Episode 80- Cycle Pure Agarbathis: Whenever the nation prays together, Building the world’s largest incense business- History, Customer, Unit Economics w/Arjun Ranga

Written By Pritish Sanyal

About Arjun Ranga:

Globally, incense is the silent bridge that connects humans to the divine. And naturally, no Indian wants to compromise when it comes to their hopes and prayers. This episode of The One Percent Project is an intriguing exploration of the incense business and its essence in Indian culture with a remarkable guest, ⁠Arjun Ranga⁠, the CEO of ⁠Cycle Pure Agarbathis⁠, a part of the NR Group. 

In this insightful conversation, Arjun delves into the fascinating journey of Cycle Agarbathis, the world's largest incense manufacturer, and its transformation into the world's first certified zero-carbon manufacturer of incense, prayer, and air care products. Arjun also shares his journey as the CEO, drawing inspiration from his grandfather and NR Group's founder, Shri N. Ranga Rao. He sheds light on the deep-rooted significance of prayer in Indian culture and the sentiments attached to it, his marketing strategies through the years, his vision for the company and much more. 

Joining him in this conversation is ⁠Sarthak Ahuja⁠, a seasoned Chartered Accountant with expertise in startup advisory and investment banking and a LinkedIn top voice who brings a wealth of intriguing insights to the discussion. Join us in this fascinating episode to explore the dynamic intersection of business, culture, and sustainability.

Subscribe to the show wherever you listen to it and sign up for The One Percent Project's "Think" newsletter at ⁠onepercent.live⁠ for curated content that adds value to your professional and personal development.

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Key takeaways:

  • In the competitive world of incense production, innovation isn't limited to fragrance alone. It extends to packaging, form factors, and, most critically, quality. In a market where entry barriers may seem low, it's the enduring commitment to quality that sets brands apart and builds the trust of generations.

  • Scent retention holds significant importance in the incense industry, especially during prayers that can last extended periods. Beyond the initial 20 minutes of the prayer, a residual fragrance should continue to evoke a sense of divinity and spirituality in the surroundings. The industry also demands the art of offering consumers the specific fragrance they'll resonate with the most. 

  • The local nuances and choices make the incense industry fragmented and highly localised. There's often a herd mentality where a popular product in one market influences others to follow suit. This trend-driven nature occasionally leads to fads in the market. However, the personal and individualistic nature of fragrance preferences makes it challenging to predict regional fragrance preferences accurately, making the incense market complex. 

  • Premium-ness in the agarbatti industry isn't necessarily associated with wealth but with uniqueness and commitment to spirituality. Even in the low-income segment, individuals deeply committed to prayer and spirituality choose to buy premium products as offerings to God. This unique consumer behaviour challenges the conventional notion of premium products being exclusively for affluent households. 

  • AI is making an impact on various aspects of the incense business, particularly in areas like demand planning, supply chain management, and predicting consumer trends. AI also holds the potential to enhance the consumer experience by familiarising itself with individual preferences and predicting their needs more accurately, ultimately leading to improved customer satisfaction and efficiency in operations.

In this conversation, he talks about:

Transcript*

Pritish: What is the history of incense? How old is this concept?

Arjun: You know, the usage of incense dates back to the Egyptian civilization, thousands of years in scriptures. Even in our scriptures, dhupa, phalgomas, and yagnas are used. In scriptures, incense has always been used in different forms. Incense and myrrh in Christianity. It's in almost all the different religious books as well. But over the years, incense has transcended from being a pure religious product into more of a spiritual product, intertwined with meditation, peace of mind, and all of that. So, the aromacological benefits of fragrance and what it does to one's mood started, I think, about 400 years ago with the advent of fragrances. So, burning fragrances started about 400 years ago. And in the current form that we see, the agarbathistic, it's about 250 years ago in Tanjore. In Tanjore, where the king was a connoisseur of incense. So that's where we can look at the current form of incense.

Pritish: Oh, interesting. So, what was the previous form if it was not these long sticks?

Arjun: It was in a raw resin, sorry, in a piece on like a log, or it was burnt as a resin stick in itself, what the bakhoor is today.

Pritish: And from there, what is the story of Cycle agarbathti?

Arjun: Our brand actually was created by my grandfather, and he was a true entrepreneur, a first-generation entrepreneur who was born pre-independence and I think 1908, lost his dad when he was just 12 years old. Very early in life, he had to care for himself, his mother, and his grandmother. He comes from a very small village in Madurai district called Vatraipur. If you look at our family lineage, it's either a purohit or a teacher. His father was a teacher. Grandfather was a pundit in a temple. So that's been our lineage, and he was fiercely independent. He realised very early that to get ahead in life, he had to get himself multi-skilled. So, he learned how to repair timepieces. He used to repair watches in school so that he could pay and get books to study. He would go to the wholesale market, buy some provisions, and sell them to the store outside his school. He would take tuition for low class students. He would go to the old age community and read newspapers to them. He used to do multiple things to ensure that ends were met in those days. He also learned shorthand and typing because that was a skill that was important. He always wanted to do something on his own. Got a first job, in Arvangar in, in a cordite factory in Nilgiris. So, he left his ancestry alone, packed up everything, mother and grandmother, and moved there. He got another job as a bookkeeper and cook at Consolidated Coffee Works, and then moved to Coorg. My dad was actually born there. And around the time India got independence, the estates, the British left, all the responsibility came upon him. And that's when he also got a government job. And in 1948, the Indian government needed people who were qualified, who could manage accounts, things like that. So, he got a government job on one side, but he always had this passion of doing something on his own. Now, grandfather used to write his ledgers, so we have ledgers. He has written that at some point of time I want to do something on my own. And, he saw India getting independence as an opportunity to also take the next big step in life. Imagine the courage and the conviction the man had. He had four children, aged mother, aged grandmother, yet took a leap of faith, supported by my grandmother and came to Mysore because it was the nearest town and started our business in 1948. And my grandmother was the one who first gave him the seed capital by pledging her jewels. As is the case in that generation of sacrifice that they all made. And then the rest is history. I think that with this fierce commitment and discipline, he was able to build the enterprise that is today.

Pritish: Sarthak is, by the way, a watch collector himself. So, he always keeps giving me a lot of ‘gyan’ on Titan watches, how unique they are. I Keep getting all of that information from him.

Arjun: Yeah. My dad's a big fan of Titan as well. So, I think the first watch he got me was the HMT Appu watch during the Asian Games. I still remember that. I think the watches after that I don't remember. But it's the one watch that's stuck in my memory.

Pritish: Among all the opportunities, why was incense something that was chosen to build upon?

Arjun: So, my grandfather in 1948 started trading Shikakai, tooth Powder, and then incense. These were the three products that were famous in Mysore. If you see, the GI tag for these products is also Mysore even today. Agarbatthi is called Mysore agarbathi. Very soon, he realised that in agarbathi you can actually build a core competence because of the fragrance creation that was in it. And he also realised that he could bring in a lot of differentiation to a rather unorganised category. Even in those days, the category was quite unorganised. A lot of innovations happened based on his beliefs on the category. And that's how we were able to create a brand. 1950 is when he actually created the word cycle. Before I get into why the cycle or how the name was coined, fragrance creation as a competence is something that has happened from generation to generation. So, my grandfather was a perfumer. Imagine, in 1949, he was one of the first to import books into independent India from France. Perfumery books. It took him a year to import these books. Okay, they came in by ship. With those books, he set up the first perfumery lab. And in 1952, actually won an award in the Dasara exhibition for the fragrance creations that he had made. And he's a perfumer, my dad's perfumer. He studied in Switzerland and Paris. I'm a perfumer myself; I'm still, even though I've been practising for 25 years, I still consider myself an apprentice perfumer. So that knowledge that was imparted from generation to generation is what holds the business together for us. And that remains the core competence. So, we are one of the few companies that create our fragrances in-house. Each and every ingredient that goes into it is carefully selected, curated, and managed. And I do tons of experiments in the lab to come up with a fragrance that I believe the market would accept. So that's happened over the years. We had the fragrance creation on one side and then, and that's something that has built on over the years. And then, we created the brand on the other side.

Pritish: Oh, fascinating. I didn't know that the essence of the incense is actually the fragrance. So, three generations of perfume experts, if I may.  You were talking about the Cycle brand. So, why Cycle?

Arjun: So, my grandfather, I think within a year's time, started creating products and taking them to market. One of the first fragrances he created became an instant hit because it was not commodity, it was unique. And this was in 1950. And people, when he went to the market selling the product, the storekeeper would either call it by my grandfather's name, which was Ranga, or call it by the colour of the packaging, which was, I think, blue in those days. He then realised that this is not sustainable over a period of time. I need to have a symbol or a logo that people will understand, no matter where they're from, their language, or their secular background, it doesn't matter. And he came up with a lot of different symbols, but ultimately, he stuck with cycle because cycle is called a cycle in every language. You will not confuse it for something else. It's aspirational. In those days, it personified freedom as well. And with the cycle, you can go anywhere. Just like your prayers can take you anywhere, there's no limit to what you can hope for and dream. There are many things that connect a prayer being and the device of a cycle. And the man had the philosophical acumen to understand that this is something that is going to be timeless. And so, that's how he came up with the symbol of a cycle and the word cycle itself.

Pritish: We are in 2023. Agarbatthis has now become a commodity, and it's a simple product. I was looking into how it's manufactured. It's not that hard in terms of putting it together. And there are so many brands. If you go to a shop today and say, I want some agarbathi, people may ask for a Cycle or be happy with anything else. So, how do you keep yourself relevant and innovative in this industry?

Arjun: Innovation comes in multiple forms and multiple formats. So, you innovate in the fragrance. That's the key differentiator. Branding is also a key differentiator. So is packaging. But more importantly, you can also innovate in the form factor of the incense itself, right? So, incense sticks in the traditional form are with the bamboo stick. You now have a solid dhoop, which is bamboo-less. We also created a dhuno, an encapsulation in a charcoal cup, which we innovated recently, making prayer much easier and more convenient. You innovate in multiple formats, and all of these categories are also starting to grow and build over the years. And what do you do in a commodity market? You differentiate through quality. Quality is at the centre of everything. Why do people pray with incense? It's morning. It's the easiest form of prayer. It's the most convenient. You take your lighter two sticks, offer them to God, you pray. At that point in time, the ambiance created during the prayer and the fact that the sticks have to burn completely are the two most important aspects that people look at. In the unorganised sector, where quality is not the primary driver, pricing is the primary driver, it falls behind. We do close to 24 different quality checks on our incense sticks. For each and every incense stick, we sell about 12 billion incense sticks. Each packet I sell in the market is traced back to the manufacturer and the person who made it for me. We have close to twenty-five thousand families in the supply chain. I can trace it back to each person. And that's the level of traceability that we've built over the years. And that's what makes a brand, over a period of time, the trust that consumers build. In a commodity market, entry barriers are low, like in our category. You can get raw incense sticks. A dime a dozen manufacturers of fragrances who do the same fragrances for soaps, detergents, and toilet cleaners will also give you a fragrance for incense. And there are so many printers in the country who make packaging. Buy packaging, raw ingredients, and fragrance; tomorrow you're a manufacturer. But the day after tomorrow, you're not. You move on to something else. Brands that have lived over generations are the ones who have actually been careful about the quality that they create. And I think, eventually, consumers will pay value for it. And that's how we've been able to survive.

Sarthak: You mentioned how the form factor is a differentiator. And you also mentioned how the scent itself can be a differentiator. But when I think of prayers in our usual Indian household, it's mostly sandal, rose, and jasmine. Scents are very predefined with respect to what an Indian typical Hindu or a Muslim or a Christian household would like. So how do you innovate there in bringing other scents, which they would think is also relevant and they can attach to prayer? What do you think about newer scents? The use case for the incense sticks would also change to something else. Maybe setting the mood in one's bedroom. I don't know how the brand likes to position itself.

Arjun: Now, of course, moving out, it's easier for us to move from the puja room to the other rooms, such as the living room and other parts of the house. We have a brand called Iris, a home fragrance product with scented candles, poplar, diffusers, aromatherapy oils, and non-puja-related incense. But the nation breathes Cycle with incense. That's 95% of the market. That being said, we have jasmine as a fragrance, mogra. I create about 14 different types of jasmine fragrances. There's jasmine, where you have to capture the early morning dew that falls on the petals of the jasmine flower. There's a tint of rose in the jasmine. There's an animal, animalic note in the jasmine flower as well. So, there are different kinds of nodes that you can create with just one linear jasmine in itself. So, it's an art of perfumery. And if I ask you, what soap do you use and what is the fragrance of the soap? You won't remember. What deodorants do you use? What is the fragrance of the deodorant? Almost any fragrance in the world is built on just five or six core notes. And then you create an accord on top of that and make it more and more exciting and mysterious. So, perfumery is actually an art and a science. And how do you make your sandalwood smell better than somebody else's sandalwood is the challenge? How do you differentiate between a commodity jasmine and a branded jasmine? It's the challenge, both from a packaging standpoint, registered trademark, and corporate standpoint, but most importantly, the fragrance's uniqueness. So, our highest-selling product, for example, is Cycles 3 in 1, which has three unique fragrances that stand for health, wealth, and happiness. The most important pillar of anybody, and that's the highest sold product in the country. The most duplicated product as well. The three fragrances are not Jasmine, Rose, and Sandal.

Sarthak: Oh. Okay. So, this also brings me to think that imagine an end consumer cannot really differentiate between the 12 notes of jasmine, unless they were to smell all of them together and be able to tell, okay, this one probably smells sweeter, or this one is slightly mellow. So, do you think for an end consumer who's actually smelling incense sticks at different points of time, they're not really doing a blind test in one go. Do you think something like the scent stays longer in the air after the incense stick has burnt out? Is this an important metric for you to work on? Is it something that your competitors work on?

Arjun: No, it is a given. It's become a marketing gimmick for a few. Retention is a very important aspect. Your prayer typically bonds for anywhere between 30 to 45 minutes. Your prayer lasts over 20 minutes, and then a residual free rail stays on. You leave, you go for a walk, you come back at home, come back in the evening at home, and you open the doors, you want to be able to smell still some part of the divinity that you left behind in the morning. That's a given in the category, and we are able to do that in almost any product that we create. So that's a given. In terms of differentiating between the 11 notes of jasmine, I don't need you to smell all the 11 jasmines. I need to be able to give you the jasmine you will like the most. And that's where marketing and differentiation and packaging come in the way you stylise your packaging for you to pick the jasmine that you're going to like, how close the packaging is designed to the fragrance that's inside, what ambiance are you creating with the communication. I think all of that falls into the branding aspect as well. Whether they will create the fragrance, not just from a smell standpoint but also from an experience standpoint on the packaging design.

Pritish: So up till now, two things that I would have not thought about Agarbatthis, one, you're absolutely right. Burning through and through is a definite KPI that needs to be hit. For some reason, I used to think if it is not burning through that God made, it's not probably that happy. I don't know. There's some stigma to it. And the second thing that you basically mentioned is retention. Agarbatthi and retention, I would have never connected. And you're right. Actually, if the fragrance stays long and when you come back, it reinforces that you did something in the morning, which gives you a pleasant experience once you're back. So those are great insights. Two things, we talked about fragrances. Obviously, India is a very diverse market. Do you see that different parts of India have different adoptions or choices regarding Agarbatthi or the perfumes? Are there any distinctive characteristics across India?

Arjun: You go a hundred kilometres, and you'll find a different fragrance, a different brand, a different product. The industry is so fragmented and highly localised. There's no reason why one market picks up some product or the other. But there is a herd mentality for sure. If some product somebody likes in some market could be on a retailer whose wife liked the fragrance. Then he'll push that more. And then, once he pushes that product more, the neighbour would want to have the same product as well. This category follows a lot of such fads and is not a trend yet, but a lot of fads. This big fad of pineapple fragrances was big the last year or two. And so all of us had pineapple in the market. There was one small company out of Gujarat that created the first pineapple. And then everybody followed suit. The whole nation was only talking about pineapple for about six months. Today, fatigue has set in, so we've moved on to something else. But yeah, that definitely does happen, but very seldom do you see a national range of a fragrance that's created. Still, locally you will always have some nuanced requirements for certain fragrances, based on, it could be climate, could be other situations, but in general, there is no prediction of who likes what, when, why, where, how. In the household, one person might like one and the next person lighting the incense might like something else.

Sarthak: What do you say there's some secret insight that you have with respect to which fragrance to push in which part of India that you wouldn't want to give away. I'm just thinking that maybe within Muslim households, there would be possibly something to do with liking rose more and I'm just thinking from a very pedantic perspective of how Rooh-afza is considered to be a very, very Muslim identity to it. Then, even when you have iftar parties, Rooh-afza is almost a necessity. So, do you think that culturally certain fragrances have just crept into certain communities and you see that in your sales data as well?

Arjun: No, absolutely not. In our case, fragrance presences are so personal. Okay. Unbelievable. In my house, what my wife likes, I don't like. In my own products, I have a different taste for fragrances. It is so personal and so individualistic. So typically, the purchasing decision maker in the household decides what incense to buy. Nobody else actually takes that call. And Muslims are connoisseurs of incense, they are very involved in their prayer. This is one of the most important products they spend a lot of time and effort purchasing. And also, the usage depends on the purchase pattern. Where are they going to light the incense stick? Is it an open yard? Is it the tulsi outside? Is it the puja mandir inside? Is it when they'll pray at home, regardless of what kind of household it is? Is it in a mosque or in a temple or a church? Is that where they're going to light the incense stick? All of that becomes equally important. The usage multiplies, but 95% of them use it for prayer and the ambiance that is created during prayer determines the fragrance as well. And unlike what you would think, it's not any single generic fragrance that sells most. If I have a Cycle rose, I don't have a Cycle rose, none of the big brands do. We all have curated accords, creations that we market. I like Rooh-afza quite a bit. I actually have it in the office. So, when guests come in, I offer them Rooh-afza. So, I think it's purely a choice.

Pritish: Is premium positioning of the product, so generally, or probably most of us buy agarbathis or incense in Panchur ki Dukan or in basically maybe a supermarket now. Has the industry evolved to a place where it can be a premium product in a premium store? Does that kind of channel exist for this kind of product?

Arjun: No, definitely. Khan market, for example, sells quite a bit of premium products as well. It depends on the store, not necessarily the customer that goes to the store. Has it transcended to become a cool product, yes, a few products of ours have transcended that background. But in our category, what I've realised is, premium-ness is not necessarily rich. It's very unique. I have my products sold in localities which are low-income groups where my highest price production lies, it just depends on the person's commitment towards prayer and God and spirituality where they believe I want to give the best. I want to offer the best to God. They buy my most premium product. I wouldn't want to say the wealthier, but households not involved in the daily prayers at home are agnostic of the product bought. For them, Agarbatthi is a name on the list. Shopping list that the maid goes and buys from the store next door and comes home. So, when I communicate, it is not necessarily advertising towards the ultra-premium households of India. Yeah, the challenge remains in identifying who is Pahaya's devotee who wants to give the best to God on one side. And on the lifestyle home fragrance side, the positioning is very clear for my brands like Iris and Leah and all of that where, where it is typical SCC, A, B and C, whatever all the FMCG companies do, we typically target that way.

Pritish: Brilliant. Before we get into the international market and exports of Agarbatthi, what, and, this is out of curiosity, I have always seen, and I'm sure Sarthak as well, all our lives we have seen Agarbatthi to be a B2C product. Is there a B-to-B channel as well for Agarbatthi? I'm assuming the temples, the mosques, the church, because they have a high usage of this regularly.

Arjun: Actually, they don't at all. Not since the last 30 years. Mosques do, to some extent. Not churches or temples. Most temples recycle the incense that they sell outside. They give it back to the storekeeper outside. Temples have the least sales of incense since I joined the business, 25 years ago. And incense typically sold around the temple is not the best quality. Because you keep it on the thali, you offer it to the pandit inside, and they give you the flowers back. The incense again comes back out, and then the next person takes the same incense back in. Typically, that's how it happens. So, incense per se, around temples is not as much. Churches are more in candles and resin, not as much in incense. But some temples and some churches do use incense as well. So, it's not a necessity to be present in a B2B kind of a scene from a religious standpoint. Still, yeah, there are huge B2B opportunities with modern trade outlets, with corporate gifting, with institutional sales as well. Quite a few of the hotels, hotel chains, religiously light incense from morning to night. Lila Bombay is an example 20 years ago that only lit up wood incense in their entrance lobby throughout the day. And that, that became their signature fragrance. So yeah, so B2B is a big opportunity, but B2C still is the dominant market.

Pritish: On incense, vanilla is probably the most used perfume or fragrance in a lot of premium stores. It could be a bakery. It could actually be a designer store. What is the association to that? Like I have smelled it, like I'm just walking on a hot day. Suddenly I'll pass a premium store and I will suddenly smell vanilla. So, is there anything around the smell of vanilla?

Arjun: Vanilla gives warmth, a feeling of warmth, and there's an electronic note in vanilla, which is very milky, so that warmth and the milky note actually makes you feel very peaceful. So that's what vanilla does. And today, vanilla with sandalwood, you know, the woody strong, every note is what most people aspire to in any confined space so that you feel very comfortable and it gives you a feeling of opulence. That's why when you're walking past you'll smell that in quite a few places.

Pritish: Interesting. Agarbathi exports are close to 1000 Cr from India and three markets that were surprising to me were Gulf, Europe and Africa. Can you double click on that? Why are these three markets the top three importers?

Arjun: Firstly, there is a misconception that Indian Agarbatthi is positioned towards expats of India. It is not. Everywhere outside of India, it's the locals who use agarbathi. Incense sticks. It's not positioned towards Indians at all. In any which way, except in the U. S. through the Indian grocery stores. But everywhere else, it's the locals who use incense. And incense is exported to over 150 countries, Indian incense. And the new developing markets are South America. Brazil, for example, it's a rage. Teenagers use incense. Everybody uses incense there. Just like how yoga and Ayurveda have become mainstream, incense has become mainstream too. Most of these countries. The traditional markets for incense were Middle East, Southeast Asia, East Africa, and parts of Europe. And they remain to be the case. Consumption is quite high and it's used daily for prayer by the locals.

Pritish: Can you talk about the value chain? Where does the raw material start from and how does it land on the consumer?

Arjun: So Agarbatthi is a very simple product. You need just a bamboo stick and then the natural materials are then applied on to the bamboo stick. It is called Jigat, which is the bark of a tree, charcoal and wood powder. The three are mixed in calculated quantities of water. It becomes a dough-like paste, like atta, that is then applied onto the bamboo stick. That is the unscented stick. It has no fragrance. It's neutral. That is then either dipped or fragrance is then injected into it, and that's how it becomes a fragrant stick. Traditional method of incense making is called masala incense, which is our premium incense. Instead of water, we put fragrance directly into the stick and then roll the bamboo stick along with herbs, resins, and other things. It's a very simple product to make. That's why we have so many unorganised players as well.

Sarthak: Would you also be able to explain unit economics? Typically, is it standard for the industry to say that?

Arjun: Well, as the raw incense stick is now a commodity. So, the fragrance costs and then your packaging on top of it, and then your sales and distribution. So, it's typically basic. Most people do it exactly the same way.

Sarthak: Okay. So, you would say about raw material, packaging, and fragrance would be about 30% of the selling price?

Arjun: It completely depends on the quality of ingredients that go into the raw material and sticks you make. Also, the type of fragrances that you create. So, typically a 10 Rupee product will have anywhere between 10 sticks to 14 sticks. Consumers will be paying anywhere between a rupee to 75 Paise per stick.

Sarthak: Okay. This, in fact, also brings me on to a question again on saying that it's a commodity that there are now newer brands who say that we use recycled petals and we make incense sticks. What I'm trying to understand is whether it would already happen? It's just a narrative that they've now brought it to market to say how salt in the toothpaste, where it would already be there but now it's being marketed to differentiate? So, do you think every other brand also does something similar?

Arjun: Yeah, Sarthak, I think you hit the nail on the head. We've been doing it for 25 years, but we didn't have the thoughts to market it like that. Well lesson learnt, I think the new digital era is teaching us a lot of things for us to also learn from. Being a conservative company, we never claimed a lot of things that we were doing. And if we had claimed it, probably we would have been ahead in the market. But a lesson learned, we should probably do it now, exactly what you said.

Pritish: Now let's talk about your journey to take up the organisation. As you said, conservative values, how did you transition?

Arjun: I am deeply committed to quality, financial discipline, taking care of our employees, giving back to society, always sticking to the promises that we make, never giving false commitments. So, these core values I hold very dear that got passed on from my grandfather to the second generation. It's the second generation of our family business. My grandfather passed away in 1980. I think he retired in 1968. It's, my uncle, the chairman, Mr. Guru, my dad, Mr. Murthy, and, and Mr. Vassal and his brothers, they're the ones who actually built the business to the level that it is. I think we became number one in India around 1970, and we've not turned back since then, and they're the ones who actually brought in all the innovation, the organised distribution, the entire concept of branding, moved away from a traditional trading network of agarbathi in wholesale and agarbathi dealers to organised FMCG distribution. All of this brought in technology. We are one of the first folks to buy a Wipro computer to look at sales and sales forecasting. This was in 1980. I loved going to the office because I could sit in the AC room. That was the only room that had an air conditioner, the computer room. This massive room with a lock and key in the late 80s. So yeah, the innovation started to happen very early in the business. Not just in the Incense sticks, we also looked at diversification as an opportunity. We got into floral extracts and herbal extracts as a group, started manufacturing shampoos, got into instant foods and home products, and started pharmaceuticals as a group. So I got into electronics as well, doing a lot of different things and we grew. So beyond just incense, innovations, keeping the entrepreneurial spirit going was something that was in the DNA of the business in itself. The brothers did that. When I came back and joined the business in 2000, I'd already learned about the business because every summer vacation would be in the office with dad. I had the luck of growing up in a joint family till I was 17, so any dinner room conversations were around the business. Incense that was lit in the corner of the house every day. New formulas, new accords, new fragrances would keep coming home, keep smelling, understanding what fragrances are. So, these learnings were always there in me. I remember when I was in the eight or nine standard, dad took me on summer vacation to do van sales in a Kerala market in Cochin. I went in a van with dad for four days selling one of our new products called Heritage. We just launched it. It was always there in me. I came back after my MBA working outside for a couple of years. In the year 2000, India was also taking off a second generation and built that solid foundation. I could then start discovering myself with small projects the family gave me to do. And slowly I eased my way into managing the entire business in about four to five years. I think by 2004 is when I took over management. So, it was handed to me. I didn't actually take over anything. And could bring in technology. Because of our financial discipline, I never had to worry about sitting behind a cash register like most of my other competitors. Even today I have a challenge. Look at scaling the business. Look at HR processes to bring in. I moved away from Tally, got a Microsoft ERP put in, and now we are completely on SAP. Brought in sales for the automation. Within the incense category itself got into high end lifestyle in the home fragrance products, got into spiritual products as well, On the other side, camphor, dia, cotton wicks, kumkum, turmeric, Chandan tika, oil, and all of that. So, I could completely diversify from being a single product company into a multi category distribution and manufacturing company as well. So, all of this without the support and guidance of the second generation and my cousins, we couldn't have done so. I get the courage to do what we did because of the team that I have. I am blessed to have such fantastic employees working in our Cycle family that back every decision that I take, that go all out to ensure that we do the right thing every single time. I'm blessed in that regard.

Sarthak: Now, do you think that where a few D2C brands are coming in, does that also tell you that, okay, there is probably a growing opportunity of untapped distribution channels on which the team is building or working on separately, for example, marketing through Instagram to make incense cool again among Gen Z and millennials? You mentioned that in Brazil; teenagers are now using incense and many times what happens is in fact, a lot of the street wear culture, the street fashion, all of it actually comes from the West and countries in South America actually adopted faster from the U.S. than India does. So do you think again, a wave might come where maybe a new positioning for incense for Gen Z through D2C, through Instagram might come in which is like an opportunity to make a premium product?

Arjun: Definitely. See, we are very active on D2C as well. We have our own e-com website called cycle.in. We have our own spirituality and wellbeing e-magazine called soulweather.com where we talk about spirituality being culture. We have our own services called pureprayer.com, where you can book any puja service at any temple, and the temple will get your lot of different homas and yajnas done for you, all of that. So now we are in that space and we are very active. We have a dedicated team that is working on our entire social media presence, targeting and management of all of that, definitely a big opportunity. But what we need to remember is this category has almost 85% penetration in India. And it's not going anywhere, Gen Z, Gen X, all of them pray, all of them believe in God. For them, when any research that we do, we realise that from generation to generation, there are a few things that are passed down. One of them is the usage of incense and prayer, if not regularly, at least occasionally. And it will remain cool with the entire Indianness and the Bharat movement that we see. It becomes part of who we are as people. Just connecting in that and also becoming sustainable and socially relevant is the key factor for us, and we are, I wonder if you're aware, but we are the only zero carbon incense manufacturer in the world. We completely offset our plastic footprint. We are plastic neutral already, six years ahead of what we had planned to be. We use only 100% recyclable packaging material. All our packaging is OSHA certified for occupational health and safety. We are in the progress of getting a lot of new certifications as well for us to be compliant at the scale that we have. So, we just need to learn how to communicate our story better.

Pritish: Interesting. So, what is the counterintuitive insight about this industry?

Arjun: It's not a commodity. It's more complex than you think it is. It is a very involved decision for a person who believes in prayer and believes in God. So, care for the product, care for the category, ensure that you create world class products. Most of the unorganised players who come in and sit on margin and promotion and offer reference centres to the trade just to get their product pushed, focus on the end consumer. I think that's something that the industry needs to get back to doing.

Pritish: What is your biggest quality or ability as a leader?

Arjun: I trust people who work with me. I completely back my team that I work with. I give them whatever support they require to make the decisions that they need to take. I think that's also my weakness.

Pritish: That's very interesting. Actually, a few days ago, my wife actually pointed that out. Like, people say they have the three top strengths, but they also turn out to be your weaknesses because you just don't see how that is impacting the other side.

Arjun: Exactly. I’m learning that the hard way, but a few things we can change and a few things we cannot.

Pritish: Cycle has been promoting sports and sponsoring the Indian cricket team. And obviously Saurabh Ganguly has been a part of the journey as well. So, can you double click on that?

Arjun: Yeah. As a brand, we wanted to be wherever the nation prays together, and there is no bigger place where the nation prays together than India Pakistan matches. And that happened in 2005 and India was hosting Pakistan for the first time after many years. And we got an opportunity to actually be the main sponsor of that tournament because one of the MNCs had to back out at the last minute because they didn't get approval from their APAC headquarters or something like that. So, what a media agency calls, but a family business who can take a decision over the phone. I got a call and overnight I being the person I am, I bargained my way into getting the price that I needed. And then we were on to cricket and that opened up Pandora's box of opportunity for us where we had a tagline then called everyone has a reason to pray. And that's when the third umpire had just come in. And then when the pending decision comes in, everyone has a reason to pray. And then it became an instant connection with the brand. And then we continued to be present in cricket, in the last 20 years. And more than consumers now, my trade partners and my employees get extremely motivated when they see my brand next to Hero or Airtel, in an India cricket match. It gives you a sense of pride as well. And that's the reason why we've been playing cricket for so many years. But if you look at our overall advertising outlet, it's still focused on SEC, BNC, ABNC, of course, and, housewife, who is a purchasing decision maker. Typically, on the GC channels for us.

Sarthak: Very interesting, as I just observed the other day, Pritish and I were discussing how marketing in India is all about ABC, right? Astrology and faith, Bollywood and cricket, and you've covered all of them. Amitabh Bachchan is your brand ambassador. What more could you really get? And then you were really not giving yourself due credit when you said you're not doing much in terms of branding and narrative. Compared to the newer players, you are the original gangster, if I may use that term.

Arjun: I need to be telling a lot more stories of what we do, what we stand for. And we support so many different initiatives from a social enterprise standpoint. For example, Gadchiroli tribal women who have been displaced due to the local law and order problems that they have. Almost 1,500 women support them. We've been supporting them the last 15 years. Many parts of the country, we continue to do that, but we don't tell these stories at all. And I have a nice consumable Instagram format. That's something I'm trying to learn.

Pritish: 1. 4 billion people pray the most when there is an India Pakistan match. Irrespective if you follow cricket or you don't, it's just in your DNA.

Arjun: The nation prays together and whenever the nation prays together, we want to be there as a brand. Cause we've been here since independence, with every prayer of the nation, somewhere Cycle would have been part of their name. When Chandrayan launched, the day of the launch, the ISRO chairman would have prayed and the odds are he would have prayed with Cycle.

Pritish: What do you see the journey of the Cycle agarbathi brand in the next 10 years?

Arjun: I definitely want to transition from just being an agarbathi brand to become a prayer brand. Prayer and well-being are, I think, the centre of who we are because we believe in doing the right thing and ensuring that the future generations' hopes are also fulfilled. So, transitioning from just being an agarbathi brand, which is the core of who we are, but becoming a prayer and spirituality and well-being brand is the journey that I want.

Pritish: You would have evaluated a number of business opportunities diversification. Is there one you did not take a decision on and it turned out to be a decision you would have liked to have taken?

Arjun: Oh yeah, definitely. 10 years ago, I had the opportunity to get into the spiritual business, what I have done now after I lagged behind. I just got into it four years ago. I should have done it 14 years ago. Spirituality and well-being, because it is part of who we are. Your puja room, incense is just one part of the puja room. You're part of every touch point of the devotees in the prayer gambit. That's something that I realised I had to be doing a lot earlier. The other category that I think is a big opportunity that I should have been a part of is the spiritual foods, the health that goes with the spiritual foods as well. That's something that I'm working on now. I want to see where it takes us.

Pritish: What made you not take a chance 14 years ago?

Arjun: The reason I would probably have not done it then is I believe that I need to have competence in the business to be actually differentiated in the marketplace. I didn't realise that I could look at my distribution in itself as a differentiator. I didn't realise that access to the market in itself is a huge opportunity, and I could have worked with scientists. I have set up an application lab now and all of that, but I always believe that something in the core I need to be able to create or to differentiate. And now more and more I learn and understand as I mature, as I gain experience, a few things that I can outsource, a few things I need to order: he values, the delivery of quality, differentiation, the branding. These are things that are also a key differentiator. I've taken these things for granted in my younger age.

Pritish: Do you see the industry getting disrupted by AI?

Arjun: For sure. I think aspects of the business are already getting affected. The demand planning or supply chain, our ability to predict consumer trends, all of that. My salesforce automation, for example, I have 2,000 sales guys in the market every day. So, we're seeing my 5,000 distributors directly go to about 9,00,000 outlets. AI will play a pivotal role in that we've done some experimentation with a few boutique firms on seeing and doing predictive analysis of what a store might require. What is the purchase pattern in that particular neighbourhood, things like that. So, you will see a lot of disruption happening where consumers' purchasing behaviour and their experiences will only get better. Cause in familiarity and ability to predict what you want is what we are all working towards. If I can know what Jasmine to sell to Sarthak, my job is done. Yeah, you can help me with that for sure.

Pritish: Brilliant. Arjun, that was a fascinating conversation. Thanks for being on the show.

Arjun: Thank you so much, guys. Wonderful. I think it was a very thought-provoking conversation and you asked superb questions. Wonderful talking to you all. Best of luck and have a wonderful day.

Sarthak: Thank you.

Arjun: Jai Hind.

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Pritish Sanyal
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