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With Support From PVR, 4700BC Is Trying Something New

PVR-backed 4700BC is in talks to raise as much as million in Series B funding to diversify beyond gourmet popcorn.

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18 Jul 2022, 12:19 PM IST

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<div class="paragraphs"><p>A 4700BC kiosk inside a shopping mall. (Source: BQ Prime)</p></div>

A 4700BC kiosk inside a shopping mall. (Source: BQ Prime)

PVR Ltd.-backed 4700BC is in talks to raise as much as $10 million (about Rs 79 crore) in Series B funding as it looks to diversify beyond gourmet popcorn to propel growth.

“It’s [discussion] still early days to disclose the investors but we are looking to raise fund this year to accelerate the growth of business after two years of Covid-led disruptions,” 4700BC co-founder Chirag Gupta told BQ Prime.

In 2015, PVR—the country’s largest multiplex chain operator—acquired a 70% stake in Zea Maize Pvt., which runs the Delhi-based popcorn chain, for Rs 5 crore.

4700BC started its journey in 2012 from kiosks in malls and multiplexes and then expanded into institutional and retail. The onset of the pandemic in 2020 blocked two of the major sales channels for popcorn—cinemas and institutions such as airlines and coffee chains. Soon after, while prices of everything from fuel to food surged, the company doubled its sales to Rs 33.6 crore in FY22 as demand for its premium popcorn remained unaffected.

“Ours is an up-market product with target audience being those who can afford Rs 80 for a pack of popcorn,” Gupta said. “The consumption behaviour remained intact so far.” Instead, he said, the consumers are willing to experiment new brands and spend money on impulse purchases.

That prompted 4700BC to reposition itself as a premium snacking brand and not just depend on the humble popcorn for revenue. In a bid to grab a larger piece of the organised snacks market dominated by Haldiram and PepsiCo, the company diversified into ready-to-eat sweet corn and protein pops (makhana).

Plans are afoot to launch chips, which Gupta said would be “something different from the regular ones like Lay’s”.

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Besides expanding into newer categories, 4700BC plans to increase its retail footprint as the surge in online demand has started to wane. It also aims to step-up its marketing spend—roughly 10% of revenue—to compensate for the Covid-hit years as out-of-home spending revives.

“Brand loyalty seems to be a thing of the past—and more fragile today than ever before with consumers buying what they see on shelves and what is available,” said Gupta. “As the pandemic-led curbs slowed the pace of retail expansion, stickiness has been a little bit of an issue. We are now working towards covering more stores and more grocery shelves across the nation.”

4700BC was quick to join the direct-to-consumer bandwagon as Covid-19 pushed customer traffic to digital channels. But that’s reversing with out-of-home spending now back in business.

“With all channels now operating at pre-pandemic levels, we are seeing same-store retail sales aiding revenue growth, while e-commerce sales dipped,” he said.

That’s another reason why the company has increased its focus on expanding its offline presence. Currently, it has three exclusive outlets and 22 shop-in-shop—an area that one retailer sublets within another retailer’s premises. Besides, its popcorns are available in 8,000 stores across metros such as Delhi-NCR, Bengaluru, Mumbai and Chennai.

“We plan to touch 12,000 stores by end of this fiscal,” said Gupta.

Another reason why the brand is stepping up its retail presence is because out-of-home consumption historically generates the highest margin. “We are not gung-ho on D2C as it is not a profitable channel rather, we will use it to test new products and identify new markets,” said Gupta.

“We unveiled new products during the pandemic to make a strong product portfolio. And these are now giving returns.”

4700BC expects to post revenue worth Rs 65-70 crore at the end of FY23. Margin, however, will remain under pressure as packaging costs jumped 25-30%, while raw materials have shot up 25%.

“There is significant cost pressure, and we have no choice but to increase prices or reduce pack size even if that can potentially hurt demand,” Gupta said. “It’s a very difficult situation but there is nothing we can do about it.”


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