How did Haldiram Build a 5000cr business empire? : Business case study

Summary

The video script narrates the remarkable journey of Haldiram, an Indian brand that transformed from a small sweet shop in Bikaner to a global giant with a $1 billion revenue in FY 19. It highlights the innovative strategies that set Haldiram apart in a commoditized market, including product differentiation, premium pricing, and strategic market penetration. The story underscores the importance of brand perception, tangible value delivery, and the power of packaging and location in building a successful business empire.

Takeaways

• 🏫 Haldiram's success story began as a small sweet shop in Bikaner and has since expanded to over 80 countries, employing more than 1500 people and generating $1 billion in sales revenue in FY 19.
• 🔑 The brand's unique business strategy involved creating a differentiated product in a highly commoditized market by focusing on quality and taste, which set it apart from competitors.
• 👦 Haldiram's founder, even at a young age, was not satisfied with the status quo and was driven to innovate and improve the product, leading to significant changes in the bhujia recipe.
• 🍪 A key innovation was the use of 'Moth Ki Dall' instead of besan to make the bhujia, which enhanced the taste and quality, turning it into a delicacy and differentiating it in the market.
• 💰 Haldiram's bhujia was priced at a 150% premium, reflecting the increased perceived value and quality, which customers were willing to pay for.
• 🎖 The name 'Dungar Sev', inspired by Maharaja Dungar Singh, acted as a powerful brand ambassador, enhancing the product's perceived value and appeal.
• 📈 The combination of brand perception and tangible value delivery resulted in a significant increase in demand for Haldiram's product, illustrating the power of marketing principles.
• 📚 Shiv Kishan Agarwal's market research in Maharashtra led to the introduction of new products like Kaju Katli, which capitalized on the sweet tooth of Maharashtrians and expanded the brand's offerings.
• 📊 Shiv Kishan's strategic approach of first establishing trust by selling familiar sweets and then introducing new snacks helped in gaining customer acceptance and increasing sales dramatically.
• 📦 The focus on packaging and strategic store locations by Manohar Lal Agarwal increased brand recall value, turning every product into a mini billboard and establishing trust with customers and sellers.
• 🌐 Haldiram's growth was underpinned by three generations of the Agarwal family's dedication to innovation, market understanding, and customer trust, culminating in a $3 billion brand valued today.
• 📘 The case study emphasizes the importance of brand building even in commoditized markets, catering to market demands while leveraging strengths, and the power of a healthy obsession with quality and craftsmanship.

Q & A

What is the significance of Haldiram's brand in Indian business history?

Haldiram is an iconic brand in Indian business history, known for its world-class business strategies that transformed a small sweet shop in Bikaner into a global brand with a presence in over 80 countries and a sales revenue of $1 billion in FY 19.

What was the initial product that Haldiram started with and how did it stand out in the market?

Haldiram started with 'bhujia,' a snack that was highly commoditized in Bikaner. It stood out by making significant changes to the product, such as using 'Moth Ki Dall' instead of besan, creating a fine crispy mixture, and selling it at a premium price, which enhanced its perceived value.

Why did Haldiram name his bhujia 'Dungar Sev' and what impact did this have on the brand?

Haldiram named his bhujia 'Dungar Sev' after Maharaja Dungar Singh, which, despite no direct connection, acted as a brand ambassador and enhanced the perceived value of the product, making it sound like a delicacy and differentiating it from the competition.

How did Shiv Kishan Agarwal contribute to the growth of Haldiram in the late 1960s?

Shiv Kishan Agarwal, a third-generation member of the Agarwal family, conducted thorough market research in Maharashtra and identified opportunities in the snack and sweets market. He introduced new products like Kaju Katli, which became popular through aggressive promotion and free sampling.

What was the strategy Shiv Kishan used to penetrate the Maharashtrian market with Haldiram's products?

Shiv Kishan first established trust by selling known dishes to the Maharashtrian market. Once trust was established, he introduced unique and unknown dishes that became hits, effectively moving customer sentiment from skepticism to delight.

How did Manohar Lal Agarwal's focus on packaging and location contribute to Haldiram's brand recall value?

Manohar Lal Agarwal emphasized packaging and strategic store placements, turning each product into a mini billboard and establishing trust with customers and sellers. This increased brand visibility and recall value, leading to exponential sales growth.

What is the significance of the 'bhujia barons' book mentioned in the script?

The 'bhujia barons' book is a recommended read for further insights into Haldiram's story and business strategies, providing a detailed account of how the brand became a billion-dollar business.

What is the role of myBillBook as mentioned in the script?

myBillBook is a billing and accounting solution that helps manage GST, invoicing, billing, and inventory management. It is highlighted in the script as an essential tool for businesses, similar to the importance of accounting and inventory management in Haldiram's success.

What are the three key lessons from Haldiram's business strategy as outlined in the script?

The three key lessons are: 1) Brand building is possible even in a commoditized market and can lead to significant sales growth. 2) Catering to market demand is crucial before leveraging one's strengths. 3) A healthy obsession with quality can turn any work into art, leading to business success.

How did Haldiram's focus on quality differentiate it from competitors in the bhujia market?

Haldiram's focus on quality involved using superior ingredients and a unique recipe, which resulted in a superior tasting bhujia. This obsession with quality differentiated it from the competition and contributed to its brand value.

What was the impact of Haldiram's pricing strategy of selling the bhujia at a 150 percent extra cost?

The higher pricing strategy signaled a premium product to consumers, which, combined with the enhanced perceived value from the name 'Dungar Sev,' led customers to be willing to pay more for what they believed was a superior product.

Outlines

00:00

🏪 The Rise of Haldiram: From Small Sweet Shop to Global Brand

This paragraph introduces Haldiram as a legendary Indian brand that has grown from a simple sweet shop in Bikaner to an international presence in over 80 countries, employing over 1500 people and achieving a remarkable sales revenue of $1 billion in FY 19. It raises questions about the unique business strategies that propelled Haldiram to such heights and invites viewers to learn from this iconic brand's success story. The narrative begins with Haldiram's early years, highlighting his innovation in the bhujia market by creating a differentiated product and his relentless pursuit of quality, which set the stage for the brand's future growth.

05:06

📈 Market Penetration and Expansion: Shiv Kishan's Strategic Moves

The second paragraph delves into the strategic business moves of Mr. Shiv Kishan Agarwal, a third-generation member of the Agarwal family, who played a pivotal role in Haldiram's growth in the late 1960s. It discusses his market research in Maharashtra, the identification of opportunities in the snack and sweets market, and his innovative approach to introduce new products like Kaju Katli, which became immensely popular. The paragraph also highlights Shiv Kishan's strategy to establish trust with customers by first selling familiar products before introducing unique dishes, leading to a significant increase in sales and the brand's expansion into new markets.

10:07

📦 Packaging and Location: Enhancing Brand Recall and Sales

The third paragraph emphasizes the importance of packaging and strategic location in boosting Haldiram's brand recall and sales. It describes how Manohar Lal Agarwal, another third-generation member, revolutionized the brand's visibility by using packaging as a marketing tool and strategically placing stores in high-traffic areas. The paragraph outlines the exponential growth in production and sales that resulted from these strategies, transforming Haldiram into a recognized brand across India and eventually leading to its current status as a $3 billion business empire. The paragraph concludes with lessons learned from Haldiram's case study, emphasizing the importance of brand building in commoditized markets, catering to market demand, and the power of a healthy obsession with quality.

Keywords

💡Haldiram

Haldiram refers to a renowned Indian brand that started as a small sweet shop in Bikaner and has since expanded globally, becoming a billion-dollar business. The brand's success story is the central theme of the video, illustrating how a small business can grow into an international brand through strategic business decisions and a focus on quality.

💡Commoditized product

A commoditized product is one that is similar across various brands, with little to no differentiation, leading to competition primarily based on price. In the video, bhujia in Bikaner is described as an extremely commoditized product, highlighting the challenge Haldiram faced in distinguishing its product in a crowded market.

💡Brand perception

Brand perception is the mental image and overall impression consumers have about a brand. The video emphasizes the importance of brand perception in Haldiram's strategy, where the name 'Dungar Sev' was used to elevate the product's perceived value, leading to a higher price point and customer preference.

💡Market penetration

Market penetration refers to the process of increasing a product's market share within an existing market. The video discusses Shiv Kishan's efforts in penetrating the Maharashtra market with Haldiram's sweets and snacks, initially overcoming hesitancy by offering familiar products before introducing unique items.

💡Strategic approach

A strategic approach involves making deliberate, well-thought-out decisions to achieve business goals. The video outlines Shiv Kishan's strategic approach to market research and product introduction in Maharashtra, which involved identifying market gaps and leveraging them to grow the business.

💡Brand value

Brand value is the worth of a brand in terms of its ability to contribute to the company's overall value, often intangible. The video describes how Haldiram created brand value by charging a premium for their bhujia, which customers were willing to pay due to the enhanced perceived quality and taste.

💡Packaging

Packaging is the process of enclosing or protecting a product for distribution, sale, or storage. In the video, Manohar Lal Agarwal's focus on packaging is highlighted as a key strategy that contributed to Haldiram's brand recall and trust, turning each product into a 'mini billboard' for the brand.

💡Location

Location refers to the geographical placement of a business or store. The video mentions the strategic placement of Haldiram stores in densely populated areas like railway stations, which contributed to increased visibility and sales, enhancing the brand's reach and accessibility.

💡Accounting and inventory management

Accounting and inventory management are critical aspects of business operations, dealing with financial record-keeping and the oversight of stock levels, respectively. The video notes the founder's focus on these areas as a key to Haldiram's success, emphasizing the importance of efficient financial and stock management for business growth.

💡myBillBook

myBillBook is a billing and accounting solution mentioned in the video as a partner, offering services for managing GST, invoicing, billing, and inventory. It is highlighted as a tool that can help businesses like Haldiram maintain financial and inventory discipline, contributing to their overall operational efficiency.

💡Craftsmanship

Craftsmanship refers to the skill, creativity, and quality involved in making something well. The video concludes with the lesson that a healthy obsession with craftsmanship can turn any work into art, using Haldiram's journey as an example of how dedication to quality can build a significant business.

Highlights

Haldiram's journey from a small sweet shop in Bikaner to a billion-dollar business with a presence in over 80 countries.

The unique business strategies that differentiated Haldiram in a highly competitive market.

Haldiram's innovative approach to product development, leading to the creation of the popular 'Dungar Sev'.

The strategic pricing of Haldiram's bhujia, setting it apart from competitors by offering a premium product at a higher cost.

The importance of brand perception and tangible value delivery in building brand value, as demonstrated by Haldiram.

Shiv Kishan Agarwal's market research and identification of opportunities in the Maharashtrian food market.

The introduction of Kaju Katli to Maharashtra and the aggressive marketing strategy that led to its popularity.

The expansion of Haldiram's product range to include sweets and snacks from other regions to cater to diverse tastes.

The exponential growth in sales achieved by Haldiram through strategic market penetration and customer trust-building.

Manohar Lal Agarwal's focus on packaging and strategic store locations to enhance brand recall and trust.

The impact of packaging as a form of mini billboards that helped establish Haldiram's brand presence.

The exponential increase in production and sales of Haldiram, highlighting the success of their business strategies.

Lessons from Haldiram's success, emphasizing the importance of brand building even in commoditized markets.

The strategic approach of catering to market demand before leveraging one's strengths, as illustrated by Shiv Kishan.

The role of a healthy obsession with quality and craftsmanship in building a successful business, as seen with Haldiram.

Recommendation of the book 'Bhujia Barons' for further reading on Haldiram's story and business strategies.

The introduction of myBillBook as a billing and accounting solution for businesses, sponsored by the video.

Transcripts

Hi everybody. Haldiram is one of the most  iconic brands in Indian business history.  

And while most of us are taught about the  American icons like Domino's and McDonald's,  

very few of us know about the world class business  strategies developed by the homegrown brands of  

India. And Haldiram is one such brand that  started as a small sweet shop in Bikaner,  

but today, it has expanded its presence in more  than 80 countries, employes more than 1500 people.  

And in FY 19 alone, Haldiram generated a sales  revenue of $1 billion. The question is while  

we see 1000s of sweet shops every single day, What  exactly was so particularly special about Haldiram  

that they were able to build a billion dollar  business? What exactly was their business strategy  

and as students of business? What are the lessons  that we need to learn from this iconic brand?  

This video is brought to you by my bill book,  but more on this at the end of the video.

This is a story that dates back to 1990 Bikaner.  When Haldiram was just 11 years old. He worked at  

his grandfather's bhujia shop and being a marwadi,  he soon enough started finding ways to make money  

for his family. Back then bhujia in Bikaner was  an extremely commoditized product, which means  

what since there were hundreds of bhujia shops in  bikaner, there was hardly any difference between  

their products. Therefore, the competition was  solely based on the price and not on quality.  

During this time, Haldiram would take up odd  jobs such as chopping and clean the kitchen,  

and he gradually began to take interest  in the making of the bhujia. Originally,  

the tasty bhujia was actually made by one  of the daughter in law's of the family.  

And soon enough haldirams grandfather  realised the potential of this product,  

and he took it to the market. And as soon as this  product hit the market, the bhujia started selling  

very well. And as soon as they started making more  money, the entire family was extremely happy. But  

Haldiram was the only member who was not at all  satisfied neither of the penny profits, nor with  

the taste and quality of their product. because  deep down he still felt that bhujia was not good  

enough. And he wanted to make something that was  far away from the rest of the competition. And  

he wanted his product to be not just yet another  bhujia among the hundreds of bhujia in the market.  

And right away, driven by this insane obsession  for a high quality product, this little  

boy started working very hard, and started  experimenting with different ingredients in  

search of a mind blowing product. And that is when  many, many iterations later Haldiram was able to  

make three changes to the bhujia that changed the  destiny of his family forever. The first change  

he made was that instead of making bhujia out of  besan, he started making it out of Moth Ki Dall.  

And this made bhujia extremely delicious, turning  it into a delicacy overnight. In addition to that,  

instead of making them soft, he started making  them into fine crispy mixture so that it could  

give people an enhanced experience of eating  bhujia and at the same time, it could make  

the customers feel something different from the  conventional bhujia sold in bikaner. Secondly,  

because this bhujia was extremely commoditized he  started selling his bhujia at a 150 percent extra  

cost at 5 paise per kilo as compared to the market  price which was just 2 paise per kilo. And lastly,  

he named his bhujia as Dungar Sev which was  named after that then Maharaja Dungar Singh.  

And these three changes ladies and gentlemen  gave Haldiram three superpowers over his  

extremely crowded competition. Firstly, the name  dungar by default made this bhujia sound like a  

delicacy that people would want to try. And this  is because, although the name dungar did not have  

any connection to the Maharaja, it acted like a  brand ambassador for the bhujia. Therefore, the  

perceived value of the product was enhanced by a  large extent. Secondly, because of this increased  

perceived value, people do not mind paying three  paise extra because they by default assume that  

they were buying a premium product. And third and  most importantly, after we people pay the premium  

for the bhujia after perceiving it as a better  product. When they actually tasted it, the bhujia  

genuinely turned out to be absolutely delicious.  As a result, the demand for Haldirams dungar sev  

skyrocketed within just a few weeks. If you see,  this is a textbook execution of one of the most  

powerful principles of marketing which says that  brand perception plus a tangible value delivery  

results into brand value. In this case, by hearing  the name of dangar Maharaj, haldirams bhujia  

attracted more customers due to the enhanced  perceived value after that, when it actually  

tasted great customers and wholesalers do not mind  paying three paise extra per kilo. So if you see,  

the three paise extra or the 150 percent premium  cost was the brand value of Haldiram's bhujia.  

And this turned Haldiram's bhujia into a leading  product in a highly commoditized bhujia market.  

And within no time, hundreds of kilos  of Haldiram's bhujia started to be sold.  

This was the founding pillar of  the incredible Haldiram story.  

The second pillar of Haldiram growth was actually  lead by Mr. Shiv Kishan Agarwal in the late 1960s.  

And he belonged to the third generation in the  Agarwal family. Until this point, the family  

have separated into three discrete businesses  which were in Bikaner, Kolkata and Nagpur and  

when Bikaner and Kolkata were doing very well,  Shiv Kishan was struggling to sell bhujia in  

Nagpur because the demand for snacks in general  was not very high in Maharashtra. Therefore,

he decided to take a step back and got back on the  ground to do a thorough market research about the  

food habits of the maharashtrians and that is  when, after making countless visits to the most  

popular stores in Nagpur, Shiv Kishan identified  three major opportunities in the market. The first  

thing he realised was that maharashtrians had not  been exposed to more than a few savoury snacks.  

And this presented him with a huge opportunity to  be a first mover in the market. But at the same  

time, just like any other first mover, the trust  factor or the hesitancy of the people was a major  

obstacle for market penetration. The second  gap he identified was in the sweets market,  

and he noted that the most popular shops in  Maharashtra mostly sold only bhalushahis Gujarati  

pedas, Mysore pak and ladoos. This is when he  realised that the maharashtrians definitely had  

a sweet tooth that could be exploited further.  And thirdly, Shiv Kishan realised that because  

the variety of sweets available in Maharashtra  was very less, there was immense scope for  

hundreds of sweet delicacies from other regions  that could be leveraged for market penetration.  

So guess what? He started by making his favourite  sweet using thickening of milk, sugar, dry fruits,  

cashew nuts and saffron. And this is what  ladies and gentlemen gave rise to the iconic  

Kaju Katli in Maharashtra. And Shiv Kishan started  aggressively promoting the dish by giving out free  

samples and by encouraging every customer to taste  the dish. Soon enough, the word of mouth spread  

and the sweet began to achieve extraordinary  levels of popularity. In fact, in one of the  

interviews, Shiv Kishan said that it first started  with people buying 100 grams then it went up to  

200 grams, and gradually people started buying  500 grams of Kaju Katli per customer. In fact,  

the flavour was so well accepted and loved that  they were flooded with demand for Kaju Katli. Soon  

enough, he introduced the logus to the delights  from Bikaner and Calcutta like malai ladoo,  

rasgulla and rasmalai. And not so surprisingly,  his Maharashtrian customers couldn't get enough  

of Haldiram bhujia wala sweets. And within  just three years, their sales shot up by 400%  

going from just 100 rupees per day to 500 rupees  per day, which in today's world is by the way,  

equivalent to 12,000 rupees of sales per day. Now,  while most of us would be extremely satisfied with  

this crazy amount of sales, Shiv Kishan did not  stop there. After serving the market further,  

he realised that South Indian snacks like Dosa  and Idli were extremely popular in Nagpur.  

So he immediately started a South Indian  restaurant for customer acquisition reasons.  

And when more and more people started visiting  his restaurant, he slowly introduced Samosas and  

Kachoris. And this time, it did not take a lot of  time because samosas and kachoris became standard  

fast foods in Maharashtra. This is how Shiv Kishan  achieved market penetration in a seemingly unknown  

market with his brilliant business strategies. Now  in business terms, what he basically did was that  

he build a golden bridge to move the customer  sentiment from scepticism to delight.  

So initially, he was an unknown vendor selling  unknown dishes because of which people are  

sceptical. As a result, market penetration was  extremely difficult. So what did he do, he first  

started selling known dishes and establish  the trust with the customers. And as soon as  

he owned the trust of the customers, he brought  in the X Factor that no other known vendor had.  

And that were the brilliant dishes, which were  completely unknown to the audience. As a result,  

the customers embraced his dishes with open  arms. In fact, they were super delighted,  

because a trusted guy was brilliant enough to  present many new dishes. While the rest of the  

known guys were presenting the same old stuff.  This was the magic of Shiv Kishan's execution.  

And this is what brings me to the third pillar  of haldiram's growth that was nothing but  

packaging and location. And these two changes were  brought by another third generation member named  

Manohar Lal Agarwal. And when executed, it  led to exponential sales because of something  

called brand recall value. Long story short,  when you see a lot of guys delivering food,  

wearing zomato t shirts, you automatically tend  to believe that Zomato is a trusted brand. When  

you see a lot of images of the same book cover  on social media and many other places, it is  

very likely that that might be the first book you  read. A very simple example of the same would be  

Dale Carnegie's How to Win Friends and Influence  People, and the subtle art of not giving an F.  

Similarly, when you see a lot of people  buying or gifting Haldiram bhujia Wala sweets,  

they automatically become mini banner ads  to make you feel that the Haldiram brand is  

extremely trusted. And this strategy, ladies  and gentleman, was a game changer back then,  

because in the 1980s, nobody in the  market took packaging seriously.

So when Manohar Lal executed this strategy,  Haldiram bhujia Wala was not just shipping  

1000s of products, but they also shipped 1000s  of mini billboards that made the brand stand out  

and established trust both with the customers  and the sellers. And when this was combined with  

strategic placement of stores in densely populated  places like the railway station, the sales numbers  

went crazy. To tell you about it, In just five  years, by 1981, the production of Haldiram had  

shot up by 400% to 3000 kilos per month, and  people from all across the country came in and  

asked for Haldiram bhujia Wala specifically, and  soon enough, the brand logo started travelling  

through the length and breadth of the country.  And this is when people of Bikaner and Nagpur view  

that Haldiram bhujia Wala was not just a small  sweet shop, but an iconic brand in the making.  

And from here onwards, despite many challenges,  there was no looking back for the Haldiram brand.  

As a result, today Haldiram is a humongous brand  valued at $3 billion with the signature dishes,  

making impact not just in India, but in 80  countries all across the world. And this is  

how three generations of the Agarwal family  laid a solid foundation to build a 5000 crore  

business empire. And this is what brings me to the  most important part of the episode and that are,  

the lessons from the case study and the study  materials to help you read further about them.  

Before we move on, I wanted to tell you about  this one skill of Haldiram founder that I was  

personally fascinated by. And that was his  focus on accounting and inventory management.  

Because these two factors are extremely  critical for any business irrespective of  

its size. And that is where our partners  of today's episode, myBillBook comes in.  

myBillBook is an amazing billing and accounting  solution that is available on both Android mobile  

and desktop. myBillBook will take care of your  GST, non GST, invoicing and billing along with  

inventory management. The best part is that  it is the multi user, multi business platform,  

which means even if you have multiple businesses  like a hotel, an ed tech company and the farm,  

myBillBook will generate insightful business  reports according to each of your specific  

requirements to help you monitor all of your  businesses at a glance. And one of the coolest  

feature of this app is also the WhatsApp  payment reminder wherein you can share  

your UPI payment links with your customers and  collect payments directly in your bank account.  

So if you're someone who wants to simplify  your accounting with complete data security,  

download the myBillBook app from the link in the  description. Now let's talk about the lessons from  

the case study and the study materials to help you  dive deeper. Lesson number one, while most people  

think that there is no scope for brand building  in a commoditized market, you need to realise  

that a commoditized market is perhaps the best  place to build a brand because once you do it,  

you're going to stand out and that is going to  skyrocket your sales in no time. In this case,  

it was haldirams acumen to build a brand  name for his bhujia among the hundreds of  

bhujia sellers in Bikaner. Lesson number two,  while most of us love to play on our strengths,  

sometimes we need to realise that  in order to play our strengths,  

we first need to cater to the demand in the  market. In this case, if you see, even after 20  

years of running a family business just around  bhujia it was Shiv Kishan's strategic approach  

to first establish trust with the customers by  selling sweets. And then he came full circle by  

selling South Indian snacks eventually to sell  North Indian dishes like samosas and kachori.  

And this eventually helped him stand out from the  rest of the competition. And lastly, we all need  

to realise that healthy obsession often turns work  into art. And regardless of what you do, if it is  

pursued with a certain degree of craftsmanship  even if you're selling something as seemingly  

insignificant as bhujia it can help you build a  billion dollar business. And before I say goodbye  

for further reading, I would highly recommend it  read this wonderful book called bhujia barons,  

which is what I referred while curating this  content. That's all from my side for today guys,  

if you learned something valuable, please make  sure to hit the like button in order to make  

YouTube Baba happy and for more such insightful  business and political case studies please  

subscribe to our channel. Thank you so much for  watching. I will see you in the next one. Bye bye