Why it may take until end-2020 for Perfetti to match last year’s sales’

By: |
September 4, 2020 6:53 AM

Sales had dropped to 40% in April, and now the company is operating at around 80% of pre-Covid levels

The company is trying to find the best ways to leverage digital advertising, Rajesh Ramakrishnan, MD, Perfetti Van Melle India said.The company is trying to find the best ways to leverage digital advertising, Rajesh Ramakrishnan, MD, Perfetti Van Melle India said.

The prolonged shutdown of schools, colleges and offices to curb the spread of the pandemic severely impacted the sale of packaged confectionery products. Rajesh Ramakrishnan tells Venkata Susmita Biswas how Perfetti is stimulating demand in these times, launching new products based on consumer insights, and how quickly can the confectionery category expect a revival.

How did the confectionery segment fare during the lockdown months?

This category is part of the larger impulse purchase category, which was severely hit by the pandemic, as it is highly dependent on footfall. With schools, offices and shops shut during the lockdown, the sale of confectionery products dropped dramatically during April, in particular.

In the initial months of the lockdown, we had a significant drop in sales in the urban markets as the pandemic first hit cities like Mumbai, Delhi, Chennai and Bengaluru. But now, urban markets have started recovering and some metro cities are opening to a large extent. Sales had dropped to 40% in April, and now we are operating at around 80% of pre-Covid levels. Sporadic local lockdowns, too, have impacted this category.

Candies have done relatively better during the pandemic than mouth fresheners and chewing gums. One of the challenges with gum is that one must spit it out and that is better avoided to reduce the spread of the virus.

Is the fact that confectionery products are largely inexpensive helping the business recover quickly?

The upside of the confectionery category is that 80-90% of the sales takes place in the 50 paise to Re 1 price point; so, these are not products that people cannot afford now. In fact, during these times when cash flow is limited, people view confectionery products as affordable treats for their children. Therefore, the bounce-back has been healthy. Until schools and colleges remain closed, this category will not recover completely. It may take until the end of the year to come back to last year’s level of sales.

Does the category need a temporary repositioning to drive sales?

We do not believe so. Fundamentally, we are working on making each brand play a meaningful role in the life of the consumer. For instance, Center Fresh is all about fresh breath confidence and that does not change with time; Center Fruit is about mood transformation, which is a universal requirement irrespective of the pandemic. As an FMCG brand, we are trying to understand what our consumers are experiencing, and tweaking our strategy to meet those needs. For Center Fresh, we had a campaign called Stay Fresh Behind the Mask, which comes from the insight that wearing a mask for long periods could give one mask breath.

Have you altered your product strategy during these times?

Value is being redefined now, as consumers are veering towards in-home stocking and in-home consumption. Our Alpenliebe Juzt Jelly limited edition pack, priced at Rs 50, was based on that insight. Additionally, a part of the proceeds from the sale of the pack was donated to the PM Cares fund. The other shift in consumer behaviour is towards food products fortified with immunity boosters. We have launched Alpenliebe Juicyfills fortified with Vitamin C, priced at Re 1, to satisfy this need of the consumer.

How are you promoting new products in the absence of substantial in-store footfall and sampling?

During the April-June quarter, our advertising spends were down to zero. However, we have now resumed marketing activities. We are trying to find the best ways to leverage digital advertising, as costs are relatively low and there is a large captive audience that is spending a lot of time on mobile devices.

For our new product launch though, we will be advertising on television. With low footfall, sampling is a challenge. To counter this, we have given the product to the retailer to recommend it to consumers. In general, we are exploring bundled offers and exclusive packs for e-commerce. Traditionally, e-commerce is not a big sales channel for the confectionery category, as the ticket size is small. Having said that, in the last couple of months, our e-commerce sales have shot up. We now have tie-ups with Amazon, BigBasket and Milkbasket.

Read Also: How the Indian coffee industry is poised for revival

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