Namaste, Sat Sri Akaal, and Salaam. 🫡

Hope you folks had a LOVELY new year. 2024 is the one. Make yourself proud. ❤️

Today we’re diving into -
- Harley Davidson’s sudden India frenzy,
- Tata’s crumbling Haldirams deal,
- and Uniqlo’s South-Asian dhamaka.

Our read time is 4 minutes and 53 seconds - faster than KL Rahul’s KLassy comeback. 🫡

Let's dive in. 👇

Market Vibe Check

Harley Davidson gets a pleasant surprise from India’s demand. 🚲

TLDR -
- Harley is facing a “too much demand problem” in India.
- 26,000 customers have fully pre-paid them in cash for a bike model that hasn’t even started production.
- 65% of these 26k customers opted for the ~$3300-priced highest end variant.

2 years back, Harley Davidson ran a press release regarding their exit from Indian markets, citing “sluggish and snaillike growth.”

But after launching their new bike, they’ve been forced to stop taking orders from new customers because of how much demand they’re seeing.

There’s a little caveat too - this bike won’t be produced by Harley, but instead by Hero Motocorp, another Indian manufacturer. But because of the Harley brand, pricing is still gonna stay premium.

India has an exciting and young biker population, and 26,000 of these customers have pre-paid, FULLY in cash for a bike that hasn’t even got onto the production line yet.

Harley (along with quite a few other foreign brands) is slowly realising that India is not a poor country. India is a wealthy country, with a lot of poverty.

Selling premium and ‘aspirational’ products does not automatically ‘blacklist’ you from most consumers’ minds, because India is turning into a country driven by the same American consumerism forces - more spending on debt, more attention given to brands and status, and more people identifying themselves by the things they own.

Interesting double-edged sword… 🤔

Tata-Haldirams deal looks done-and-dusted… 💔

Earlier last year (I can say this now lol) Tata tried to buy a controlling 51% stake in Haldirams Foods.

A couple problems came up -
- Haldirams was valuing themselves at $10bn while only doing $1.5bn of revenue, a ~7x multiple that’s unheard of in this market and even astronomical generally for a food business.
- Tata’s Consumer Products arm (the acquirer) itself was only worth about ~$10bn, so they couldn’t really go through with the deal without tapping into the pockets of their parent company

Both sides were locked in some heated negotiations over both price and deal structure, and Haldirams were intentionally charging a rather hefty premium because they were trying to sell a controlling stake.

The market has been silent since, so it’s pretty safe to assume that there’s nothing else happening on this deal.

Sure was exciting while it lasted. 🤷

Uniqlo has a profit party in India. 💀

TLDR -
- Uniqlo clocked 630Cr ($76m) of topline and 68Cr ($7.2m) of profit in India.
- They’re not targeting the fast-fashion segment, they’re going for a PREMIUM customer who wants to wear quality clothes.
- Despite that, they’re growing revenues at 70%+ - India’s market really is super diverse.

Another tell-tale sign of Indian consumerism…

Uniqlo launched their first India store in 2019.

Cut to today, and they’re a profitable business that’s growing at 70% a year.

They did almost 630Cr ($76mn) of sales in the last 12 months with a pretty stunning profit margin of 11%.

The even crazier part - they’ve done it all from 10 brick and mortar stores.

What interests me about their business is that they are not targeting the “fast fashion” segment like H&M and Zara do.

Uniqlo is not selling cheap and flimsy clothes that look good but only for 3 washes.

Uniqlo is selling genuinely premium products, and Indian consumers are LOVING it.

People are willing to pay big bucks for a product that’s miles above what anyone else can offer.

Uniqlo proves it - if you can sell a $80 USD jacket in India AT SCALE, you have made it as a brand.

In other news… ☕

Stock markets get ready to close out their best year since 2019 (FT)

Cocoa prices surge the highest in 15 years (BBG)

Shield AI nabs a $2.8bn valuation with a $300mn Series F (TC)

Cali bans diesel/fuel trucks at ports in favor of electric ones (NYT)

Huawei nears $100bn in sales. That’s billion, with a B. (BBG)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC