PAPER BOAT

Exploring Sales and Distribution Strategy of

Paper Boat

Group 3
Ayush | Chaitanya | Harpreet | Hiteshwar | Srinivas | Kunj |
Sandip

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

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

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

Price

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

Distribution channels
Retail
Stores
GT

Whole
sellers
Pan shops

Indo nissin
Institution
al
Paper boat
Modern
trade
Own
distributio
n
Online

Restaurant
s
Mess
Hyper
market
chains
Online
grocery
Apps
Amazon,
Flipkart
etc
Institutional
sales like
airlines

General trade channel structure

Paper boat
Manufacturing
plant

Paper boat
manufacturin
g plant

Carrying &
forwarding
Agent

Carrying &
forwarding
agent

Super
stockist

Distributor

Distributor

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

promote
r

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

Territory design- Lucknow

Beat schedule-Kamakhya enterprises

Monday: Sanjay Gandhi Puram
Tuesday: Indiranagar-2
Wednesday: off
Thursday: Chinhat
Friday: Indiranagar-1
Saturday: Gomti Nagar-1
Sunday: Gomti nagar-2

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/Sr No. Name

Margin

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

8%

1.55

Distributor cost price/ manufacturer selling price( including taxes 5%)

19.32

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/
Margin

Big Bazaar 20%

Vishal

15%

Spencers

17%

V-Mart

11%

Walmart

20%

Reliance
20%
(Not in
Lucknow)
* Challenge faced

Lucknow 4
Kanpur 3
Varanasi 1
Gorakhpur 1
Bareilly -1

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 sales push requirement:
Customer Demand:
Quick product turnover (Low
investment by retailer):
Favorable Credit policy:
Breakage/Expiry service:

Low investment in advertisement, higher profits to

distribution network (Retailers margin. Paperboat: 15%
+4.16%, PepsiCo: 17.5%
Superior product due to higher pulp content (~2x) and
imported fruits (Pomegranate); less effort required by
retailers to sell to end customers
Natural juice products perceived as premium, High latent
demand for natural drinks over carbonated drinks
Small order size allowed for retailers, reduces their
inventory cost
Sell first, pay later for new outlets, Paperboat assumes
the risk of sales on itself
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