"The attempt is to upgrade price points"

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Then, as a food product, it has to taste very well and be available at the right price point. As a basket these things works together and not any one element can ensure success on its own. All said, other things being equal, advertising plays a very big role.

Can you give me your estimates on the size of the Indian confectionery market and the latest equation in terms of market shares?

As per Nielsen we are the single largest fragmented category in the country—across FMCG, durables etc—because there are so many brands and pack sizes. Thus measuring at the retail outlets becomes difficult. Our internal estimates seem to indicate that as a category, we are in excess of Rs 2,000 crore in terms of value and would be growing at a reasonable single-digit percentage. So it’s not low single-digit anymore; but I don’t think that it’s very healthy double-digit reach either because it is a very large unorganised market. There is room for growth.

How have you dealt with the changes in the tax structure, given that the confectionery market is so price sensitive?

That’s been a challenge all these years. We have been in a bit of a bind as we have had a fairly aggressive duty structure for a long time now. Also, the cost factor keeps escalating because of inflation. The cost of raw materials is high. It makes the confectionery market that much tougher to be in because you are at fixed price point.

However, Perfetti has grown aggressively on volume and the economies of scale have helped us deliver on the bottomline. Another thing is that we have been very aggressive value generators—every year we are able to find some better and sharper ways of reworking our margins. Going forward, the attempt is to upgrade price points, in terms of launching products at higher prices.

Perfetti has said it hasn’t spent too much money on consumer and trade promotions. But confectionery, as a category, depends a lot on consumer promos to create excitement among children, and trade promos to generate push. What exactly is Perfetti’s gameplan?