How I Built a Healthy Snack Company and Sold It For 500 Crores

Summary

In this insightful episode, Swas Samat, the founder of the health snack brand Yoga Bar, shares the journey of building a D2C megabrand. Samat emphasizes the importance of creating value in people's lives and the brand's offline-first approach, detailing the challenges and strategies in penetrating the market through general trade and modern trade. The discussion also touches on the impact of COVID-19 as a tailwind event, accelerating the brand's online presence and consumer health consciousness. The packaging's vibrant, modern, and international design is highlighted as a key to its lasting appeal.

Takeaways

• 😀 Swas Samat founded a healthy snack company, Yoga Bar, which became a household name in India, known for its healthy bars and breakfast options.
• 🌟 The motivation behind starting the business was not primarily to make money but to create a product that adds value to people's lives and makes a difference to society.
• 🛫 Yoga Bar identified a gap in the Indian market for healthy packaged food, inspired by similar products found in the US, and capitalized on this opportunity.
• 🎨 The brand's packaging reflects the founders' personalities, focusing on colors that evoke happiness and a sense of modernity and international appeal.
• 🏪 Initially, Yoga Bar was an offline-first business, which was crucial for establishing a strong brand presence before expanding to other channels.
• 📈 The company emphasizes the importance of offline sales, as they are often more profitable than online sales, especially for food businesses.
• 📊 Offline success is measured by the sales team's cost being a reasonable percentage of the total sales they generate, aiming for around 20%.
• 🔄 The COVID-19 pandemic was a turning point for Yoga Bar, as it forced the company to pivot to online sales and expand its product range to cater to the increased health consciousness of consumers.
• 🛍️ Modern trade retailers, like dmart and Reliance, are selective about the brands they stock, requiring proof of market share and success in general trade before considering a new product.
• 📚 The company's growth strategy involved careful market selection, focusing on high-throughput stores, and ensuring that sales team costs were proportional to sales generated.
• 💡 Tailwind events, such as increased health consciousness during the pandemic, can significantly impact a D2C brand's success, providing opportunities for growth and expansion.

Q & A

What was Swas Samat's primary motivation for starting a healthy snack company?

Swas Samat's primary motivation was not to create a large business or make a lot of money, but to make a difference to society and add value to people's lives by offering healthy packaged food options that were not available in India at the time.

What inspired Swas to start the Yoga Bar brand?

Swas was inspired to start Yoga Bar after noticing the absence of healthy packaged food options in India, similar to the kinds of bars they used to eat in the US after yoga classes. The idea was solidified when they trademarked the name 'Yaba' upon their sister's suggestion.

How does Swas define the product Yoga Bar in terms of the emotions it evokes?

Swas defines Yoga Bar not just as a healthy snack bar but as a product that sells happiness. The emotional response they aim to elicit from consumers is a feeling of happiness when they consume the bar.

What was the initial strategy for building conviction in the Yoga Bar product?

The initial strategy involved self-belief and passion rather than a rational thesis. Swas believed in the product's potential to create value, and early proof came from selling in yoga studios and receiving positive feedback, which helped build conviction.

How did Yoga Bar approach the offline market initially?

Yoga Bar started by focusing on a specific region, Bangalore, and learning from the experience. They ensured that their sales team costs were kept to a maximum of 20% of the sales they generated to maintain a sustainable business model.

What is the significance of having a product in both dmart and Reliance stores?

Having a product in dmart and Reliance stores is a strong indicator that the brand has arrived and is a credible player in the category, as these retailers only stock products that have proven market share and consumer demand.

What is the general profitability ranking of sales channels for food businesses according to the transcript?

The transcript suggests that General trade (smaller stores) is the most profitable, followed by modern trade (large retail chains like dmart), and then online sales channels.

How did Yoga Bar ensure their sales team was effective in on-boarding new stores?

Yoga Bar trained their sales team to passionately communicate the product's differentiation and provided product kits to shopkeepers, effectively turning them into brand advocates and part of their marketing strategy.

What was the impact of COVID-19 on Yoga Bar's business model?

COVID-19 forced Yoga Bar to pivot to online sales as offline retailers shut down. This led to the expansion of product categories and a significant shift in the company's trajectory, making it more tech-focused under the guidance of Swas's husband.

What were the key design considerations for Yoga Bar's packaging?

The key design considerations for Yoga Bar's packaging were to make it modern, international, and colorful. The packaging was intended to evoke happiness and be relevant globally, with a design that has remained consistent and appealing for the last 10 years.

How did Yoga Bar leverage the increased health consciousness during COVID-19?

Yoga Bar capitalized on the heightened health consciousness during COVID-19 by emphasizing their product's health benefits, such as protein and fiber content, aligning with consumers' growing interest in healthier food options.

Outlines

00:00

🌟 Founding a Healthy Snack Brand

Swas Samat, the founder of the healthy snack company, Yoga Bar, shares the story of building a brand that became a household name in India. Initially, Swas wasn't motivated by business growth or profit but by the desire to make a difference in society. The idea for Yoga Bar was born from the lack of healthy packaged food options in India compared to the US. After attending yoga classes and noticing the popularity of healthy bars there, Swas and her sister Anandita trademarked the name 'Yoga Bar' and started the company. The packaging and brand values reflect the founders' personalities, focusing on gratitude, happiness, and selling an emotion of happiness along with the product. The early days involved selling at yoga studios and through an accounting outsourcing company, which helped validate the product's potential in the market.

05:01

🛒 Navigating Offline Distribution

The script delves into the intricacies of offline distribution for a food business, emphasizing the importance of physical presence in stores for brand credibility and profitability. It details the structure needed for an offline sales team, including area sales managers and officers, and the cost implications of maintaining such a team. The strategy involves focusing on high-throughput stores and ensuring that sales team costs are a reasonable percentage of total sales. The narrative also touches on the challenges of entering modern trade without a strong general trade presence and the importance of demonstrating market share to secure retail space. The founder's experience with sales kits for shopkeepers and the significance of passionate sales teams in convincing traders to stock the product are highlighted.

10:03

🌈 Building Brand Conviction and Adapting to Market Changes

The conversation explores how the founder built conviction in her product despite initial skepticism. It was a combination of self-belief and emotional connection rather than a rational thesis. The early proof of concept came from selling at yoga studios and positive feedback during Diwali gifting. The COVID-19 pandemic served as a significant turning point for Yoga Bar, forcing the company to pivot to online sales and expand product categories. The health consciousness awakened by the pandemic worked as a tailwind for the brand, leading to increased demand for healthier food options. The packaging of Yoga Bar has remained relevant and vibrant over the years, reflecting the brand's international and modern aspirations, with bright colors symbolizing happiness and joy.

15:04

🌍 Aspirations for Global Brand Recognition

The final paragraph discusses the brand's aspirations to be recognized internationally, with a dream of having Yoga Bar featured on billboards worldwide. The packaging design has been consistent for the 10 years of the company's existence, maintaining its modern and international appeal. The choice of bright and colorful packaging was intentional, aiming to evoke happiness and joy, which are core to the brand's identity. The founders' vision was to create a product that would be at home in any global market, and the packaging was designed to resonate with well-traveled audiences and eventually reach a wider consumer base.

Keywords

💡D2C Brand

D2C stands for Direct-to-Consumer, which refers to a business model where brands sell their products directly to consumers without a middleman. In the script, Swas Samat discusses building a mega D2C brand, which is central to the theme of entrepreneurship and creating a successful business model that directly engages with consumers.

💡Consumer Insight

Consumer Insight refers to the understanding of consumer needs, preferences, and behaviors. It is crucial for businesses to identify market opportunities. In the script, Swas Samat emphasizes the importance of consumer insight in identifying the gap in the Indian market for healthy packaged food, which led to the creation of the Yoga Bar brand.

💡Healthy Snack Company

A Healthy Snack Company is a business that produces and sells nutritious and typically low-calorie snack foods. The script revolves around the story of Swas Samat, who built such a company, Yoga Bar, focusing on healthy options that were not widely available in India at the time.

💡Market Share

Market Share is the portion of the total market demand for a product or service that is captured by a firm or brand. In the context of the script, Swas Samat mentions the importance of proving market share to modern trade vendors, indicating the brand's success and relevance in the market.

💡General Trade

General Trade refers to the distribution of goods through small, independent retailers or mom-and-pop stores. The script discusses General Trade as one of the most profitable channels for Yoga Bar, highlighting the importance of this distribution method for the brand's success.

💡Modern Trade

Modern Trade typically involves large retail chains or supermarkets. In the script, Swas Samat explains the challenges of entering modern trade without first establishing a presence in general trade, emphasizing the importance of having a strong market presence before securing shelf space in larger stores.

💡Online Business

Online Business refers to commercial activities conducted over the internet. The script mentions that online margins for food businesses are typically lower than offline sales, indicating the challenges of building a profitable online presence in the food industry.

💡Product Differentiation

Product Differentiation is the process of distinguishing a product from its competitors to make it more appealing to a particular market segment. In the script, Swas Samat talks about the importance of training the sales team to communicate the unique selling points of Yoga Bar, which helped in differentiating the brand in a crowded market.

💡Packaging

Packaging refers to the container or wrapping in which a product is contained for distribution or sale. The script discusses the significance of Yoga Bar's packaging, which has remained relevant for a decade, reflecting the brand's modern, international, and colorful image.

💡COVID-19

COVID-19 is the disease caused by the novel coronavirus SARS-CoV-2. In the script, Swas Samat describes COVID-19 as a turning point for Yoga Bar, as it forced the company to pivot to online sales and expand its product range to cater to increased health consciousness among consumers during the pandemic.

💡Tailwind Events

Tailwind Events are external factors or circumstances that positively impact a business or industry. The script uses the term to describe events like COVID-19 that, despite being negative in a broader sense, provided a positive push for Yoga Bar by accelerating their online presence and product diversification.

Highlights

Swas Samat founded a healthy snack company that was later sold to ITC, demonstrating the success of creating and selling a niche product in India.

Yoga Bar became a household name, illustrating the power of identifying and filling a gap in the market for healthy packaged food in India.

Swas was motivated by making a societal difference rather than just business success, highlighting the importance of social impact in entrepreneurship.

The idea for Yoga Bar originated from Swas's personal experience in the US, showing how international exposure can inspire domestic business ideas.

Yoga Bar's packaging reflects the founders' personalities, emphasizing the connection between brand identity and personal values.

The company started with selling in yoga studios, indicating the strategy of targeting niche markets for initial traction.

Swas discusses the importance of self-belief over rational business theses, especially in creating new market categories.

Offline sales require a significant sales infrastructure, which is crucial for long-term business sustainability.

Gross margins in food are typically around 30%, setting expectations for profitability in the food business.

Investors prefer to see offline success before considering investment in food businesses, underlining the importance of a strong offline presence.

Online sales can achieve 30% margins with high frequency and repeat orders, but it's contingent on effective marketing and customer retention.

General trade (small stores) is often more profitable than modern trade or online channels for food products, due to lower operational costs.

Swas shares the strategy of focusing on high-throughput stores to optimize sales team costs and increase market share.

Training sales teams to passionately communicate product differentiation is key to on-boarding new stores and gaining retailer support.

Modern trade retailers require market share data before stocking new products, emphasizing the need for a proven market presence.

COVID-19 was a turning point for Yoga Bar, leading to a shift to online sales and category expansion, showcasing adaptability in crisis.

The pandemic increased health consciousness among consumers, benefiting health-focused brands like Yoga Bar.

Yoga Bar's packaging has remained relevant for a decade, reflecting the brand's international and modern image, and its use of vibrant colors to evoke happiness.

Transcripts

if you know a brand that actually is

found a way to be on the shelf and is

available on a dmart and Reliance it's

full proof that the brand has arrived

today we have swas samat who built a

healthy snack company and sold it for

500 to ITC yoga bar has become a

household name famous for its healthy

bars and breakfast options and is found

in the kitchens of lacks of Indians

today in this episode we dive deep into

three core insights into how swas built

a mega d2c

brand talk a bit about the consumer

Insight on what made you think that oh

this is going to be a category because

you essentially built the category

honestly in India so when you set out to

do business like I don't think I was

primarily motiv and this this is good

and bad right um I don't think I was

primarily motivated to create a large

business and make a lot of money that

wasn't my motivation I think every area

I choose to work in I would ask myself

if something that I'm doing is actually

making any difference to society that do

you create something that truly adds

value in people's lives and you have to

remember that back in the day like when

we started which is 10 years ago there

was no healthy packaged food in India

Anand and had spent some time in I mean

I had uh exchange at wateren and we used

to go to the BM yoga yoga class and when

we used to come out we used to go to T

Jo and take a kind bar we used to eat in

a kind bar and every time we used to eat

we' be like why do we not get these

things in India right so we saw these

products in the US we realized India

doesn't have any of them so we my sister

came back the minute she came up with

the name Yaba we trademarked it we

started the company 2 years later and um

a lot of the things that you see on the

packaging Etc is a reflection of who we

are as people I think we say they we

talk about gratitude we talk about

happiness and lot of people ask me what

do you sell and I try to say I sell

happiness I I don't sell yoga bar I

actually sell like when people have a

bar what's the emotion you feel most

people will say they feel quite happy

I'm going to double click on this a

little bit right so you saw this in the

US you came here but want to understand

how did you build conviction because a

lot of time when you bring outside

products and try to think about hey this

might be a need or a want in this market

how did you build that conviction early

on if I had tried to build that

conviction early on I probably wouldn't

have started I think you have to be

crazy because you think at that point of

time that you if you are convinced

you'll be able to convince everybody

else to eat the product that you make

right but you can ask me what I

initially did the conviction is built

out of self-belief it's not built out of

thesis because the best kind of brands

in business are actually built from

fleeting moments of the heart and

emotion and you know all of that if you

rationally sit down write down why you

created something and will people do

this and do you think there'll be a

market for a 40 rupees product when

people are consuming sckers at 15 rupees

your rational answer is always no it's

stupid to even try to do this but you

should not be led by rationality if you

truly believe that you can create some

value you have to give yourself Time and

Time compounds the things that you try

to tell people that you want to create

but the early proof was we used to sell

in a c couple of yoga studios so I used

to go to a th000 yoga at that point in

time so I used to after the yoga class

is over I would she remove all these

bars from my bag I would keep it at the

the receptionist used to sit both of us

used to chat I used to sample it out to

everybody ask people if they would pay

money for it and then the next day I

would sell the bar and see if people

would you know buy it and then through

the accounting Outsourcing company that

I had co-founded at that point in time

we had this Diwali gifting thing and

where we just cleaned up the bars and

gave it out his gift and everybody came

back and said this just Tayes healthy

can we buy it somewhere and that's just

this I mean uh it could very well be

that this data set was very very small

to tell myself that this is going to be

a roaring success but because it's all

in like think about it we're talking

about like a couple of people who go to

a yoga class you're talking about like

clients you know um entrepreneurs Etc

who are already quite well- wored

because people travel and but in that

limited audience people seem to like it

I want to now go to uh an interesting

fact about yoga bar which is you started

into offline first right and you crack

this whole science of offline with

modern trade General trade and so on and

I want to really go deep into this want

to really understand if I'm a Founder

today and I am trying to go and go to

market offline yeah how do I start how

do I find those connections how do I

launch yeah every single thing in going

and launching my product in a dmart for

example right like how do I do that your

gross margins in food your net gross

margins like after you cover everything

is in the range of 30% you don't have

the luxury of building a brand online so

today if I'm an investor who needs to

give money to a food business the first

thing I'll actually ask is show me your

success offline you are never going to

make money online please show me offline

inner geography what have we crapped so

it's very important as an entrepreneur

that if you are setting up a business

for the long term whether you want to do

it profitably whether you want to raise

Capital you need to make sure that your

products are actually selling offline so

it's quite critical to actually crack

the offline code does that

mean online margins can never be equal

to 30% even if you have a good frequency

online it can be when there is a certain

velocity and you're not spending

marketing dollars to generate sales over

and over again the repeat rates are

critical to determine if you'll ever be

successful online so there could be a

case where in the frequency is so high

that the company would be able to make

30% margin on repeat orders online yeah

you can if you have category share have

you seen any brand doing that right now

I mean all the brands of large companies

probably even for even for larger

companies they will tell you that their

online channel is the least profitable

of all of their Channel by order General

trade is most profitable then modern

trade and then online interesting so

you're saying the highest profitable is

General trade which is the m and pop

stores in smaller stores then there is

modern trade which is the Demar big

bazars of the world and then there is

going to be online channels right right

perfect so we now have why do offline

and what are the business model tweak

for that I want to now go and say that

how do I build a first go to market like

how do I go to the first one what is the

primary difficulty of the offline

business the offline business requires a

lot of people because structure this I

have to have an area sales manager I

have to have sales officers under him

each sales officer typically will cover

about 60 to 80 stores in a week so you

know that's kind of the average

um and so you need to build a structure

depending on the number of stores you

want to be present in of Area Sales

officers and then a supervisory level

you would pick like one geography the

best way to do offline like the way we

did it is you just pick Bangalore get

Bangalore right see what are other the

learnings I've never had an fmcg

background right so what what is the

conclusion I came to I am better off

focusing on even today yogabar is

present in only 5,000 stores so you have

to be cognizant of the fact that your

offline sales teams cost can only be 20%

of the total sales that they generate in

a company like Hindustan Le and ITC that

sales team cost will be 5 to 8% you want

achieve that because they have very high

throughput products but you should at

least try to Target 20% if you start you

can't balloon up your Manpower cost and

then turn around and say that I'm

building for the future at some point

that money will run out so what takes

time you setting up what are the

relevant stores for you all stores might

not be relevant you focus on the high

through put store so what is the same

store sales that you're generating is

the same store sales increasing month-

on month and therefore because it's

increasing my sales team cost is to my

Revenue ratios continuously coming down

you want to achieve it on day Zero but

every quarter you should look back and

say what is the sales team of sales

ratio and that's how gender trade works

so you should do the math I have X

amount of money see I have one or two

crores um split it up into 12 so that's

20 lakhs a month 15 to 20 lakhs I need

to go to a region where I can if I'm

having 15 lakhs of my sales team cost

I'm able to generate one and a half to

two CR I mean about at least 75 lakhs of

cost so that I maintain that 20% ratio I

pick the market and the stores that can

actually have the potential of giving me

75 lakhs of sales how do I do that I

kind of study my competitors how much

sales are they doing in most of these

stores and these regions what would be a

high Market region if I decide today

that I'm playing musle I will at least

try and study and get Market Intel on

where does Kellogg sell primarily which

is the region that's most sensible for

them and I would put all my resources

and effort to say that if I create a

model where I'm spending about 15 lakhs

on my sales team and I'm able to

generate one CR I can then go to other

regions and slowly do the same thing

when you said you are having these many

sales agent in a geography what really

helps you on board a new store and what

works and what doesn't work to get a new

store to keep my product you have to

train your sales team to give that

passionate feel about why the product is

differentiated a Trader obviously wants

to pick large Company products because

the system is streamlined the

distributor Supply comes properly the

brand is well known you generate cash

and all of that for him to make a

deviation in his process he needs to be

convinced your product will actually win

so you need to make sure that at least

for yogabar we gave like product kits to

every single shopkeeper and said please

feed your family this and he became our

salesperson like my marketing expense

was that because once he was convinced M

yeah he would tell everybody

right so I spent a lot of time effort

training my sales team and making sure

they truly understood why we were

differentiated from competition there is

no way a company of our size with our

Capital could have grown if not for

people truly communicating why we were

different let's go to Modern trade so

modern trade is a fairly straightforward

answer a modern trade vendor or buyer

will not keep you unless you can show

you have Market shared data and you are

a certain market share the category like

for example dmart pegs how much you are

selling in offline so H tell me this you

cannot enter modern trade without

entering General trade is that like a

yeah like large small Mafia of sorts no

I mean it would be rightly so because

for them what do they do right like you

have to think and whenever you enter

into a negotiation you have to

understand the other person's

perspective how do they make money it's

called jimro right like you generate

what is the gross margin you generate

every square feet of your store and deal

so sharp yeah like they they have to be

so sharp in their operations that every

square feet has to generate cash through

through pit of the product then math is

very very clear so unless you are a

product that's actually performing in a

general trade store they can't waste

their real estate space because they

could give their real estate space to

somebody else how do they make money I

have X amount of space I keep selling

the product in this amount of space the

more it keeps moving I keep my cash

register keeps clicking on the amount of

gross the margin that I have agreed with

the vendor right that is their

perspective so real estate is really

expensive for them so unless they are

they know 100% that you are successful

they won't keep you in fact I would say

like if you know a brand that actually

is found a way to be on the shelf and

not through influence not because

somebody knew the CEO of the company but

because the brand is strong and is

available on a dart and Reliance it's

full proof that the brand has arrived it

means the brand is a credible player in

the category awesome so I had a a

question which is when we think about

headwind and Tailwind events for example

demonetization was a Tailwind event for

PTM right or maybe somebody's license

getting canceled is a headwind event for

the company right I'm sure yogabar also

had a bunch of Tailwind events wherein

the category was just adopting what are

some of those events where and what are

some of the events that d2c Founders in

general should look for in the next few

weeks months years so for us actually

covid was a important Point actually

when Co happened what ended up happening

was because we were only an offline

business until then we never sold our

products online and offline all the all

the retailers of course they shut shop

and they also started keeping only

essentials from large companies like

stuff that was moving super fast right

so suddenly a Channel of sales

completely stopped but what ended up

being a complete really negative cycle

for the business two or three things

came out of it one was because you know

my my uh employee left my husband came

in as a co-founder and he's a tech guy

so if you see why yogabar has done so

well online it's because that's run like

a it's run like a tech company obviously

he coming in changed the trajectory of

the company because at that point in

time we were only doing bars and musle

but because you get a lot of study of

what works online we started expanding

categories we started launching protein

musly we started you know launching all

the dry fruits we have now an Brands

called yoga baby I think that speed of

understanding that there are certain

kind of consumer online and we kind of

have to cater to everybody because we

had the reverse problem we only cater to

offline audience and we said two

products but then suddenly now that you

don't have the channel of sale online

you can't sell one or two things and

make a business right you still have a

business to run so I think that was a

significant chapter in the company and

the second thing that happened is

because of covid people became a lot

more health conscious like people

started becoming a bit more conscious

more protein more fiber in their food so

I would say that was one event I want

you to walk me through the exact thought

behind why something is designed the way

it is uh and maybe uh we can just do

that the thing that you have to remember

about the yoga B packaging is it stayed

the same for the last it's been relevant

the packaging has stayed relevant for

the 10 years of existence of the company

even today people will look at yog gabad

packaging and say it's International

it's modern and it looks nice and to

rewind 10 years we looked completely

different to everything there on the

shelf like nobody used the colors that

we use nobody was using pinks nobody was

using really bright orange yellow and we

went crazy with colors in our package

let take a step back you just said three

words yeah modern international and I

forgot the third one we said something

very colorful very colorful yeah how did

you the inside that these are the words

I want to associate with colorful

because uh bright color represents

happiness for us you always represent

Joy with rainbows you always represent

Joy why being vibrant or bright so we

always picked colors that when you look

at it it just gives you the sense that

you feel a little bit happy we picked

modern because we were clear we were in

a category where we creating category so

you have to be relevant first to a set

of audience that is already quite well

traveled you you you you first convert

that customer and then you go down the

hierarchy right so it has to be slightly

modern because people are well be like

okay I think I feel like I've seen this

product somewhere I would want to pick

it International because initi and I

mean anandita needs to talk about this

we always wanted this one time where our

product would be on whole folds so we

always like we said that you know on

Time Square there'll be this Big Yoga

barad that dream is yet to be fulfilled

but you always think that anywhere in

the world where people see this brand it

should work it should sell

[Music]