Over the past decade, the travel industry in India has witnessed a remarkable boom. The post-COVID era, in particular, has seen a massive resurgence in travel, sparking a surge in demand for luggage and trolley bags. Amidst this thriving market, one company has managed to outshine the rest, capturing the market share from the giant of the Indian luggage industry, VIP Industries. Today, we’re diving into the story of Safari Industries and how it has become a formidable competitor in the Indian luggage market.

The Soaring Indian Luggage Market

The luggage and bags market in India is on a robust upward trajectory, with revenue expected to hit an impressive US$15.04 billion in 2024. The industry is projected to grow at a compound annual growth rate (CAGR) of 5.21% through 2028, driven by the burgeoning middle class and their insatiable wanderlust. This surge in demand is creating a fertile ground for expansion across all segments of the luggage market.

With per capita revenue at US$10.43 in 2024, the potential for growth is substantial as disposable incomes rise and travel becomes more accessible to a broader population. Manufacturers and retailers are eagerly positioning themselves to capitalize on this evolving market, catering to the diverse needs of consumers in both premium and affordable categories.

Safari Industries: A Rising Star

Founded in 1974, Safari Industries has steadily carved out a niche for itself in the Indian luggage market. Specializing in the manufacturing and trading of luggage and related accessories, Safari has grown to become a leading brand in the travel gear sector, known for its diverse product offerings and quality.

Safari’s product portfolio is categorized into two main segments: hard luggage and soft luggage. The hard luggage line, crafted primarily from Polypropylene (PP) and Polycarbonate (PC), is manufactured in-house at the company’s state-of-the-art facility in Halol, Gujarat. This in-house production capability allows Safari to maintain strict quality control and respond swiftly to market demands.

On the other hand, the soft luggage range is made from various fabric materials and is largely imported. This strategy enables Safari to offer a wide array of styles and designs, catering to the ever-evolving preferences of consumers. Safari’s lineup includes suitcases, backpacks, duffel bags, and travel accessories, appealing to both budget-conscious buyers and the premium segment.

The Titan of the Industry: VIP Industries

VIP Industries, established in 1971, has long been the undisputed leader in India’s luggage market. Headquartered in Mumbai and employing over 6,000 people, VIP has dominated the industry for decades, offering a broad spectrum of products across various price points. Its brand portfolio, including VIP, Skybags, Carlton, Aristocrat, and Caprese, is well-known and trusted by consumers across the country.

Despite the recent challenges posed by competitors like Safari, VIP remains a market leader with its extensive distribution network, strong brand recognition, and diverse product range. The company’s long-standing presence and reputation continue to be significant assets in the competitive luggage industry.

Safari vs. VIP: A Strategic Battle

In the past three fiscal years, Safari Industries has made significant strides in eroding VIP’s market dominance, showcasing an impressive growth trajectory. This remarkable rise can be attributed to Safari’s strategic initiatives, spearheaded by Sudhir Jatia, the company’s chairman and managing director, who interestingly, is a former VIP director.

Safari’s success stems from a multi-pronged approach:

1. Market Expansion: Safari targets the mass market, capitalizing on India’s expanding middle class and their increasing travel aspirations.

2. Product Diversification: The company has broadened its product range, introducing new luggage designs and venturing into backpacks and laptop bags.

3. Distribution Network Enhancement: Safari focuses on strengthening its distribution channels, ensuring better product availability and market penetration.

4. Innovation: Under Jatia’s leadership, Safari prioritizes product innovation to keep pace with changing consumer preferences and travel needs.

5. Brand Building: Consistent marketing efforts have bolstered Safari’s visibility and appeal among consumers.

A Digital Advantage: Safari’s E-commerce Edge

One of Safari’s key competitive advantages lies in its early adoption of e-commerce, which has created a significant moat in the luggage industry. With 20-25% of its FY23 revenues coming from online sales, compared to VIP’s 16%, Safari has demonstrated a superior ability to adapt to changing consumer shopping habits. This foresight has diversified Safari’s sales channels and positioned it favorably to capture the growing digital-savvy consumer base, allowing it to potentially outpace traditional market leaders.

These strategic efforts have enabled Safari to steadily eat into VIP’s market share, positioning itself as a formidable competitor in the industry. The company’s agility and responsiveness to market trends have allowed it to outpace larger competitors, gradually reshaping the market landscape.

Financial Growth: Safari’s Impressive Performance

Safari’s financial performance over the past few years paints a picture of a company on the rise:

Safari’s revenue has more than doubled from ₹685.87 Crores in March 2020 to ₹1,550.42 Crores in March 2024. Despite a setback in 2021, the company’s net profit rebounded significantly, reaching ₹175.81 Crores in 2024. The operating profit margin and return on capital employed (ROCE) have also shown substantial improvement, indicating strong financial health and operational efficiency.

Future Outlook: Safari’s Path Forward

Safari Industries has ambitious plans for the future, aiming to maintain its impressive growth momentum:

1. Market-leading Growth: The company plans to focus on key channels, categories, and consumer segments driving expansion.

2. Supply Chain Optimization: Investments in modern ERP, warehousing, and planning technologies will enhance supply chain responsiveness and cost-efficiency.

3. E-commerce Focus: Safari will continue to strengthen its supply chain to meet the unique demands of e-commerce and direct-to-consumer channels.

4. Premium Category Expansion: Aggressive investments in the premium luggage segment will help increase market share and improve pricing.

5. Digital Advantage: With a significant portion of revenue coming from online sales, Safari is well-positioned to capture the digital-savvy consumer base.

6. Profitability Improvement: Safari is poised for high growth with improving profitability, leveraging its strategic initiatives and strong market positioning.

Peer Comparison

Shareholding Pattern

Conclusion: A New Leader Emerges

Safari Industries has shown remarkable growth in the Indian luggage market, steadily gaining market share from VIP. Its success is a testament to strategic market expansion, product diversification, distribution network enhancement, innovation, and brand building. With a strong digital advantage and robust financials, Safari is well-positioned for continued growth.

As the company adapts to changing consumer preferences and expands its presence in both traditional and digital retail landscapes, Safari faces both opportunities and challenges in maintaining its growth trajectory and market position. The journey ahead is one of strategic maneuvers, but with its current momentum, Safari seems well-prepared to navigate the road to continued success.