🎨 Asian Paints' journey from 0 to ₹30,000 Cr
Insights on how to solve for margins, marketing pitch & distribution.
Welcome to the 74th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Why conventional business this time? 🎯
The age of internet is riveting.
We have brands that have skyrocketed within months because they cracked the path to PMF soon, and some to whom we’ve said painful goodbyes. But, you don’t necessarily need to build every business like it. This is a story full of insights creating a long lasting business.
Let’s dive in ✨
Asian paints had come a long way since its launch in 1942. It enjoys a whopping 34% market share, is in 15 countries and does over ₹30,000 Cr in annual revenues.
The humble beginnings 🎬
During the world war II, a temporary ban was laid on the import of paints in India. This prompted the then 26-year-old Chimanlal Choksi, & his friends Suryakant Dani, and Arvind Vakil to kick-off a made in India paint company.
Asian Paints had a whopping turnover of ₹23 Cr in 1952. By 1967, Asian Paints became India’s leading paint manufacturer - a position they hold even today.
A great example of entering a completely blue ocean market with macro factors affecting the category. PayTm did the same with demonetisation, zoom did it with pandemic, airbnb did it with the 2008 recession.
The supply chain disruption 🚀
For a paint business to scale there are two problems. First, you need to have enough margins to sustain cashflow requirements. Second, you need colour shades, a lot of them.
First, the margins 💰
In the 60s, paint was created by big manufacturers → sent to distributors → dealers → customers. Asian Paints realised that if they had to grow, they need to remove the added margins, and that’s how Asian Paints removed distributors who ate upto 20% cut.
The only challenge - limited storage space at any dealer’s shop. Asian paints addressed this stocking dealers 3-4 times a day, a strategy highly unheard off. The next was predicting the demand.
In 1970s, Asian Paints became one of the first brands in country to spend 8 crore to buy a mainframe compute for demand forecasting.
This logistic network helps Asian Paints in having a gross margin of as much 90% on some products (average is 50%) and spending only 10% in seller commissions + transportation cost. This is much higher than it’s competition Berger or Indigo paints.
Second, the colour shades 🌈
Asian paint owns every paint mixing machine at their resellers.
Talk about monopoly.
The marketing stunt : Asian paint’s GATTU 🥸
R.K. Laxman’s Gattu was one of Asian Paints’ early breakthroughs. This was an era where cartoon mascots had taken over advertising in India. When the Mr. Laxman decided on the mascot, the brand ran a naming contest prized at INR 500.
In this user generated content (UGC) approach, within days, they got over 47,000 entries. Soon Gattu was launched and was seen on hoardings, newpaper ads, and magazine with a punch line.
“Any surface that needs painting needs Asian Paints”
Through his quirky & eccentric cartoons, Gattu caught nation’s attention and was often found giving an image to public’s imagination - from painting the head of a bald man to a dog, it did all.
The core insight being solving for pop culture than trying to paint the world with ads. It focused on who influence on end customer & then packaging the brand narrative around it.
Lastly, solving for the customer 👑
Asian Paint became known to its actual buyers - mostly men (🚫) who were making these decisions. But call it a 90s dream, being a household name is what every brand chased that point in time. Imagine SOAP ads.
Asian Paints had interesting early insights - majority of it’s customers never found the shade they really wanted & most spent time at home, conversed to neighbours, consumed ads in newspapers / TV all day.
The most interesting insight - females were the actual consumers & hence the ‘Mera Wala Cream' ad was born.
This was an ideal example of how to use a customer insight and turn it into a product offering. Perfect user <> marketing pitch fit.
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Here’s a special treat ft. Rishi’s story ✨
From working in a small team to now leading so many things in Atlan, Rishi has come a long way in his last 2 years journey. If you are someone who trying out a lot of things & not able to articulate your next move, his story might be a good framework to chime into.
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Rishi's story has me in awe. :')
Great article and loved listening to Rishi's story.