Start-up Hector Beverages is out to prove its energy drink Tzinga has enough zing to take on giants
"Our consumers have the drink when they are studying for an exam, are feeling sleepy in office or a late night movie show," says co-founder Neeraj Biyani.
"Here's what the outsider would see: a new entrant, in an unproven space, out to take on giants with the deepest of pockets (any guesses on what Coke pays Aamir Khan, or Pepsi gives to MSD? Or how much does Red Bull's Formula 1 team cost?) And the company goes on and calls itself Hector, who lost to Achilles.
But that, people, is the trip: the audacity of the underdog. We decided to take the big guys on. We decided to not be cowed down by the big bullies who make their fortune selling sweetened, fizzy water. And we know that Achilles does not have the most powerful heels."
BE asked the founders of energy drink Tzinga about this rather unusual approach to the company website and the brains behind it. They tell us it's not the doing of a radical creative boutique or hot shop, it came from within.
To the point where the entrepreneurs actually wrote the copy themselves, and were happy enough with this bristling with bravado manifesto to actually put it on the website. And that's not the only example of conventional wisdom that Tzinga has attached dynamite to.
Hector Beverages was set up about two years ago by four individuals who have experienced everything from working for multinational corporations to dipping their feet in entrepreneurial ventures.
They are setting themselves up against both the Goliath, and the other Davids, who exist in the Rs 350-500 crore Indian energy drinks market. The ruling matador in this arena is Austrian brand Red Bull that has been the drink of choice in many a Jagerbomb and during brutally long study sessions.
Then there are others in the market, from pedigree players like Coca-Cola's Burn, local brands like Goldwin Healthcare's Cloud 9 and KS an unlikely extension from a condom brand, besides a horde of sporadic imports from Monster to Pepsi's Sobe. So we go back to the start — is another energy drink brand a good idea or a foolish one?
According to co-founder Neeraj Kakkar, in their shared beverage experience (a significant chunk of the founders' previous careers have been with Coca-Cola) they could spot that the Indian market is disproportionately dominated by carbonated soft drinks. This was in comparison not just to the developed economies but even countries like China, Brazil, Philippines, and Poland to say nothing of Thailand, the country of Red Bull's origin.
He says, "With that data point, we engaged with multiple consumers across Delhi and Bangalore and realised that energy drinks is a category in which there is a lot of interest but only one significant player." Fair enough. However, the fact is it's a small waterhole where many are paddling hard to create ripples.
So how does the small guy take on the big one? The men behind Tzinga are trying a series of tactics that includes its very competitive price, Rs 25 for a 250ml pack; a price tag that is a full Rs 50 less than the general asking price for even the cheaper brands in the category. A 250 ml can of market leader Red Bull on the other hand, costs Rs 95.
It's the result of what Tzinga considers genuine product and packaging innovation: a doypack instead of the usual metal can or glass. Says co-founder James Nuttall, "The important point here is that this is not unsustainable. For most consumer goods, packaging is the biggest cost and has a great impact on the retail price. We have been able to disrupt this aspect with our packaging." However it does pose a fairly unusual problem for the brand, with potential consumers wondering how an energy drink can be priced so low.
Nuttall admits, "This is related to the self-image aspect and does constitute a paradoxical marketing challenge — that of marketing a better product at lower price!" Blame it also on the lack of a well defined counter culture movement in the country.
Kakkar says "A consumer's choices of brands is still based, in large part, on what consumption does for their projected self image rather than on the inherent "goodness" of a product." He adds a tad loftily, "Even though we created the best energy drink formulation from day one, consumer adoption was limited to the truly smart people who bother less about self image," pointing to IITs in Delhi and Mumbai and the National Law School and IIM Bangalore as examples of early adopters.
A typical Tzinga consumer, say the founders, is irreverent, witty and extremely confident of himself or herself. They are generally 18-25 years old. Team Tzinga also would like to believe that unlike other energy drinks that are used as mixers or for high premise consumption, their brand is a lot more functional.
"Our consumers have the drink when they are studying for an exam, are feeling sleepy in office, have to stay up to watch a Champions League game or a late night movie show and various other such activities (some of course, unmentionable)," says co-founder Neeraj Biyani.
The company plans to triple its production levels currently at a million drinks per month through the course of 2013. It is opting for a two pronged distribution strategy, high touch ie zero wholesale, high awareness and with a keen tracking of individual outlets. It also plans on strong POSM (point-of-sale marketing) deployment, coupled with sales teams armed with tablets with a customized app, to ensure information flow is flawless across the system.
Call their strategy intriguingly smart or recklessly ambitious, despite their energized approach to the battle against an established international player, the brand is dead set on "keeping it real." Says cofounder Suhas Mishra, "None of our advertising will ever have people jumping across tall buildings or stopping speeding trains with their hands."
An approach that's apparent in its first ad campaign created by Mumbai based ad agency Lauburu and production house Golden Medias. The TVC has a student and a corporate worker fighting off sleep with Tzinga. The digital strategy includes a network of people who connect with the brand and help them activate it online, on Twitter and Facebook mostly.
"The brand is about energizing everyday — helping people fight sleep, when they can't afford to. That's extremely distinct and will be at the core of our communication strategy going forward too," says Mishra. Marketing consultant Harish Bijoor believes this scrappy underdog has something of a fighting chance, since it has been well calibrated to the market.
Stacking the odds in its favour are a host of youngsters who aspire to energy drinks but are unwilling or unable to fork out a large sum of money for a shot of quick wakefulness. He cautions against it trying to compete at the top end though: "It's not a mixer.
To reach that status you need heritage. They will have to create huge volume and carve the brand's own market. They have differentiation based on price and packaging, though I think they need to revamp the latter for a more contemporary look." Just don't expect your Jagerbombs served up with Tzinga anytime soon.
The founders, what's their story?
Been There: Wharton (was the Arnold Palmer Scholar there); The Coca-Cola Company
A lesson To Remember: Creating sustainable advantages is the key to creating successful brands. The courage to look beyond what is obvious was important for us.
After hearing from 10,000 retailers and more marketers that this new packaging is not right, we decided to go ahead with it, as this created something which can be defended against the big players for the long term.
Brands That Rock: Fastrack
Why?: Creating a definitive 1000 crore youth brand in 5 years is not funny.
A Lesson To Remember: There are a couple of principles which B-school opened my eyes to, yet I keep learning and re-learning. The first is to consider that the outcome of your efforts should be looked at through a probabilistic or statistical lens.
We humans really want to use the first data coming our way to make the next big set of decisions — especially if we find that data to be supportive of some happy conclusion or previously held belief.
You have to fight hard to remain in critical thinking mode and not jump to congratulating or berating yourself based on early data. The second is the concept of the S-curve — saturation curve behaviour.
This behaviour is everywhere in the consumer world, and can either fool you into believing something didn't work when you just didn't do it exactly right or intensely enough, or trick you into spending a lot more on something which doesn't have much more to offer in terms of value.
Brands That Rock: EOS lip balm
Why? It was a new start-up entrant in the US some years ago. They went for it based on a consumer insight they believed in, which had been discarded by the dominant CPG houses. I like that story — even if for self-serving reasons.
Been There: MDI; The Coca-Cola Company
A Lesson To Remember: An entrepreneur needs to be very patient and perseverant. Because in organisations, targets keep changing but as an entrepreneur one is chasing one's belief.
Brands That Rock: Nike
Why?: I love their designing.
Been There: IIM Calcutta; The Coca-Cola Company; Nokia; ChannelPlay
A Lesson to Remember: All functions have their experts and one must listen to them with respect. But eventually take a call based on objective thinking and first-principles only.
In fact without that, all an entrepreneur ends up being is a miniature version of a large organisation, dulling the edge that is the most potent weapon for a start-up.
Brands That Rock: Cadbury's
Why?: Their ability to create consumption occasions consistently.