Paperboat flexes its financial muscle, but losses on a rise

Hector Beverages, makers of energy drink Tzinga and flavored drink brand Paperboat, reported more than 100% rise in its total revenue to INR72 crore in FY16 from a nominal INR32 crore in FY15. However, the company’s losses widened significantly to INR82 crore in FY16, a near fourfold rise from INR22.6 crore in FY15. Although the company’s sales rose on the back of increased spend on marketing, it is now planning to curtail the marketing costs in coming year to improve its financial position since the brand is already established. While Hector Beverages produce both Tzinga and Paperboat, the later brand accounts for more than 80% of the company’s total sales.

The concept of traditional packages juices is unique for a country like India, and Paperboat was the first company to start manufacturing such drinks. The 7 year old Sequoia Capital backed startup is already starting to diversify its offerings, and launching packaged Indian snacks along with the juices to reduce its dependence on summer season.

Paperboat is now not the only firm to manufacture and sell such traditional drinks. Sensing the huge market potential in the category, other major brands such as ITC and Dabur have also released their own products in the market. While ITC is giving competition to Paperboat through its “B Natural” juice brand, Dabur has released Hajmola Yoodley. With the rising competition in the segment, all firms are looking to invent and stay in the space.