Happilo: Farmer's son and a nutty biz selling good health in small packs

Vikas Nahar's enterprise does Rs 40 cr a month on average, selling exotic and local nuts processed at 16,000 sq ft of processing space that he now plans to scale up by another 100,000 sq ft

The name of the enterprise is essentially a portmanteau of the words 'Happiness' and 'Love'. Add heaps of good health to that, and you have a six-year-old enterprise called Happilo, set up by someone who grew up 250 km from Bengaluru in a family engaged in growing coffee and pepper.

Vikas Nahar isn't the quintessential foreign-educated techie who came back to contribute to his nation. An MBA from Pune, he was just about 31 when he started a business selling nuts from all across the world as a health food, after previous stints in an export-import company and at Yes Bank.

Yet, his company is a Rs 40-crore-a-month enterprise by revenue, selling its wares online and through 100 distributors and 10,000 stores across the country. Here is Nahar's story.

Getting started

It was his stint at the spice trading company that stirred Nahar's imagination and got him to get into the food business.

"During my visits abroad, I noticed a lot of 7-11 shops providing convenience to people. I wanted to launch that format in India in the gourmet space and started a retail brand called Satvik in 2011. It was a specialty food chain selling gourmet chocolate and sugar-free stuff," says Nahar.

His elder brother soon joined Satvik as a co-founder and took over the business when Nahar quit the venture in 2015.

During his days at Satvik, Nahar found that the urban Indian consumer was beginning to look at health food and healthy snacking with greater interest.

"That prompted me to launch Happilo in September 2016 as a proprietorship firm. It was converted into a private limited company in 2018," says Nahar, who claims that he started with an initial capital of just Rs 10,000 and two members in his team. 

He did that because international brands such as Tong Garden and Planters were focusing more on the markets in Europe and the US and did not have a big play in India, where they felt that the consumer was very price-conscious.

"But I needed capital to scale up. That's when my wife, who works with Indian Oil, liquidated most of her savings and gave me a Rs 20 lakh loan in 2017," says Nahar.

He also attended a startup seminar and landed a collateral-free loan of Rs 75 lakh at an eight per cent interest rate under the central government scheme from Syndicate Bank. It was just what Nahar needed to set up a processing unit, kickstart an exercise in brand building and expand the global supplier base of exotic nuts, dry fruits, and trail mixes (a fusion of nuts and berries fashioned as snacks-on-the-go). 

Big leap and small hiccups

Nahar then launched his brand on BigBasket through a former business associate working there. This friend asked Nahar for a small ad in the paper mentioning Happilo's launch with BigBasket and, in return, gave the enterprise a presence in the country's top-six metros--Mumbai, Delhi, Kolkata, Chennai, Bengaluru and Hyderabad.

While that was a big moment for Happilo, there were supply-chain problems, and the firm was often unable to source certain exotic products such as brazil nuts and macadamias, as the international suppliers weren't gung-ho about India. Almonds, cashews, walnuts and a whole range of dry fruits, of course, were easier to source.

"We limited above-the-line promotions such as newspaper and television ads and focused more on BTL (below-the-line), doing sales activities, such as exhibitions, displays and free sampling," says Nahar. "We also knew that modern trade was the way to go, so we tied up with Hypercity in Malad, which gave us a great deal of traction. After that, it was Amazon and Reliance. We are also available on Instamart and Blinkit."

Nahar says Happilo was perfectly positioned in the online space and was one of the strongest e-commerce brands in the health foods space, a category he claims his enterprise played a big role in transforming from minuscule to mammoth. It helped that the consumer mindset was shifting to 'healthy', escalating protein in the diet, shunning fried snacks and keeping an eye on cholesterol. 

"We did about Rs 8 crore in 2017-18, and doubled that to about Rs 16 crore the following year," Nahar claims, adding that his firm broke even quite early. However, he was reluctant to share profit numbers.

The pandemic years

Covid-19 was a mixed bag for Happilo. At one end, there was a huge spike, with consumers suddenly becoming more health conscious and WFH helping boost the firm's online business. Says Nahar: "In fact, there was a four-fold spike in business that prompted us to bump up the headcount from 100-odd people to 275 today. I say this with some pride that there were absolutely no layoffs or salary cuts during the pandemic." 

But there were pain points too. The Bengaluru Police weren't buying his argument that his snacks were an essential category, and he had to shut operations for a few weeks before moving to the Police Commissioner's office to get his point across and obtain limited clearance to operate.

Other problems included a spike in input costs and inventory stuck in transit in containment zones like Bhiwandi in Maharashtra and Ghaziabad in Delhi NCR. Happilo has a pan-India presence, but its biggest markets are in the southern states, Maharashtra and Delhi.

Pre-pandemic, 70 per cent of his business was through distributors and modern trades such as Hypercity, Reliance, Namdhari and Big Bazaar, while the rest was on e-commerce sites such as Amazon, Flipkart, Swiggy and Zepto, to name a few. The two waves turned this mix around, and today physical sales account for only 35 per cent of his business.

The road ahead

Before the pandemic, the enterprise operated out of 5,000 sq ft of processing and warehousing. This rose to 24,000 sq ft during the second wave. The plan now is to bump this up by another 100,000 sq ft in the outskirts of Bengaluru. 

Funding was a problem for Happilo in the pre-pandemic days, and Nahar says at least 30 investors must have rejected his proposal to raise $1 million between 2017 and 2019. He eventually got Series-A of as much as $12 million from A91 Partners and others in 2021 and raised another $25 million from MotilalOswal in February-March 2022.

Happilo has tied up with Marvel and Disney and will soon launch Happilo X Marvel co-branded products based on characters such as Iron man, Spider Man, and Captain America. The Disney tie-up will feature characters like Elsa and Mickey Mouse. The enterprise will also launch hazelnut spreads and a peanut butter brand associated with Spider Man. 

The firm was also the title sponsor for Rajasthan Royals in the latest IPL season. Nahar says the move helped him establish a fair amount of brand equity in tier-2 cities, where he plans to expand.