High packaging costs pose a challenge for the entire agarbatti industry, say MDPH scions

Tell us about your journey at Mysore Deep Perfumery House (MDPH), founded by your father Prakash Agrawal in 1992. What are your earliest memories of the business since childhood? What did you need to change or add to the business when you joined it? What challenges did you face?

Anshul Agrawal: When we used to come back from school in our childhood, we always saw agarbatti packing going on at home; so, we also sat and participated in the activity with the labourers. Plastic Cup Making Machine

High packaging costs pose a challenge for the entire agarbatti industry, say MDPH scions

We visited the factory often and watched my mother and grandmother blending perfumes, while my father, Prakash Agrawal, founder of Mysore Deep Perfumery House, travelled a lot for marketing purposes, to procure raw materials and so on.

When I came in, the biggest challenge was changing the perception of the industry. Everyone used to perceive this industry as a small cottage industry, so running a scalable business was not even imagined. To change that outlook and make it a brand was a major shift that we have been able to achieve.

Also, running the business like an organized FMCG player was a challenge in terms of manufacturing and sales. As the entry barrier is very low in this industry, there are too many small players and this issue still exists, but we have learnt to cope.

Give us a sense of the scale of operations when you joined, versus what it is now.

Anshul Agrawal: When I joined, there were no machines; all the materials were hand-processed traditionally. Now, we have completely transformed into a state-of-the-art organized factory.

About 80% of our workforce comprises women, and they are empowered as MDPH has led a big socio-economic change at the grass root level. They get their salaries in their bank accounts and they have complete accountability at work. This helps them to get loans, build capital and have a say in their households.

How have you seen the market and consumer choices evolve over the years? What are your efforts to cater to the new demands? What are the new age fragrances?

Ankit Agrawal: The agarbatti market has been consistently evolving over the years and as technology has developed, new innovations are being created by our R&D Department.

Initially, it was more about traditional fragrances like rose, sandal, musk, etc. But in recent years, the trend is of consumers using agarbattis as a lifestyle product, as home fragrance, rather than just using it for praying.

The changing mindset of the Indian consumer is pushing us as a company to constantly evolve, and to keep introducing new fragrances and products in the market. Our pineapple fragrance agarbatti is one of the hottest sellers in the East and South Indian markets. Zed Black has come up with the Parfum series, which brings the world’s favourite perfumes in agarbatti form.

We recently introduced Aromix series, which is a unique agarbatti with two fragrances on a single stick and the fusion incense sticks are available in four attractive variants like mango-pineapple, green apple-jasmine, cherry- rose and apple-cinnamon. These fragrances are popular with the younger generation, always on the lookout for something different.

We also introduced the eco-friendly Gauved Sambrani Cup, made from cowdung. This was an initiative undertaken to support gaushalas and cows, by using their waste to make products. Zed Black also launched the Aarogyam camphor incense sticks, to relax the mind, body and soul. The innovative charcoal-free, healing series came with camphor, cinnamon, tulsi and kewda-scented incense sticks from MDPH.

Zed Black recently tied up with Helpusgreen to introduce the Nature Flower agarbatti, made from recycled flowers from temples across the country.

During the pandemic, we introduced a range of handwashes in the market, which got good response from consumers.

Tell us about your flagship product Zed Black as well as the initiative to localize agarbatti brands and their fragrances according to region.

Ankit Agrawal: Zed Black is one of the earliest products introduced by MDPH. It has developed into the top-seller for the brand. The fragrances are specially hand-picked to deliver a purified and calm atmosphere. Zed Black 3-in-1 is the top seller and we have roped in ace cricketer M S Dhoni as its brand ambassador.

We have noticed a significant change in the buying mentality of consumers in South India versus consumers in North India. In the South, agarbattis are sold more and in the North, dhoop or dhoop sticks are preferred.

We have also seen particular fragrances selling more in particular areas - pineapple, a fruity fragrance, is hot-selling in Kerala and Assam; another fragrance Arij is popular in Orissa; the dual fragrance product Aromix sells more with the younger generation, while the older generation still prefers the traditional fragrances.

Zed Black and MDPH have incorporated technology, to ease the process of manufacturing agarbatti, and to make them in large numbers. Currently, we are a leading manufacturer of incense sticks, processing more than 30 million sticks (around 15 lakh packets) every day.

If you sum it up, what is the USP that has helped MDPH hold its own in the face of competition from other players? Give us an overview of your manufacturing and distribution capacity in India.

Anshul Agrawal: Our biggest USP is giving the right quality product at the right cost consistently. The customer now trusts Zed Black - if it’s us, they are assured of quality. We have four manufacturing units in Indore, spread over 10 lakh square feet.

We have our own backward integration unit, where we have installed 650 automated raw agarbatti machines. The four units and the backward integration unit together provide direct employment to 4,000 people in Madhya Pradesh.

The perfumery is also in-house. We are today present in every nook and corner of the country due to our robust distribution channel. Apart from general trade, we are also present on Amazon, Flipkart, etc. We recently diversified into puja products - mainly camphor, chandan tikka, puja oil - and we are looking at developing more bouquets of products.

What are the challenges before the entire agarbatti industry today, and before MDPH in particular, and what action points are required?

Anshul Agrawal: For an agarbatti manufacturer, packaging plays a very vital role. The challenge before the entire agarbatti industry is that packaging costs have increased a lot and combined costs of raw materials, transportation, etc., have grown exorbitantly.

So, selling smaller packed SKU at Re 1, Rs 2, 5 or 10 is becoming difficult, though it is easier to enter any market with a smaller pack size, as the customer has to invest only Rs 5 to 10 on your brand at entry level. The second challenge is, since it’s a natural product, certain raw materials like bamboo become difficult to source.

Developing them indigenously and maintaining standards is another challenge.

How was your performance in pandemic year? Going forward, tell us about your market expansion plans as well as long term growth strategy. What are the growth figures that you expect at MDPH as well as the Indian agarbatti industry during this fiscal?

Ankit Agrawal: The incense stick industry, which had been growing 15% annually, witnessed a 30% growth during the COVID-19 pandemic, with people staying home and praying more. Things are getting even now, with people beginning to go to office.

The growth could be 12-15% only this year and will continue in the long term, since agarbatti is used for happy and sad occasions. We are expanding our manufacturing capacity as the company completes 30 glorious years in incense sticks manufacturing.

The Zed Black brand today offers an array of products like agarbatti, dhoopbatti, pure sambrani cups, bamboo-less dhoop sticks, dhoop cones and puja samagri PAN-India. As part of backward integration, we have been investing in setting up modern manufacturing units near Indore in Madhya Pradesh.

Two new manufacturing units - one at Rampipliya and another at Kshipra village – have come up. The greenfield units have added an additional manufacturing space of 5.3 lakh square feet. The new units will support expansion plans of Zed Black, which is exported to over 40 countries including the US, Australia, Brazil and Chile, and will cater to changing preferences of Indian consumers.

What is one lesson that you have learnt in the course of running Mysore Deep Perfumery House?

Anshul Agrawal: My biggest learning from MDPH is this:

‘When you earn from a business, invest it back into the brand’.

We have invested back into the brand development exercise – we do the right kind of advertising, we have the right brand ambassadors in MS Dhoni and Hrithik Roshan to create the right perception. Without that, we wouldn’t have reached where we are today.

We have seen family-run businesses investing in multiple other businesses, but we have invested back into our core business to scale it up and take it to the next level. It has paid off well over time.

On brand ambassadors MS Dhoni and Hrithik Roshan: Says Ankit Agrawal, “Given that this is a market with an incredibly low entry barrier, several local unorganised players produce the same product at a lower cost and pass on the benefits to the retailer.

MS Dhoni at Zed Black TVC shoot with Anshul Agrawal and Ankit Agrawal of MDPH | FPJ Photo

The retailer is king and controls the sale of products like incense sticks. These are typically ‘push’ products. Only 30% of consumers ask for and buy their preferred choice of incense sticks. Zed Black is endorsed by cricketer MS Dhoni, while actor Hrithik Roshan endorses its sub-brand Manthan and we strive to stand out in the largely unorganised category owing to these factors.”

On human workforce vs machine production: “As a company, we believe both are required,” says Anshul Agrawal. “You cannot shy away from automation and at the same time, you also need people to run these machines. In spite of mechanisation, we have provided more employment as the company has been growing. We have taken up employing unskilled labour as a socio-economic cause.”

High packaging costs pose a challenge for the entire agarbatti industry, say MDPH scions

Corn Puff Machine On technology in agarbatti manufacturing: “In the agarbatti manufacturing sector, there is some semi-mechanization in processes, but there is no line automation for complete manufacturing, as in other industries. Maybe in future, someone will come up with a system of manufacturing which will be revolutionary for the agarbatti industry,” says Anshul Agrawal.