Rasna, a household name throughout the 80s and 90s, continues to dominate the pre-mix market and is now exploring overseas franchise agreements for manufacturing abroad.
Under this agreement, the franchisee will be responsible for investing in the plant and machinery, as well as managing day-to-day operations. Rasna will provide the pre-mix, technical expertise, and partial financial assistance. Additionally, Rasna will oversee quality control, handle marketing initiatives, and manage distribution channels.
Piruz Khambatta, Rasna Group chairman, said, “We already have 3 to 4 arrangements and we are searching for more.”
Such arrangements are currently established in Bangladesh and Nepal.
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Negotiations for franchise agreements were underway for Egypt, Indonesia, and the Philippines. Factors such as market size, rising logistics costs, and high duties were driving the interest in these arrangements.
Approximately 30-35 percent of Rasna’s sales currently stem from exports, with plans to increase this share to 50 percent within the next few years.
Rasna is currently distributed in 60 countries worldwide.
Khambatta expects the export division to clock in a 30-35 per cent year-on-year (YoY) growth in volumes in FY24. “We could have done much better but the whole year has been full of supply chain disruptions partly because of the wars and the Red Sea crisis.”
Domestically, the growth is expected to reach approximately 20 percent. The soft drink manufacturer has enlisted actress Tamannaah Bhatia as its new brand ambassador.
However, similar to other consumer-facing companies, Rasna has been facing challenges in increasing its sales in rural areas for some time now.
Khambatta said, “Last summer, rural growth didn’t pick up.”
While March was “very good”, April, May and June lagged. Diwali was also a “little pale,” he added.
Nonetheless, the Chairman of the Rasna Group expressed optimism regarding the rural segment for the upcoming fiscal year (FY25), anticipating an uptick due to the implementation of incentives during an election year.
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Roughly 20-25 percent of Rasna’s sales originate from rural areas. Khambatta noted that individuals from rural regions also place orders in urban centers. He emphasized that the rural sector serves as a growth catalyst.
“India is very unique; our growth propensity depends on the rural masses,” Khambatta pointed out.
Rasna adopts a three-pronged strategy for growth. On one front, it targets the masses; on another, it competes with startups in the direct-to-consumer (D2C) sector with higher-margin products, while exports serve as another avenue for growth.
In terms of exports, Rasna has met the criteria for the government’s Production Linked Incentive (PLI) scheme, specifically aimed at branding and marketing efforts overseas.
Moreover, Khambatta is optimistic that if the global situation improves, there could be a 50 percent increase in exports.