Blog

In Roald Dahl’s famous book, Charlie and the Chocolate Factory, Grandpa Joe once said, “Mr Willy Wonka can make marshmallows that taste of violets!”

How much thought do we put into the ingredients in the candies we munch on frequently? While we know it’s mostly sugar, what other preservatives are in it?

The question bothered Mahesh Dharam while on a trip to Goa when his son saw a large lollipop at a store and urged him to buy it. After speaking to the shopkeeper, he learnt there was a demand but insufficient supply.

For Mahesh, this was a chance to create a healthier alternative for candies. In 2013, Mahesh and his wife, Anusha Mahesh Dharam, started Kandee Factory to offer vegan, preservative, and chemical-free candies, marshmallows, lollipops, gummies, and hard candies.

Like Lay’s, the Chennai startup uses nitrogen to keep its products fresh by controlling moisture levels. “Currently, the products last 12 months, which is important for trade,” Mahesh, Founder and CEO of Kandee Factory, tells YourStory.

While in their corporate jobs, the husband-wife duo decided to kickstart their candy venture. With bootstrapping with Rs 2 lakh, they converted their kitchen into their lab and hired their cook as the first employee. In fact, Mahesh would sometimes be the delivery boy. 

Kandee Factory operated as a proprietary till 2019 before it was incorporated and started getting investments. Since then, it has raised Rs 4 crore from Keiretsu Forum Chennai, ah! Ventures, Nice Angel Network, Arun Jain family office, and Aprameya Radhakrishna family office. “Here we are today, as one of the select suppliers to Walmart,” the CEO says. 

In fact, at Walmart Growth Summit in March this year, the US retail giant selected 20-25 companies, including Unibic, Parle, etc., and “We were the smallest company selected… This was a humbling moment,” the founder says.

He expects the revenue from Walmart sales to come in the latter part of 2025.

Offerings

Kandee Factory offers nearly 150 SKUs under different brand names. 

Under Marshmelts, it offers vegan marshmallows in vanilla mist, salted caramel, gulkand, and rasmalai flavours, as well as chocolate-coated marshmallows called Choco Mallows. 

While gelatin acts as a binding and foaming agent in regular marshmallows, “In the vegan avatar, we use seaweed extract as the gelling agent and soy protein as the foaming agent, separately,” the CEO explains. 

He adds that Kandee Factory’s marshmallows are 90-95% similar to gelatin-based ones and could be slightly thicker and not as fluffy. Moreover, these recipes don’t contain animal products except for Choco Mallows, which have milk. 

The startup offers gummies under the Orileys brand in Indian summer mix (raw mango, pink guava, tamarind, and jackfruit) and sour fruits (apple and pineapple) flavours. The brand also sells hard candies in blackcurrant apple, aamras, lemon sorbet, and cranberry mint flavours.

Under Toonpops, it sells lollipops in packs of 12 and 60 in assorted fruity flavours. Lastly, it offers blueberry, orange, and watermelon flavour candy canes under Kandee Kanes, Kandee Springs, and Kandee Swirl Pops brands.  

The startup refrains from using artificial colours and uses extracts from beetroot, spinach, turmeric, and some flowers to make its candies and other offerings attractive.

Kandee Factory is FSSC 22000 certified (a global food safety initiative) and US FDA-approved for production. It also has Kosher, Halal, and vegetarian certifications.

Business layout

The Marshmallows are priced between Rs 109 and Rs 329; the gummies cost between Rs 70 and Rs 270; the Choco Mallows are priced at Rs 105; the hard candies between Rs 125 and Rs 249. The Kandee Kanes pack of 12 goes up to Rs 840. The hard candies under Orileys are priced between Rs 125 and Rs 249.

Kandee Factory has business-to-business (B2B) and business-to-consumer (B2C) operations in the impulse buy category. It has an online presence through its website and ecommerce platforms, including Amazon, Swiggy, Zepto, and BigBasket. It is available offline in about 1,000 retail stores.

With a pan-India operation, it sees maximum traction from Mumbai, Pune, Bengaluru, and Hyderabad.

In FY23 and FY24, the startup clocked Rs 3 crore in revenue, the CEO says, adding, “We did not see any growth in FY23-24; it was flat since we were building the business.” The company has been PAT-positive since the previous quarter.

The company projects a revenue of Rs 6-7.5 crore in FY25 and plans on doubling it next year. “We have worked these 18 months… getting the right people into the system, enhancing shelf life from 6-12 months, buying machinery, etc.,” he says. 

The company has factories in Tamil Nadu’s Adyar, Indira Nagar, and Kottivakkam regions. With a team of 45 employees, Kandee Factory has 95% women in the workforce, and the production facility has been 100% women-run since its beginning. Only the delivery and a few operational staff are men.

Funding and future

Kandee Factory aims to reach Rs 100 crore in revenue in the next 4-5 years and Rs 1,000 crore topline in the next 7-8 years.

This September, the company will launch a new project—its first shop-in-shop experience centre—in one of Reliance’s projects in ECR, Neelankarai, Chennai.

At the experience centre, consumers can see live how hard candy and lollipops are made and get hands-on experience in making the lollipops themselves. The company also plans to have a chocolate experience with marshmallows in them at the centre. 

“We’re looking forward to making this visual treat available for the Chennai consumer base in the ECR belt,” the founder says.

According to data company Tracxn, Kandee Factory competes with Perfetti, Candzey, and Falero, among others.