Exploring Sales and Distribution Strategy

of Paper Boat

Arijeet (1501005) | Putoukho (1501028) | Rahul (1501030) | Nitin

(1501089) | Pradeep (1501090) | Sourabh (1501103) | Shilanand
(1501106)
Group: 5

Introduction
Paper Boat is a brand of non-carbonated beverage and ethnic Indian drink produced and
marketed by Hector Beverages, which is located in Bangalore, India
Paper Boat beverages were introduced in August, 2013 as a traditional, authentic indigenous
drinks, packaged in single serving flexible pouches.
Its markets include India, Dubai, Malaysia, UK and US with very strong presence in two
Indian cities, Bangalore and Delhi.
Paper Boat constitutes 90% of Hectors total sales, rest coming from energy drink, Tzinga.
It has evolved from 80 packs per minute capacity plant in Manesar to 380 packs per minute
capacity plant in Mysuru.

Market Size and Forecast

Non-Carbonated Market

Ethnic Beverages Market

6000

5599

5000

15
10-

R
AG
C
%

400

224
200

1000

100

2015

334

300

2500

2000

500

500

4000
3000

600

2016

2017

2018

2019

2020

Market Size, Forecast and Growth for NonCarbonated Market in Crores INR

150
100

2015

2016

2017

2018

2019

Market Size, Forecast and Growth for Ethnic

Beverages Market in Crores INR

Paperboat Significant Achievements

Gained unique position in presence of big players in extremely cluttered beverage market
Ensured availability even when distribution network requirements are very high to reach end
consumer in such a product category.
Food Processing capabilities to ensure longevity on shelves in Indian climatic conditions
Procurement of Indian traditional ingredients
Established availability at multiple points from retail outlets to airlines.
Engaging social media marketing and appealing packaging

Paper Boat : Marketing Mix

Type of Product - Beverages are generally variety-seeking convenience good but Paper Boat has
shifted it to the category of Preference good, through its differentiated variants and the
relevance of emotional value it provides.
Product
Emulating home made
drinks taste; highly
differentiated variants;
high quality, healthy
beverage

Price
Charge premium;
Differential pricing in
different channels

Promotion
Unique combination
of drinks and
memories;
Appealing packaging
with vibrant colors,
cute doodles

Place
Shelf space at retail;
Served at 10000 feet
above sea level;
Aspirational platforms
like Barista and Trident

Paper Boat : Value Proposition

Promise of

Emotional Value
Nostalgia/Innocent
memories based
products
Functional Value
Unique and
differentiated
variants

Economic Value
Charge premium; low
on economic value

Target audience Mostly between 18-40 years of age in metros and tier-1,2 cities;
Widespread Indian diaspora across 10 other countries including Dubai, UK, Malaysia,
etc.
Compelling and Differentiated by being able to make people taste memories
Innovative packaging; Promotional Campaigns highlighting unique flavors

Distribution Channels
Retail Stores
GT

Whole Sellers
Pan Shops

Indo Nissin

Restaurants
Institutional
Mess

Paper boat
Modern
Trade
Own
Distribution

Hyper Market
Chains
Online grocery
Apps

Online

Amazon
Institutional Sales
Like Airlines

Paperboat sales through its

own website
Its authorised e-commerce
partner is amazon.in in
India.
Paperboat has also
partnered with Delhivery
to provide omni-channel
solution.

General Trade Channel Structure

Paper boat
Manufacturing
plant

Paper boat
manufacturin
g plant

Carrying &
forwarding
Agent

Carrying &
forwarding
agent

Distributor

Super stockist

Distribut
or

Dealer

Dealer

Functions performed by Distribution Channel

Carrying and Forwarding Agent
Place Utility; Warehousing; Movement; No transfer of ownership;
UP 2 C&F , such that C&F can get advantage of bulk transport
Super Stockist
Bulk Breaking, esp. when distributor order sizes are small;
Appointed in cities where C&F is absent; Possession utility
Distributor Holding Stock; Bulk Breaking; Credit provider to dealers/retailers
Dealers/Retailers Touch point for end consumer; Point of Purchase Promotions

Sales Org. Structure of Indo-Nissin

GM
VP
DGM
RSM
ASM

ASM

SO
DSR

DSR

ISR

DSR

SO

SO

SO

DSR

ISR

Promoter

Daily Routine of DSR

Beat: 240 counters @ 40
counters/day
Order creation

POP advertising
placement
Last bill payment
settlement

Ensuring visibility of the product

DSR Incentive Structure: Sales force compensation

Fixed : 7000
Target achievement : 2000(TR)+2000(PB)
Daily SMS update : 1000
Assorted: Rs.25 per bill crossing 1000

With every 24 pcs 1 pc

is given free
That translate to 1/24
= 4.16 %
So, either the retailer
gets a piece free or he
gets additional discount
on purchase

This is to promote sales

on retailer side
With every 10 cases,
retailer gets 50 Rs off
per case (1 case = 48 pcs)
With every 20 cases, it
gets 80 Rs off per case
With every 30 cases, it
gets 100 Rs off per case

Secondary Scheme

Primary Scheme

Retailer Promotional Schemes

General Trade Margin w/o Super Stockist

To understand the margin among the distribution chain let's take a product for example
whose MRP is 25/-

General Trade Margins with Super Stockist

Sr No.

Name/Title

Margin (in %)

Rs.

MRP/Retailer sales price

25

Retailer margin

15% + 4.16%(primary scheme)

4.13

Retailer cost price/distributor selling price

20.87

Distributor margin

7%

1.37

Distributor cost price/super stockist selling price

19.50

Super stockist margin

6%

1.10

Super stockist cost price/manufacturer selling price(including taxes 5%) -

18.40

MT Margins
Modern trade
retail chain

Discount/Mar
gin

Big Bazaar

20%

Vishal

15%

Spencers

17%

V-Mart

11%

Walmart

20%
20%

Reliance
* Challenge faced

Sale for MT* is done by paper boat

themselves

For a product of MRP 25/-

Modern trade chain like Big bazaar will get

20% flat discount from Paper boat

MRP- 25
Big bazaar cost price- 20
Big bazaar margin-5

How They Beat the Competition?

Higher Margins

Low investment in advertisement, higher profits to distribution

network (Retailers margin. Paperboat: 15%+4.16%, PepsiCo: 17.5%

Low Sales Push Requirement

Superior product due to higher pulp content (~2x) and imported fruits
(Pomegranate); less effort required by retailers to sell to end customers

Customer Demand

Natural juice products perceived as premium, High latent demand for

natural drinks over carbonated drinks

Quick Product Turnover (Low

investment by retailer)

Small order size allowed for retailers, reduces their inventory cost

Favorable Credit Policy

Sell first, pay later for new outlets, Paperboat assumes the risk of
sales on itself

Breakage/Expiry Service

Paperboat's company policy of easy returns of breakage/expiry, Low

breakage due to unique packaging

Challenges

Incumbent players dont allow Paper Boat to keep stock in their refrigerators.
Aamras is the dominant flavour in terms of sales (70+%).
Rural customers may not pay price premium for higher quality.
Retailers not allowed to order only Aamras or restock only Aamras to prevent other
flavours getting sidelined.
Multiplexes, a key institutional channel, yet to be penetrated.

Way Ahead

New flavors including region-specific ones; More SKUs - half litre packs,
gift packs announced
Tailoring products to meet needs of rural markets

Use of technology in distribution

Costs need to be controlled

THANK
YOU