Transforming Tradition: The Evolution of Balaji Agarbatti Company
Overcoming challenges, innovative strategies and zeal for the future:The Balaji agarbatti company story with Ashish Shah
Balaji Agarbatti Company, a prominent brand in India celebrated for its top-quality incense sticks, underwent a significant transformation in 2016 with the arrival of a group of young leaders from diverse professional backgrounds. This collaboration infused the company with fresh energy and strategic direction, setting the stage for remarkable growth. By 2020, the leadership baton of Balaji Agarbatti passed to a dynamic quartet of leaders, each bringing their unique expertise and perspectives to the forefront. With a wealth of experiences behind them, they championed innovation and resilience, driving Balaji Agarbatti towards sustained success and recognition in the industry.
Market observers initially raised questions about the longevity of the “newcomers” at Balaji Agarbatti due to the fallout from the previous owners. Speaking with Sugandh India, Ashish Shah, Managing Partner of the Balaji Group, acknowledged the challenge of navigating unfamiliar terrain. At 33, Ashish stepped into a leadership role at Balaji, bringing with him a wealth of experience in other domains. Despite the complexities resulting from the fallout, Ashish embraced the opportunity wholeheartedly. He immersed himself in the agarbatti market, undertaking extensive tours across the country. Through direct engagement with dealers, distributors, stockists, and suppliers, he swiftly familiarized himself with the intricacies of the industry.
Shah humorously reminisced about conducting distributor interviews, a task akin to the current interaction. He delved into learning various market specific packaging types, taking samples, and touring diverse markets to promote Balaji’s products. Conducting a gap analysis, Shah identified segments where Balaji lacked presence, such as the absence of a 250g family pack in Maharashtra. Leveraging insights from surveyed customer buying behavior, Shah strategically filled these gaps, thereby boosting sales in prospective markets. For instance, addressing the limited availability of agarbattis packed in bundles, Balaji increased bundle SKUs. These strategies not only propelled Balaji’s growth but also solidified its position in the competitive agarbatti market.
When asked about the challenges faced upon assuming control of Balaji management, he highlighted the uphill battle of proving their capability amidst market skepticism. Despite doubts surrounding their lack of experience, their family had been rooted in the agarbatti raw material business since the 1980s. This set them apart from other major brands in Bangalore, where the art of perfumery and masala incense stick production is passed down through generations, typically beginning in one’s teenage years. However, their upbringing differed from this tradition. While he occasionally visited his father’s office and factory during school days, he had little interest in this business. After college, he and his cousins pursued ambitions beyond the incense industry. For instance, Ashish completed CFA and worked as an Equity Research Analyst at a prominent Rating Agency. Despite their varied backgrounds, they were united in their determination to lead Balaji towards a prosperous future.
Managing money and running a business are weighty responsibilities that demand both intellect and passion. As we delved into product creation, some, like Banaras, Pure Sandal (zipper pack), and Oudh & Khus in our Royal Segment, found favor in the market while others didn’t. Crafting fragrances for these products required extensive research, consultations with experts, and numerous experiments.
Beyond scent creation, designing packaging posed its own challenges. With a background in commercial photography, creativity comes naturally. In my previous role leading the exports department, I oversaw the creative aspects of packaging and labeling for Balaji products. This meticulous process involves designing products that resonate with consumers while effectively conveying our brand’s essence.
Our brand has consistently held a prestigious reputation. Over the past three or four years, our persistent efforts have further solidified this status. Today, when we unveil a new product, customers rarely request samples. Instead, they confidently place bulk orders upon seeing the launch poster. This enduring trust is our most prized possession, bringing us profound joy and satisfaction. It serves as our driving force, fueling our relentless pursuit of excellence. Quality always takes precedence in our approach, with product launches meticulously planned and executed. Ensuring impeccable quality remains our foremost priority, with cost considerations following closely behind.
When discussing new markets, Ashish highlighted the potential in Bihar and Rajasthan, previously untapped regions for Balaji. In terms of exports, he expressed satisfaction with South East Asia, Central America, and select South American countries, where Balaji receives consistent orders. Ashish emphasized the importance of tailoring incense products to fit the customs, traditions, and fragrance preferences of each region, a principle also applied domestically. He highlighted the complexity of managing inventory to address the diverse preferences of dozens of markets across India and abroad, necessitating careful consideration of fragrance, design, packaging, and pricing for each market.
Sugandh India noted that certain markets have price thresholds that they will not exceed, no matter the persuasion. Ashish agreed, acknowledging this challenge in several markets. To address it, they distributed dozens of samples to dealers and distributors for personal use and distribution. Knowing the quality of their products, they were confident that once tried, customers would be inclined to purchase and promote them at the retail level, emphasizing to dealers, “ek baarjalakarke to dekho” (try burning it once and see).
Switching gears to aroma blending, Ashish explained that they stock over 200 aromatic chemicals for creating blends, with more than a hundred in-house blends, each comprising an average of 30 to 40 ingredients. The art of blending is intricate, overseen by his cousin Dixit, who manages procurement and blending operations.
Sugandh India recalled a past fire incident, Ashish mentioned about the devastation of losing their ready-to-ship stocked premium products just before the peak buying season in July, a crucial time for Maharashtra’s festive season. Despite the irreparable loss of thousands of cartons, they received swift support from printing vendors, ensuring a rapid turnaround in production. Though finished goods were lost, essential chemicals, perfumes, and raw agarbattis were spared. They dispatched the first lot within seven days post-fire.
Remarkably, the workforce, including the women, were present within hours of the fire. Their resilience and dedication were evident as they swiftly mobilized to aid in the recovery process. Through perseverance and collaboration, they not only weathered the setback but also emerged stronger, with reinforced logistical strategies and a deepened sense of solidarity among their workforce and partners.
Today, the Balaji Group stands as a testament to resilience, having emerged from the shadows of its past into a more streamlined and efficient organization. Ashish oversees various aspects of the business, ranging from product development and perfume creation to packaging design, procurement, sales, and international markets. He finds comfort in his role, stating, “This is where I belong. My office and factory, my comfort zone, surrounded by my loyal and hardworking team.”
In addition to Ashish’s role, his partners, including his cousin Dixit Shah and brother Nainesh Shah, play equally pivotal roles. Dixit manages finance and accounts, as well as process management, while Nainesh oversees day-to-day operations at the factory, managing manpower and raw material procurement.
Regarding daily operations, Ashish emphasizes the involvement of his partners at the factory, ensuring smooth functioning. He underscores the incorporation of state-of-the-art technology, skilled manpower, and innovative operational methods.
Ashish remarks, “Agarbatti manufacturing demands ample space, and though our space is limited, we’ve leveraged our expertise, technology, work ethos, and market insights to refine our production processes.”
Sugandh India asked about the challenges Balaji faces and how they’re dealing with them.
Well, there are challenges, especially from local producers. They focus more on selling lots of products rather than making sure they’re good quality. They don’t have the same overheads as us and often sell things unbranded and in bulk without worrying about their scent or safety. Some even use inferior quality aroma chemicals or residue oil mixes in their products, which can be bad for customers’ health. They don’t care much about their brand reputation or how their products affect people. This makes it tough for companies like us who value quality. The competition on prices is so intense that some manufacturers don’t even bother ensuring quality in their products anymore, leaving customers feeling cheated.
It’s a tough situation, but we’re committed to sticking to our values and making sure our products are safe and of the highest quality, even if it means facing these challenges head-on.Another challenge we face is how consumers’ preferences keep changing. They often choose products based on their attractive packaging and titles rather than their actual value for money. This makes it tough for brands like that focus on offering genuine quality. We need to stay alert to new products and trends in the market and constantly think about how to improve our designs, packaging, and prices.
Companies are always launching new products and variations, making it hard for customers to stay loyal to one brand or fragrance. Everything in the market—from packaging to flavors and scents—is always changing. Even the market for agarbatties is evolving rapidly, with more people preferring dry sticks and sambrani cups.
To stay competitive in this fast-changing market, we have to keep updating our products, including our range of perfumes, to meet the changing needs of consumers and stay ahead of the competition.When discussing the choice between regular/economy products and premium ones, he clarified that their focus is on premium markets. While premium and luxury brands help maintain their good reputation, they also must cover factory and overhead costs. The economy segment helps them manage expenses and stay balanced.
However, despite their focus on premium markets, Balaji understands the importance of offering options for different budgets. Banaras, one of their best sellers, is a popular choice in the Economy Zipper Pouch category because of its quality and quantity. Buyers wanted a good quality agarbatti in the Economy zipper segment, and Balaji delivered.
When asked about the company’s future plans, Ashish explained that they aim to develop new products appealing to youngsters. They plan to expand beyond incense sticks to include a wider range of lifestyle products. In particular, they’re focusing on the roll-on segment, with the intention of launching one or two new products every six to eight months, all meeting their high-quality standards. Ashish stressed that customers have high expectations from a reputable brand like Balaji, especially regarding perfumes, so they’re dedicated to ensuring excellence with every new launch.
Sugandh India observed that the Balaji Group has become more proactive and assertive, particularly in the past three years. When questioned about changes in their approach compared to the previous administration – Ashish highlighted their commitment to market research to identify new opportunities. They have been introducing new product segments to fill gaps in the market, ensuring prompt supply, and actively responding to feedback from dealers and distributors.
