Navalprabha Foods wants to become the black kitchen of D2C brands
It was in the mid-1980s. Harak Soni’s aunt, Meena Soni, who had moved to the United States, lacked Indian food, especially dhokla khaman (a light, spongy flour-based snack). So, when she came to India on her annual visit, she told her family to find a solution for her craving.
Harak’s father, Jayesh Soni, and grandfather, Narayanji Soni, prepared a homemade premix for dhokla khaman, that Meena could bring back to the United States. Soon, the premix not only solved his dilemma, but also became very popular in the United States, especially among the Indian diaspora, says Harak, director of Navalprabha Foods.
The product’s instant popularity led the Soni family to begin supplying the premix in the United States through Meena and select national retailers. Until around 1988, the family operated on a small scale, but when they were convinced they had found a good business opportunity, they couldn’t let go.
The same year, the Soni family set up a 1,000 square foot manufacturing unit and launched Navalprabha Foods in Jalgaon, Maharashtra, with a capital investment of Rs 7,000. One of his first clients was a Nashik-based FMCG company, which asked Harak’s father to manufacture a Gulab Jamun premix.
Three decades later, Navalprabha Foods is now a white-label manufacturer supplying companies such as Nilon’s, an FMCG company, and Rakesh Masala, a spice manufacturer. His portfolio includes premixes for dhokla, Gulab Jamun, idly, dosa, vadaice cream, and Cakes and flavored cashew nuts and millet. In the future, he wants to become a contract manufacturer for direct-to-consumer (D2C) brands.
Harak, a third generation entrepreneur, observes market trends and drives product innovation at Navalprabha Foods, in response to these trends. He runs the business with his sister Chandni Soni and his brother Darshan Soni.
Two years ago, Harak noticed that people were becoming more health conscious. He realized that his company needed to add healthier options to its portfolio. This led the company to launch flavored cashews, almonds and millets. “We’re not a full-fledged health company, but a company that also has healthier products in its portfolio,” he says.
Another trend has been the emergence of plant-based meat tikkis and patties. Many entrepreneurs in the D2C space have contacted Harak with plant-based meat manufacturing requests tikkis and patties.
According to a report by Research and MarketsIndia’s meat substitute market is expected to reach $47.57 million by 2026, with an average annual growth rate of 7.5% from 2021 to 2026. It is this “huge opportunity” that Harak wants to exploit.
The D2C idea
Observing the interest expressed by D2C players, Harak began to take the idea of D2C seriously.
A D2C brand sells products directly to consumers online, without involving retail stores or a distribution network. The Indian D2C market is pegged at $1.9 billion and is expected to reach $22 billion by 2025, according to a report by Technopark.
The company has invested Rs 4.3 crore in a factory in Jalgaon exclusively to manufacture products for D2C brands. He started manufacturing and the food startups that are on board are Snackible, Yes and Govaa Bazaar.
“In the 1990s, our idea was to produce X tons of products every month, but today we aim to become the black kitchen of D2C brands and work with as many entrepreneurs as possible without worrying about quantity. Next-gen entrepreneurs and founders leading food startups are extremely innovative and passionate about what they do,” says Harak.
Lessons learned from failure
Traditionally, Navalprabha Foods has operated as a B2B (business-to-business) company. However, in 2006 he ventured into the B2C space but soon realized he wasn’t cut out for it.
The company set up a manufacturing plant and started manufacturing kulfis. The company has launched 23 flavors of kulfis and even ice cream, but the products failed to find a foothold in the retail market.
“Competition from the ice cream giants ate us up and we felt our unit economy had gone bad,” Harak says. He says it was extremely difficult to maintain a cold supply chain and the company was paying four times what it cost for a single batch of kulfis and ice cream. Navalprabha Foods was manufacturing a lakh units a year, but was only able to sell 65,000 to 85,000 units.
In 2013, the company made the difficult decision to stop the B2B operation. She sold her equipment and unit to an FMCG company based in Ahmednagar.
The biggest lesson the company learned from this experience was that it needed to focus on its forte: B2B operations.
Navalprabha Foods operates with a margin of 6-7% with small entrepreneurs and 10-11% with big brands.
In terms of revenue, Navalprabha Foods has yet to reach the big leagues. The company recorded revenue of Rs 1 crore in FY20 and Rs 2 crore in FY21.
“We’re still a very small company, but we’ve been able to support entrepreneurs and big brands, so we’re happy at the end of the day,” says Harak.
In the future, the company plans to produce healthier products such as premixes for ragi idli and ragi gulab jamun, millet products and vegetable meat. “People have realized the importance of post COVID-19 health; so health product production is definitely on the cards,” Harak signs.