Case Study- Nathus Sweets

A bitter – sweet story

Arun Gupta, the owner of the popular Nathu's Sweet Shop chain, was forced to revisit his expansion plans because of the economic slowdown

ARUN GUPTA, owner of the popular Nathu's, has beaten the economic downturn by focusing on providing his customers value for their money.

Ahead of the festive season, almonds and sugar have begun to taste bitter to Arun Gupta. Every morning when his men go shopping for these, Gupta, 52, prays that there is no further escalation in prices. These days, more often than not, his prayers are left unanswered. Gupta owns Nathu Sweets, the popular sweetmeat shop in central Delhi's busy Bengali Market, which is the flagship of the 13-shop chain of the same name run by his extended family. Over the years, politicians, celebrities and commoners alike have developed a fondness for its array of sweets and snacks such as sohan halwa, ghevar, rabri, kalakand, chholey bhature and aloo chaat In the past few months, however, business has hit a rough patch. Costs of raw materials have skyrocketed. The price of khoya, a key ingredient, has risen by Rs 20-Rs 25 per kilogram. Similarly, sugar prices have increased by Rs 12-Rs 13 per kg, dry fruit by Rs 30-Rs 35 per kg and milk by Rs 2-Rs 3 per litre. Gupta has been forced to think of ways to cut casts without compromising on quality. "It’s a dilemma. With raw material prices shooting up, it's tough to maintain profits at existing prices. If we increase prices too much, we stand the risk of being forced out of the competition," he says. 1

Unlike other industries, the impact of the slowdown is yet to dent the sweet meat industry. But, it has upset budgets of mid-segment shops like Nathu's. The Bengali market outlet had sales of Rs 5 crore in 2008-09. Gupta refused to share other financial details and annual growth rates, saying: "We did feel the pinch. The impact of the slowdown is bound to reflect in our growth margins this year" he says. But he's also sure that he'll...