It’s been a decade since tape cassettes have done significant business for music labels. In that decade, the explosion of digital music has meant that cassette decks and physical music were pretty much dead. So when Saregama launched a physical music player in 2017, it had been a long time since they had any significant direct relationship with individual customers. As it turned out, those customers were more than enthusiastic about Carvaan, the music player that catapulted Saregama back into retail. Carvaan comes pre-loaded with 5,000 songs from the pre-Internet era, and its sales show that there is tremendous nostalgia that Saregama was able to tap into. The company has made the device available in Bengali, Tamil and Marathi, on top of the Hindi original.

“Electronics business is not something that came [naturally] to a B2B company,” said Vikram Mehra, Saregama’s Managing Director. “So we took it slow to maintain quality, we took it slow to build our pipelines, we took it slow so that we can build the distribution network properly and at the end when we are finishing the year I think we are very satisfied with the way in which Carvaan numbers have grown.”

The numbers

Saregama has four manufacturers making Carvaan, the latest one being Indian. Here’s how many units they sold each quarter, including other variants like Carvaan Mini:

Quarter Units sold Gross margin
Q1 FY 2017–18 14,000 17%
Q2 FY 2017–18 95,000 19%
Q3 FY 2017–18 132,000 20%
Q4 FY 2017–18 146,000 22%
Total FY 18
3,87,000 ~19.5%

For context, Saregama had predicted that they would sell 200,000 units in Q3 and Q4, meaning they exceeded their own estimate by around 40%. The main version of Carvaan costs between ₹6000 and ₹6400, a bit lower than the earlier price (cost benefit from a GST reduction during Q3 was passed on to consumers). Carvaan also has a Mini variant, with a smaller set of algorithmically selected songs pre-loaded from the larger Carvaan’s 5000-large collection. The Mini is targeted at younger listeners.

In the US and the UK, the Carvaan costs around ₹4000 more than those sold in Indian stores. The international pricing is 159 USD and 120 GBP, which comes out to just over ₹10,500.

Carvaan achieved those sales numbers without even starting to do conventional advertising, Saregama said in its analyst presentation for the quarter. Special festival variants and a ‘Premium’ version of the device are planned. Saregama expects to almost double its production of Carvaan in FY 2018–19, selling around 750,000 units, and said that the Indian manufacturer alone will be able to produce 600,000 units “with all cylinders firing”. They also expect gross revenue to go up to 25%.

Selling nostalgia

Saregama has even started doing doorstep demos of Carvaan on demand. Consumer research said that people in the 40+ age bracket “want the old-world way of listening to the music,” Mehra said, where there is “a very simple single button [click] listen to music experience.” Dispelling cynicism about Carvaan being a one-hit wonder, Mehra said, “I do not think till five years anybody needs to worry as far as Carvaan or its variants are concerned.” The company estimated that the total size of the market that Carvaan can theoretically reach is over 25 million.

Presentation | Earnings Transcript