A 91-year-old legacy and a bunch of fresh eyes. Mix the two together and you get a blend of new flavours, ranging from chocolate hazelnut to melting rose, Kit-Kat, mint Oreo crumble, Hawaiian passion, tutti frutti and choco peanut butter.
The new flavours are among the many things whipping up at Keventers, the vintage dairy brand. The 117 year old brand is trying to go contemporary, adding on to its signature flavours — strawberry, chocolate and butterscotch.
Rise and fall
The plan though involves milking its retro appeal. As Aman Arora, one of the co-promoters says, “Keventers is synonymous to milkshakes. While there are different beverage brands available, there isn’t anybody specific in milkshakes. Hence, we don’t think we have any direct competition.”
That’s probably why Agastya Mihir Dalmia chose to resurrect his grandfather’s legacy, roping in Arora and hospitality consultant Sohrab Sitaram. Ram Krishna Dalmia had, himself, acquired the brand from Swedish entrepreneur Edward Keventer in the 1940s. Then, Keventers had 48 distribution outlets across the capital. But things went awry when the government requisitioned the farmland for diplomatic enclaves in the 1970s, which, among other reasons, led to the dissolution of the brand. Since then, the name has been sported by several unauthorised standalone outlets. Ironically, the Connaught Place franchisee, thronged by the young and old alike, which kept the name ‘Keventers’ alive by serving shakes, ice creams and more over the years, was one of them. Now, it has been renamed Shake Square. The Keventers trio (the Dalmia family owns 80%, Arora and Sitaram 10% each) is thus looking at rejuvenating the brand.
Art of revival
How is it doing that? Keventers opened its first outlet in Delhi’s Select CityWalk in March 2015, followed by a kiosk in Promenade, part of DLF’s upscale mall complex in Vasant Kunj in June 2015. “Today, we have about 17 outlets including six company-owned outlets across Delhi-NCR and Patna,” says Sitaram, CEO, Keventers, adding that they are looking to add four more company-owned outlets.
But the plan remains to expand the franchisee route, which already contributes about 50% of the revenue. “We have recently finalised them for Karnataka, J&K, Maharashtra and Punjab,” says Sitaram. They are also eyeing countries such as Nepal, Pakistan, Kenya and have already finalised a master franchisee in Thailand.
Keventers charges a one-time license fee of Rs.5 lakh from the franchisees and gets a royalty of Rs.40,000 per month. It also earns a small part of revenue, about 3-4%, by catering at weddings. “It’s a very small portion when compared to the outlet sales,” says Sitaram, adding that it is more of a marketing initiative.
Besides the attempts to branch out, the company, rechristened as Super Milk Products, is completely redesigning the packaging, decking up outlets and launching marketing campaigns to resonate with the youth. “People remember us as a very old, dilapidated brand. We thus want to focus on engagement for now,” says Sitaram. To do this, Keventers has come up with ‘retro’ bottles that change with events. “The bottle design changes for events whether it’s Holi, Valentine’s Day, Diwali etc. In Nepal, we’re coming up with the symbol of Mount Everest on the bottles. We’re constantly trying to cover different cultures through the bottles,” he adds.
When it comes to the back-end though, the company is not keen on expanding. Its syrups and flavouring agents are manufactured at a lone plant in Okhla and transported to various outlets. With a shelf life of about one and a half years, there’s no requirement for a plant everywhere, believes Sitaram.
For its core ingredient — milk, the company has a tie-up with Mother Dairy, but is eyeing partnerships with local manufacturers as it expands.
Logistics is handled by a third party. But Sitaram says the model works for the company, particularly because of the products it is into. “Transport costs account for 20% of the cost, which is bearable compared to establishing and managing a plant everywhere we expand,” explains the CEO.
The company isn’t keen on deliveries either. “We’re solely a takeaway brand and are not getting into deliveries at all. We started with deliveries sometime back, but found that the billing circle was getting too complicated and the money made was not worth the effort. Contribution margin from deliveries is almost nothing,” he adds.
Even without the deliveries, the milkshake segment offers much potential. The sector is growing rapidly, with a market size of nearly Rs.1,500 crore (milkshake and flavored milk) and a CAGR of 25%, according to Subhasis Basu, business head, dairy products, Mother Dairy. CK Ranganathan of CavinKare concurs as milkshakes currently account for nearly 30% of the dairy sales of his company.
Keventers meanwhile logs about 1,200 transactions daily at company-owned stores, with the ticket size at Rs.107 for a 300 ml bottle and Rs.210 for a 500 ml bottle. When it comes to the franchisees, it is around 500 transactions a day, shares the CEO, adding that the current EBITDA margin is at 30-35%.
But while most of the bigger players have taken the FMCG route, why is Keventers sticking to the kiosk format? FMCG clearly is a bigger arena and offers more opportunity. Moreover, as Ranganathan says, “Setting up a kiosk is way more expensive and it leads to limited availability.”
He is not far off the mark. When it comes to costs, rentals are the biggest guzzler for Keventers, followed by F&B at 31%. The kiosks are set up in a 100-200 sq ft area, which Sitaram says “allows us to manage the ROI.” On an average, a 100 sq ft outlet costs nearly Rs.12-15 lakh to be set up and breaks even within 12-18 months, according to the CEO.
However, Sitaram has his share of complaints, especially with high-street rentals. “The problem lies in the fact that these places don’t have the type of footfall we would notice in a mall. Paying anywhere between Rs.1,000-2,000 per sq ft is just too much.” Outlets such as Keventers generally have to pay either a minimum guarantee or a percentage of sales. While percentage of sales generally leads to a lot of outflow, a good footfall might compensate for the cost. “We have no problem with the minimum guarantee amount. What troubles us is the sales percentage, which ranges anywhere between 13-22%. This increases the expenses,” he explains.
Keventers’ average footfall is about 250 on weekdays while it goes up to 800-1,000 on the weekends. “Our average earning ranges anywhere between Rs.2-4 lakh/month for every outlet,” says Sitaram.
Despite the high costs, Keventers’ to-do list doesn’t figure other items than business expansion. FMCG, Sitaram says, is a completely different ball game. “We’re delivering products made from hand and not machines. Our product has a lower shelf life as compared to Tetra Paks. Thus, the customer is willing to pay a higher price for it,” he reasons.
Basu feels there is some merit to the argument, adding that a kiosk definitely leads to better control and flexibility, which in turn helps in innovation. “But maintaining hygiene and quality standards throughout will definitely be a constraint,” he cautions.
To address quality concerns, Sitaram says, “We follow a FIFO process to maintain standardisation. Our research team visits locations and alters the fat content of the milk to ensure quality.”
However, the glaring issue as Basu points out is “the size of the business in a kiosk format will always remain small”. So, what’s Keventers’ plan to overcome that? “We might get into the flavored milk segment as well but that’s a different business model altogether. For now, we’re focused just on milkshakes,” says Sitaram.
Ranganathan’s advise though, is to focus on innovation. “This is the name of the game to make the success ratio higher. We believe both milkshakes and flavoured milk will grow.”
The co-promoters, however, are working on getting the right processes and systems in place for their expansion. Keventers’ elaborate re-launch has definitely created some noise. But if the new breed of promoters can actually revive the moribund brand and make it synonymous with milkshakes overseas, too, remains to be seen.