers, now in the age group of 25 and 40 years, played cricket in the by-lanes and how their mothers would offer them a glass of rejuvenating aam panna or jaljeera post the matches. Another story was of consumers, when they were young, would relax in their verandahs in the afternoon and relish aamras.............
Scalability of the Paper Boat Business: Any Constraints?
Industry observers, however, raised questions about the scalability of Paper Boat’s business given that it faced issues unique to the variants that it offered. Sourcing of raw materials was turning out to be a key challenge for HB. Biyani explained, “The flavours and products are so unique that you don’t have a back-end chain to supply the raw material.” He said that because there were several suppliers in the mango categories, it was not difficult to procure raw material for aamras..............
Assignment Questions
I. What are the key elements of the diffusion process? What factors contribute to consumers accepting a new product? Has there been any change to the pattern of adoption of new products over the years?
II. Was there anything innovative about Paper Boat’s marketing mix? What were the strategies adopted by Paper Boat with regard to its Customer Value Proposition, Customer Offering and Customer Communication that put Paper Boat in a different orbit? What was Paper Boat required to do at the backend to get the aforementioned 3Cs (Customer Value Proposition, Customer Offering and Customer Communication) right? Demonstrate how the diffusion of innovation happened in case of Paper Boat.
III..................
Exhibits
Exhibit I: A Paper Boat Promotion
Exhibit II: A Comparison of Paper Boat’s Pricing with Few of its Competitors
Exhibit III: Childhood Memories Projected by Paper Boat
Exhibit IV: Variants’ Packs from Paper Boat
Exhibit V: A Still from the Social Media Film
Exhibit VI: Stills from Paper Boat TVCs