Italian-Dutch confectionery and gum maker Perfetti Van Melle — makers of Center fresh, Center fruit, Alpenliebe, Happydent, Mentos, Alpenliebe Juzt Jelly and Chupa Chups — recently ventured into the shaped gums category at the `2 price point. Managing director Rajesh Ramakrishnan speaks with Akanksha Nagar about how higher prices and value packs encourage home stocking and are more conducive to e-commerce. Excerpts:
Has Perfetti Van Melle India recovered from the pandemic-induced slowdown?
We saw a 10-15% decline in sales during the third wave. As things began to open up, we swiftly recovered, and by the first quarter of this calendar year, we were back to pre-Covid levels. Our sales were `1840 crore in FY21, and we grew by 8-10% in FY22.
We intend to grow faster than the category, which is growing at 7-8%. We have 25% market share, but there is enough headroom to grow in terms of penetration, frequency, and depth of consumption.
What was the idea behind pricing the newly launched Center Fruit Tennis Ball-shaped gums at `2 — quite high for a confectionery/ gum brand?
It is about upgrading consumers in the value proposition on an ongoing basis. Historically, we had 50 paise products, then there are predominantly `1 products and now, we have also graduated to `2, 5,10, 20, and so on. The intent is to make sure that we are able to provide the right value proposition to consumers at the right price points. Some of the larger price points lend themselves better to the online channel and also to the trade model.
We have a new product development calendar for each of our brands. We identify the right demand space and consumer needs, in order to come up with new products. It is an ongoing exercise that happens across all brands.
Centre fruit contributes around 25% to the company’s business. In terms of distribution, we would get the product in at least 5,00,000 outlets. To build top-of-the-mind recall, we have associated with a bunch of influencers and are trying to figure out some on-ground activation. The campaign for the brand will be supported by digital and television. Our digital marketing spend is close to 15% of overall spends, with the rest going towards television.
How much do your offline and online channels each contribute to your overall revenue?
E-commerce for us was non-existent four years ago and today, it is less than 1%. I don’t see its contribution dramatically changing in the next six to 12 months, though our intention is to grow this number. Large value packs encourage home stocking and consumption, making them more adaptable to modern trade and e-commerce channels. Our institutional sales contribute less than 1%. We are also in active talks with other brands to see how we can cross-promote.
What is your strategy to penetrate deeper into rural markets?
The confectionery category has traditionally been a very cluttered and fragmented one, with several regional players other than national ones. We have based our business premise on ‘differentiated products’, building iconic brands, and an extensive distribution network.
While confectionery is distributed in about 7.5 million outlets, we are present in about 4.5 million outlets. We also recently tied up with ElasticRun, a B2B e-commerce platform for rural India, to increase our rural penetration. We are working on how to target specific brands in specific geographies, to build stronger brand salience.
Do you see the growing preference for sugar-free confectionery impacting your business?
In India, this preference is for a small sliver of the population and yet to become a trend. However, for us, it is all about providing consumers with choices. We do offer sugar-free variants of Happydent and Center fruit. However, they currently contribute a small number to our overall sales.