Interview: Mayank Shah, Senior Category Head, Parle Products

‘D2C model is not sustainable for FMCG brands’

Currently, the price rise we have incorporated is partly absorbing the increase in input cost, says Shah
Currently, the price rise we have incorporated is partly absorbing the increase in input cost, says Shah

Mayank Shah calls the biscuit company’s foray into the wheat flour category a “natural choice”, more so given the consumer preference for all things safe and packaged. He talks to Sheena Sachdeva about the spike in demand for premium snacks during the pandemic, the increasing contribution of e-commerce to the overall FMCG market, and more.

There has been an increase in snacking volumes during the pandemic. How did Parle’s business fare?

During Q1 FY21, people were stocking processed foods due to their long shelf life. Although there was a spike in demand, there was no clarity from the central or state governments on the number of workers that can work in a factory, leading to supply disruption. Further, during the festive season, a lull time for processed foods, the business saw minimal growth of 12-15%. Demand started picking up during the second wave, but not as much as the first wave. In the second wave, the demand grew by 25-30% compared to pre-pandemic times.

We saw that people were trying new recipes as a recreational activity. Due to this phenomenon, we saw high demand for premium products like Milano and Bourbon. Currently, 15% of our business comes from premium products, which was 11-12 % in the pre-pandemic times. Also, e-commerce now contributes 3-4% to the overall FMCG market, which was less than 1% in the pre-pandemic era. We leveraged our e-commerce channels with a focus on e-grocers, to ensure our products were easily available.

What prompted your foray into the wheat flour category?

As people are avoiding moving out, they are also avoiding the process of buying wheat and getting it milled, leading to a shift towards packaged atta. Currently, according to Parle’s primary and secondary research, the total atta market in India stands at Rs 125 lakh crore, and packaged atta has a share of almost Rs 20 lakh crore. With more people converting to packaged atta, the time is ripe for companies like Parle to get into the market. As a biscuit manufacturer, we also mill atta for our biscuits, hence it becomes a natural choice for us to get into the category.

Both Britannia and ITC recently entered the potato biscuits segment. Does Parle, too, have something coming up?

We have a big range in the cracker segment with brands like KrackJack, Monaco, and Parle Top. We recently launched piri-piri and pizza variants in Monaco, and butter masala in KrackJack. In terms of potato biscuits, we are waiting to see how the category shapes up. If the overall category of potato biscuits grows, we will surely foray into it.

According to Edelweiss Research, Parle has managed to inch closer to Britannia in the biscuits category during the pandemic…

As a brand, we don’t believe in market data as it’s not accurate. Given the high consumer footprint of Parle Products, it is difficult for a research firm to understand the penetration of the brand. There is no product that could compete with Parle-G’s popularity and availability. Our range of more than 50 iconic products, including Monaco, Hide & Seek and Milano, are liked by all kinds of consumers, across socio-economic classes.

How much of an impact will price hikes have in this segment?

Currently, the price rise we have incorporated is partly absorbing the increase in input cost. We are expecting the raw material prices to go down in the coming months, so that there are no more price hikes. Also, to rationalise our cost, we are trying to supply directly to our distributors. We want to ensure availability and affordability of products. As there is stress on the household budget, we are trying to keep the unit price of packs as affordable as possible.

How soon before Parle joins the direct-to-consumer bandwagon?

Although direct-to-consumer (D2C) has enabled brands to directly communicate with users, it involves high costs. It is too early for us. In a normal situation, when other channels, including offline and online marketplaces, can deliver smoothly within optimum costs, we don’t see D2C helping us in any way. It’s difficult to ensure profitability unless you have products whose unit costs are high and offer high margins, which can absorb the cost of delivery. Usually, for FMCG brands, it is difficult to sustain a D2C model.

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First published on: 20-08-2021 at 06:50 IST