{"id":6559,"date":"2024-08-09T19:00:00","date_gmt":"2024-08-09T13:30:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=6559"},"modified":"2024-08-11T19:08:05","modified_gmt":"2024-08-11T13:38:05","slug":"popees-the-baby-care-brand-from-kerala-taking-on-global-rivals","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/popees-the-baby-care-brand-from-kerala-taking-on-global-rivals\/","title":{"rendered":"Popees: The baby care brand from Kerala taking on global rivals"},"content":{"rendered":"\n

Manu Balachandran, Forbes India <\/em><\/p>\n\n\n\n

9 August 2024 <\/em><\/p>\n\n\n\n

If it hadn\u2019t been for a kind manager at Canara Bank in Malappuram district of Kerala, Shaju Thomas would have probably continued being a journalist.<\/p>\n\n\n\n

It was around 2005, and Thomas had wanted a loan of \u20b910 lakh from the bank, the only SME (small and medium enterprise) branch in his district, to keep his entrepreneurial venture going. The manager, impressed by the 26-year-old\u2019s perseverance, finally decided to take a gamble on him, even though his predecessor had thought otherwise.<\/p>\n\n\n\n

\u201cIt was God\u2019s intervention,\u201d Thomas says about that time. \u201cIf it weren\u2019t for that money, Popees wouldn\u2019t have existed today.\u201d Today, Thomas runs Popees Baby Care, a business that rakes in well over \u20b9100 crore a year and has become one of Kerala\u2019s best-known brands in a little over two decades. The company produces everything from clothes to soaps and diapers, retailing them through 70 exclusive outlets and some 8,000 other retail outlets across the country.<\/p>\n\n\n\n

Three other stores, all in the Middle East, are being readied this year, which will see Popees go head-to-head with some of the world\u2019s leading baby care brands in malls across Dubai, Abu Dhabi and Sharjah. \u201cI am a believer in Indian cotton being the best,\u201d Thomas tells Forbes India from his office in Thiruvali in Kerala. \u201cIndian manufacturing is also the best. That gives me the confidence. I am obsessed with quality, and that\u2019s at the centre of everything we do. Money is only secondary.\u201d<\/p>\n\n\n\n

Last year, Popees posted annual revenues of \u20b9122 crore and is now setting sights on a topline of \u20b9250 crore by 2025, before growing to \u20b91,000 crore by 2027. The brand sells garments between 18,000 kg and 22,000 kg a month and employs over 1,400 people at its two factories in Kerala and Karnataka. \u201cI am in this business not to make huge gains and profits,\u201d says Thomas, managing director of Popees Baby Care. \u201cWe are in the business of baby care, and we must be very careful about everything we do because it involves babies. What I want is satisfaction at the end of the day.\u201d<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Last year, Thomas and his wife, Linta Jose, acquired a majority stake in Chennai-based publicly traded Archana Software Limited and renamed the company as Popees Cares Limited. Now, the privately held Popees Baby Care will merge with Popees Cares Limited, before raising private placements, as the company targets aggressive growth in the coming years.<\/p>\n\n\n\n

\u201cThis year, we are not being very aggressive,\u201d Thomas says. \u201cWe want to focus on the listing and merger. We also want to premiumise our collections because our customer profiles are changing. There are more premium customers coming into the market. What we are focussed on is an Ebidta margin of between 34 and 38 percent.\u201d Ebitda refers to earnings before interest, taxes, depreciation, and amortisation.<\/p>\n\n\n\n

India\u2019s childcare product market is expected to grow between 13 and 14 percent annually to \u20b95.4 lakh crore by 2028, with younger parents focusing on branded apparel and consumables, according to a report by Redseer Consultancy. It also helps that India is the world\u2019s most populous country, and has one of the highest birth rates globally, with 16 births per thousand people, almost 1.5 times that of developed countries. A growing Tier II and III market only adds to the potential for companies such as Popees.<\/p>\n\n\n\n

\u201cGlobal brands carry with them the momentum and visibility that has been built over decades, which translates into trust as well as aspirational value,\u201d says Devangshu Dutta, founder and CEO of Third Eyesight. \u201cBut in many cases their pricing is higher than what would be affordable for most Indian consumers. Therefore, there is space for Indian companies to create strong brands that address both factors, trust and value.\u201d<\/strong><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Taking the Risk<\/strong>
Thomas has always had an entrepreneurial streak in him and began venturing out on his own after school. Much of that, he says, is hereditary, coming from a family that had been in business, supplying rubber to the likes of MRF. Passionate about photography, Thomas had set up a small studio in Nilambur, his hometown in Kerala that is known for its teak wood, after his schooling.<\/p>\n\n\n\n

Simultaneously, he studied economics before going on to finish his diploma in journalism from the Calicut Press Club in 2000. \u201cNobody wanted to study economics back then,\u201d Thomas says. \u201cNow it\u2019s in huge demand. But I realised the importance of studying concepts such as scarcity, demand, and supply, now.\u201d<\/p>\n\n\n\n

After his graduation in journalism, Thomas picked up work with the Malayalam newspaper, Mangalam, and was soon posted to the hills of Wayanad. Around the same time, he invested in a baby care shop in Manjeri, a town near Kozhikode in Kerala. \u201cI knew there was potential in the sector,\u201d Thomas says.<\/p>\n\n\n\n

Being an investor made him aware of the nuances involved in the baby care segment. To begin with, there were no brands, and clothes were often brought in bulk from garment manufacturing units and sold in the state for as little as \u20b95. \u201cVery often, these clothes would come in big cartons with naphthalene balls and smelled of sulfur,\u201d Thomas says. \u201cAnd regardless of that, they sold like hot cakes. Sometimes, people would come from hospitals after childbirth, pick up these clothes, and make the newborn wear them.\u201d<\/p>\n\n\n\n

That\u2019s when Thomas realised the massive underlying opportunity in manufacturing good quality, branded clothes for children. \u201cThere were big brands for everybody except kids,\u201d Thomas says. He soon packed his bags and went off to Tirupur in Tamil Nadu, India\u2019s then-thriving garment manufacturing capital, to understand how he could venture into the business. With him, he also carried a few pieces of child wear that he had sourced from friends abroad, as a reference for the quality of the product that he was looking to make.<\/p>\n\n\n\n

\u201cI was thinking both domestic and international,\u201d Thomas says. But Tirupur was something of a rude shock. Thomas found himself in a market near the railway station, with tiny shops, that had their stitching units outside, from where clothes were dispatched to various states under different labels. \u201cWhen I enquired with them, they asked me if I wanted to sell domestic or international,\u201d Thomas says. \u201cIf it was domestic, I had to buy from there. If it was international, I had to have a minimum order quantity. It was the first time I had heard of that concept.\u201d<\/p>\n\n\n\n

But Thomas wasn\u2019t startled. Instead, he found a supplier, who would meet his demand for quality, and soon began working with a minimum order quantity, which is usually the minimum number of units a business is willing to sell to a customer in a single order. He also turned down an offer to join a television news channel, IndiaVision, much to the disdain of his family who had wanted him to remain a journalist.<\/p>\n\n\n\n

Starting his own business also came with its own set of challenges. For one, in an era when customers didn\u2019t bother about branded clothes for their kids, and when cheaper alternatives were easily available, Thomas\u2019 products were significantly expensive. He could only sell for \u20b960 what was otherwise available at \u20b96.<\/p>\n\n\n\n

\u201cPeople in the Malabar region have a mindset to help others,\u201d Thomas says. \u201cShops in the region started keeping my products. That gave me confidence.\u201d Thomas also realised that he needed to set up a factory in Kerala if he had to make timely deliveries as business was slowly picking up steam, and shipments from Tirupur took time.<\/p>\n\n\n\n

Saviour at the Bank<\/strong>
Setting up a small factory was no cheap affair. His family had already been opposed to the idea of doing business, which meant Thomas now had to turn to banks to raise capital. \u201cI made a project report, and submitted it to the bank,\u201d Thomas says. It was a branch where his father, a businessman, had a loan limit of \u20b91 crore. \u201cI wanted \u20b910 lakh. But the manager wasn\u2019t convinced by my business plan. He asked me \u2018why don\u2019t you start a curry powder business\u2019 since people always want food. I told him babies are born every day and clothes for them were essential too.\u201d<\/p>\n\n\n\n

But his plea fell on deaf ears and was finally sanctioned a loan for \u20b91 lakh without collateral. With his personal savings of another \u20b94 lakh, he bought machines from Chennai. \u201cAll I knew was that if I set out to do something, I will complete it,\u201d Thomas says. He soon set up a small factory, combining a few rooms in Thirunelly in Kerala. The idea was that the raw material would come from Tirupur, and the workforce in Kerala would do the final stitching before it was dispatched.<\/p>\n\n\n\n

Thomas, however, was still desperate for working capital to keep the business running. It was around this time that a new manager had come to the branch and Thomas would visit him every day to pitch his business. \u201cI used to tell him about my ambitions,\u201d Thomas says. \u201cI was particular about cleanliness and having everything in order and would invite him to my factory.\u201d Finally, after much persuasion, the manager visited the factory and was quite impressed. \u201cWithin two days, he added another \u20b99 lakh to my loan, and that\u2019s how I started.,\u201d Thomas says. \u201cIf that hadn\u2019t happened, I would have shut down.\u201d<\/p>\n\n\n\n

With the additional funds, Thomas soon began expanding and selling products across Kerala. By 2005, Thomas was married, and his wife also joined him in the business, helping design products. His background in journalism also helped, as he began putting advertorials in evening newspapers about the importance of buying high-quality kids\u2019 wear. By 2010, Popees changed its logo, a turning point in its growth trajectory. That splendid run lasted until 2019, Thomas says, when Popees would only be able to meet 70 percent of its demand and had already been distributing in markets including Punjab and New Delhi.<\/p>\n\n\n\n

It was around this time that Thomas began toying with the idea of its retail stores. \u201cMy cycle was very long,\u201d Thomas says. \u201cOnce you reach a certain turnover, you need to reduce your time. That\u2019s how I thought of my showroom. Until then they were sold in other retail outlets.\u201d The yarn for Popees clothes comes from organic cotton farmers in Ahmedabad, and the manufacturing is done in Tirupur, based on designs given by Popees. Only the final assembly and last round of stitching is done in its factory.
\u201cI was scared to foray into retail,\u201d Thomas says, \u201cMy business was already at about \u20b974 crore, and I was worried if stores would stop taking my products. With floods in Kerala and Nipah virus in Kozhikode, there was uncertainty already in the market.\u201d<\/p>\n\n\n\n

Still, Thomas took the plunge and set up a proto store outside the company\u2019s headquarters. That was a success, with customers flocking to the store and buying in bulk, with the store generating \u20b95 lakh in sales. In 2019, Popees opened its first retail outlet in a 1,500 sq ft showroom in Kochi, before starting in Trivandrum and Bengaluru.<\/p>\n\n\n\n

But Covid-19 came as a dampener. In early 2020, Thomas had almost finalised a deal with a private equity (PE) major to raise \u20b9100 crore for a 26 percent stake sale. The due diligence had been completed, and everything seemed on track before the PE firm pulled out after uncertainties about the future. Thomas had also met actor Aishwarya Rai Bachchan to bring her on board as the brand ambassador for Popees.<\/p>\n\n\n\n

With Covid-19 shutting down operations, Popees turned to manufacturing masks and clothes for children, all given for free in Kerala during the pandemic. Simultaneously, though, it went on an expansion spree with its retail outlets going from some six stores to over 30 in two years. Today, the company has 70 stores, 35 of which are franchise-invested, company-operated while the others are franchise-owned, franchise-operated. Twenty more stores are expected to be completed this year, with the company gearing up for a launch in the UK and Australia, apart from the UAE.<\/p>\n\n\n\n

There is also a focus on omni-channel distribution, with Thomas saying that as much as 30 percent of his clientele chooses to buy products online. The company already sells on ecommerce platforms. Today, it has the capacity to make 5 lakh garments monthly.<\/p>\n\n\n\n

Alongside, it has moved to manufacturing everything from baby oil and soap to baby wipes and fabric wash. The product range includes toys, baby soap, body wash, shampoo, lotions, and towels, among others, although a significant share of the sales still come from clothes. \u201cI have three children, and much of what we did was also keeping them in mind,\u201d Thomas says.<\/p>\n\n\n\n

That\u2019s why he prefers not to give discounts on products, instead focusing entirely on the quality. \u201cI am obsessed with product and quality,\u201d Thomas says. \u201cWe can also provide discounts after raising our markups significantly. But we don\u2019t want such high margins.\u201d The company has now hired a new designer in Bengaluru to bring in a premium collection, which Thomas says, will put Popees in a different league in the next few years.<\/p>\n\n\n\n

\u201cWe don\u2019t want a lot of money,\u201d Thomas says. \u201cWe didn\u2019t have children for a few years after marriage. People are praying and waiting for children. So, you have a responsibility to give good products. If you give good products, they will always come.\u201d<\/p>\n\n\n\n

\u201cWhile the large proportion of those are born to families in low-income segments, there is still a substantial number born to households that are middle and upper income,\u201d adds Dutta of Third Eyesight. \u201cAlso, as incomes are growing and the size of families is reducing, the budget available per baby is climbing, which is obviously a strong driver of market growth.\u201d<\/strong><\/p>\n\n\n\n

All that means, for Thomas, the baby steps are now complete. It\u2019s time for the sprint, and the 47-year-old is all set for that.<\/p>\n\n\n\n

(Published in Forbes India<\/a>)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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