Initially launched in Mumbai, Byte is a strawberry-flavoured chocolate, priced at Rs 3 for a 10 gm bar. Targetted at the under-12-year segment, the introductory offer comes with a free tattoo. Confirming both the developments, CIL director (sales & marketing) Bharat Puri CIL said the price increase is necessary for the continued profitable existence of the company in the marketplace.

According to industry analysts, the reason for introducing Byte at such a low price point is to reach out to a wider consumer base in the targetted segment besides inducing more trial purchases. Says Puri, "We will have to evaluate the market response to Byte in a longer time frame before we think of line extensions on the brand". Meanwhile, the company is gearing up to tackle any repurcussionson sales due to the price hike. Though the reason for the hike is not known, sources in the trade feel that CIL will invest more in below the line support to offset the impact of the price hike on sales. Avers Puri, "We are looking at promotions and trade incentivisation which will be in line with our advertising activity".

As against other impulse categories like wafers, soft drinks and branded mithai, chocolates are already perceived to be expensive. Hence, the increase in price is likley to distort the price value equation further. However, Puri says, "The impact on the volumes of business is expected to be minimal as in any impulse product category, the consumer usually accepts a price increase in line with inflation". The price increase is in line with inflation and has been taken almost after a year, he adds.

Following the price hike, the company's flagship product Cadbury's Dairy Milk (CDM), which retailed at Rs 15, will be available for Rs 17. Similarly, the price of brand Perk--directly pittedagainst Nestle's Kit Kat--has been increased marginally from Rs 12 to Rs 13. Kit Kat is sold at Rs 15 for the same grammage.

The brands not touched by CIL for a price hike are Picnic and CDM Gold. Launched early last year, Picnic and CDM Gold have been major volume drivers during 1998. CIL has been able to attain volume growth in excess of its stated objective of 12 per cent in case of chocolates primarily because of the movement of Picnic and Gold in the market," says an analyst.

CIL's experience with price hikes has never been encouraging, according to market sources. A similar increase in price effected in the first quarter of 1997 and 1998 had affected sales. During the first half of 1997, net profit fell by 56 per cent compared with the corresponding period of the previous year. However, industry observers are bullish on CIL's performance this year by expecting it to report a larger net profit of Rs 25.5 crore for the year 1998-99, as against the Rs 18.57-crore garnered in 1997-98.