India’s famous snack brand Balaji Wafers
There is a lot of activity in the Indian snack market these days. Just a few months ago, Haldiram had signed a big global deal at a valuation of more than $10 billion. Now, another homegrown brand, Balaji Wafers, which started from Rajkot, Gujarat, has also attracted the attention of investors across the world. It is reported that American private equity firm General Atlantic, Balaji Wafers It is going to buy a large stake in India at a valuation of about $ 4 billion (about Rs 35,000 crore). This deal is a big win not only for Balaji Wafers, but also for hundreds of small and regional brands in India that are quietly taking on the big international giants.
What is this ‘big deal’ of $4 billion?
According to an ET report, American investor General Atlantic is ready to buy 7% stake in Balaji Wafers. This deal could be worth around Rs 2,500 crore (about $282 million). If this deal is confirmed, the total valuation of the company will be estimated at around $4 billion, i.e. Rs 35,000 crore. This will be another big private equity deal in the domestic consumer sector. Chandu Virani, founder and managing director of Balaji Wafers, has also confirmed talks with General Atlantic. He said that the deal is almost finalized and it will be formally announced soon. Mr. Virani also indicated that in future the company may launch its own IPO instead of selling more stake.
How are ‘desi’ brands defeating the big giants?
This deal reflects a new trend in India’s fast-moving consumer goods (FMCG) sector. For a long time, this market was dominated by big companies like Hindustan Unilever (HUL), Nestle and ITC. But now, small and regional brands are changing this picture. The main reason for this is that these smaller brands understand local tastes and needs better. They are able to offer good quality products at lower prices than big brands. They are able to do this because of their local supply chains and low-cost operations. Also, e-commerce platforms like BigBasket, BlinkIt and Amazon have given these regional brands a new way to reach direct to customers (D2C).
Less advertising, more business
The success formula of Balaji Wafers is very clear, low cost and high efficiency. The company sells its products 20-30% cheaper than national brands. Chandu Virani started his business in 1982 as a snacks and sandwich supplier in a cinema hall in Rajkot. Today, much of the success of Balaji Wafers goes to its unique business model. The company spends very little on advertising. While the average industry spend is 8-12% of revenue, Balaji spends only 4% of its revenue on advertising. They reinvest the huge amount left in production and maintaining quality. In the last financial year, Balaji had made annual sales of Rs 6,500 crore and net profit of about Rs 1,000 crore. They have about 65% share in the organized market of potato chips and namkeen in states like Gujarat, Maharashtra and Rajasthan.