The Fizz, the Fortune and the Friction of Lahori Zeera

The batch had to be scrapped.

Lahori Zeera had spent nearly two years developing a zero-sugar version of its flagship beverage. The idea was to create a drink that retained the familiar taste of the original while replacing sugar with stevia, a plant-derived sweetener. In the initial trials, the formulation appeared to have worked. People liked it. In blind tastings, they could not distinguish it from the version the company wanted to replicate.

Then the company moved to a larger production batch. The stevia aftertaste became pronounced. The formulation that had worked in small quantities was no longer delivering the same result at scale.

The company scrapped the batch and delayed the launch.

"We made a small batch initially, and everyone felt the product was perfect," Saurabh Munjal, co-founder of Lahori Zeera, tells OPEN Digital. "However, when we produced a larger batch, the stevia aftertaste became very prominent." We scrapped the entire batch and delayed the launch because it was not the product we had originally tasted, he added.

The decision was costly in time and resources, but Munjal says the company was unwilling to compromise on the product.

"We went back to the trials and worked on the formulation again. The product we have now launched is one we are completely confident about."

The episode offers a glimpse into the pressures of building a beverage business whose growth has begun to outpace its ability to manufacture and distribute its products. For Lahori Zeera, the challenge is no longer simply persuading consumers to buy a drink. It is ensuring that the company can produce enough of it, maintain its quality and preserve the economics of a business built around an affordable bottle.

That challenge is becoming more consequential as the company expands beyond its northern and eastern strongholds.

When Revenue Rises and Profit Falls

The financial numbers tell a story of growth accompanied by mounting pressure.

Lahori Zeera closed FY25 with revenue of ₹468 crore and profit of ₹54 crore, as per the regularity filings accessed by business intelligence firm Tofler. In FY26, revenue rose to ₹775 crore, while profit fell to approximately ₹16 crore, as per Munjal.

The increase in revenue was substantial. Profit, however, contracted sharply.

For Munjal, the pressure comes partly from the cost of the materials required to make and package the beverage.

"We have been under-capacity for the last nine years, since our existence, and that continues to be the case," he says.

Demand, he adds, remains significantly higher than supply. During the peak season, the company was largely sold out, apart from a brief period in April when heavy rainfall affected business.

Yet the ability to sell more does not automatically translate into higher profitability.

Packaging materials are linked to crude oil prices, which Munjal says have risen to around $108 a barrel, compared with a more typical range of $60–70. Sugar prices have also been volatile, climbing from around ₹45–48 to as high as ₹72 before easing to approximately ₹56–57.

The impact is particularly significant for a company whose flagship product sells at ₹10.

When the selling price is low, even relatively small increases in the cost of packaging, ingredients and transportation can put pressure on the economics of each bottle.

Munjal says the company operates at a gross margin of around 35 per cent and an EBITDA margin of 12–15 per cent. But he acknowledges that input costs have taken a substantial toll on profitability.

"Businesses have to continue operating through such periods," he says. There will always be difficult phases, but companies have to keep building and ensure that the product remains available, he added.

The company is exploring ways to protect its margins through larger pack sizes, procurement efficiencies and improvements in packaging.

"We have several levers that we can use. Upselling and cross-selling can help because margins improve as the SKU size increases. We can also build further efficiencies into the business."

The immediate problem is that the company cannot simply pass every increase in costs on to consumers without risking the affordability that has helped establish the brand.

The ₹10 Constraint

The price of Lahori Zeera's flagship drink is both a commercial advantage and a constraint on expansion.

At ₹10, the beverage occupies a price point accessible to a broad consumer base. But that price also limits how far the product can travel before transportation costs begin to erode its economics.

The company's expansion strategy has therefore depended on building distribution close to the markets it wants to serve.

Lahori Zeera is currently present in around 20 of India's 27 states, according to Munjal. Although the business began in North India, the East has emerged as a major contributor to revenue, matching the North. The central and western regions have also become significant markets.

"We are no longer a regional business; we are now primarily a North-and-East-focused business with a growing national presence," he says.

The next major opportunity lies in southern India, where the company has had a relatively limited presence.

To support its entry into the region, Lahori Zeera has established a contract-manufacturing facility in Bengaluru. The facility is expected to help the company expand into Karnataka, Andhra Pradesh and Telangana.

The choice of contract manufacturing is significant. Rather than investing heavily in owned facilities in every new market, the company can work with local manufacturing partners and bring production closer to consumers.

The approach also reflects the economics of a low-priced beverage. A product that sells for ₹10 cannot absorb unlimited transportation costs simply to reach a distant market.

Distribution Before Advertising

Munjal's approach to entering a new state is deliberately gradual.

The company first builds distribution and secures shelf space. Marketing comes later, once the product is available widely enough for consumers to discover it.

"When we enter a new state, we do not immediately spend a large amount on marketing," he says. "We first build distribution and secure shelf space."

Once distribution has been established, usually over a year or two, the company invests in marketing, educates consumers and builds awareness.

"Our approach is distribution first, discovery next and repeat purchase after that."

The sequence is designed to avoid a familiar problem in consumer businesses: spending money to generate demand before the product is reliably available.

It also requires patience. Munjal says it generally takes two to three years to determine whether a new market has truly worked.

The company's recent expansion into eastern India has, however, delivered results faster than expected.

Bihar has become its highest-contributing state this year, according to Munjal. The response in Jharkhand and parts of the Northeast has also been strong.

"We enter each geography expecting it to take at least a couple of years to develop, but the response has exceeded our expectations," he says.

The company is trying to build for the long term rather than impose aggressive short-term targets on markets that are still developing.

A Different Kind of Beverage Consumer

The launch of Lahori Zeera Diet reflects another dimension of the company's expansion: the effort to reach consumers who are willing to pay more for a different formulation.

The product was developed in response to a growing interest in zero-sugar beverages and more conscious consumption.

But the formulation presented a challenge.

Munjal says the company considered several alternatives to sugar, including allulose and monk fruit, before settling on stevia.

"Stevia has a strong aftertaste, so managing that became the biggest challenge," he says.

The company eventually developed a formulation that it believes retains the taste consumers expect while offering a zero-sugar alternative.

The product is priced at ₹20, twice the price of the original beverage, and is aimed at a more premium, health-conscious consumer rather than the entire mass market.

"We are targeting roughly 10–15 crore people in India who have the purchasing power to make conscious choices about what they consume," Munjal says.

The launch gives the company an opportunity to broaden its consumer base without changing the positioning of its flagship product.

It also illustrates the difficulty of translating a promising product idea into a formulation that can be manufactured consistently at scale.

Why Munjal Is Not Hiring a Celebrity

As Lahori Zeera expands, it faces a question familiar to consumer brands: how much should it spend on building a recognisable public identity?

Munjal has resisted the conventional answer.

The company has been encouraged to appoint a celebrity brand ambassador, he says, but has chosen not to do so.

"We have been encouraged to appoint a brand ambassador, and we could afford to do so, but we have chosen not to."

Instead, he believes the people who consume the product should represent the brand.

"The brand ambassadors for Lahori Zeera are the everyday Indians who consume the product. They are the real people representing the brand."

His approach to marketing is shaped by a belief that consumer trust cannot be manufactured simply by attaching a familiar face to a product.

"Consumers are no longer as fascinated by a celebrity endorsement as they once were," he says. "An authentic conversation is far more valuable than having a celebrity say something they may not genuinely believe."

The same reasoning informs his reluctance to compare Lahori Zeera directly with established beverage companies such as Coca-Cola.

"Coke is a massive brand with an extraordinary legacy," he says. "Comparing a relatively young brand with a 78- or 89-year-old brand is not fair to Coke."

The ambition, he insists, is not to imitate established players but to build a brand with its own identity.

The Limits of Instinct

Munjal's role in the company extends beyond the financial and operational questions of expansion. He personally leads marketing, despite having no formal training in the function.

"I have an MBA in finance from Singapore, with a specialisation in finance," he says. "Marketing evolved naturally over the years, and I gradually became more involved in it."

He describes the company's approach as one guided partly by instinct rather than conventional marketing metrics.

"We have never approached marketing by calculating impressions or deciding purely on the basis of share of voice. My view is that you have to understand what feels right for the brand. Instinct plays a significant role in our decision-making."

But he is also conscious of the limits of relying on instinct as the business grows.

"We recognise that we have been fortunate and that there has been a great deal of serendipity in our journey," he says.

"You cannot rely on luck forever. We are trying to introduce more structure into the business and surround ourselves with intelligent people who are smarter than us."

The company's founders, he says, may be its public faces, but the work of building it belongs to the larger team.

"We may be the faces of the company, but the credit belongs to the entire team. It is a collective effort."

The Discipline of Saying No

The company's approach to product development reflects a similar willingness to abandon ideas that do not work.

Lahori Zeera has been encouraged by distributors to enter the energy-drink category, but Munjal says the company has stayed away because it does not fit the brand's ethos.

It has also withdrawn products that failed to attract consumers.

The company launched a product called Emily Manta, but pulled it out within 10 months after receiving negative feedback from consumers, retailers and distributors.

"Although we liked the product, the market feedback was clear," Munjal says. "We decided not to continue with it and pulled it out quickly."

The decision is a reminder that product expansion is not simply a matter of adding more flavours or entering more categories.

For a company whose flagship product continues to account for much of its production, every new product competes for resources, manufacturing capacity and management attention.

Munjal says the original flavour remains the company's priority because it is the product that established the brand.

The product mix, he believes, will change as production capacity expands.

A Family Business in a Competitive Market

Lahori Zeera is led by three cousins, and Munjal says their shared objectives help resolve disagreements.

"We may not reach a conclusion in the same meeting, but over multiple meetings and discussions, we generally arrive at a unanimous decision," he says.

The founders have also divided responsibilities, allowing the person overseeing a particular function to carry greater weight in decisions relating to it.

The arrangement is intended to keep the business moving without allowing disagreements to become prolonged.

The cousins have also resisted opportunities to build individual public profiles.

Munjal says the company was offered an opportunity to appear on Shark Tank India, but decided against it.

"It can become a distraction and take focus away from building the business," he says.

"We are still a young company with a long way to go. This is not the time to get distracted by personal branding."

The decision reflects the founders' concern that the company's next phase will require sustained attention to manufacturing, distribution and competition.

The Next Frontier

Lahori Zeera's ambitions extend beyond India.

The company is exploring markets such as Nepal, Sri Lanka, Bangladesh and the Gulf Cooperation Council countries, where Munjal sees similarities in taste preferences and established connections with India.

The plan is to work with local partners who can provide infrastructure and operational capabilities, rather than commit to a large capital-expenditure cycle of its own.

The company would contribute its brand and help drive sales.

The approach mirrors its domestic expansion strategy: enter markets through partnerships, establish distribution and scale as demand develops.

But the competitive landscape is changing.

Munjal says almost every major beverage and FMCG company has launched or is exploring a jeera-based beverage.

The growing interest in the category creates opportunities for the company, but also raises the stakes. Lahori Zeera must protect its position while building the capacity and systems required to compete with larger players.

For Munjal, the next two or three years are particularly important.

"This is the time for us to double down," he says. "If we can sustain our growth over the next two or three years, there may be no ceiling for the brand. It could grow into something much larger than we can imagine today."

The ambition is expansive. The immediate problem is more prosaic.

Lahori Zeera has consumers waiting for its products, new markets to enter and a growing portfolio to develop. Yet the company must also contend with rising costs, limited production capacity and the challenge of making growth translate into stronger profits.

The failed Diet batch was a small but revealing example of what happens when a business tries to scale before every part of its operation is ready.

The financial results suggest that the same tension now runs through the company itself.

Lahori Zeera has shown that it can create demand. The next test is whether it can build a business capable of meeting that demand without allowing the cost of growth to overwhelm the gains.

For Munjal, the objective is not simply to sell more bottles.

It is to build a brand that can sustain its own success.