Parle Products, which retails brands such as Parle G, Monaco and Melody, is improving its play in rural areas by increasing the presence of its range of brands in retail stores and kiranas and also expanding the reach of distributors.
“A brand like Parle G is available in most of the rural outlets, but it is not necessary that all our brands are available across those stores. We are making an effort to ensure that our other brands like Krack Jack and 20-20 biscuits are also also available in those outlets so that consumers get access to such brands and thereby increase consumption,” said Krishnarao Buddha, senior category head at Parle Products.
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The company has improved its distribution by around 8-10% this year. For Parle, rural areas contribute around 55% of its total sales, while urban areas contribute the remaining 45%. Other companies such as Britannia and Nestle have also been ramping up their rural reach by investing in distribution. At present, Britannia is the market leader by value in biscuits with over 40% value share, but Parle still leads in terms of volume.
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Buddha said the gap they find in their rural reach is that not all their brands are available there. “It’s not easy to make retailers stock all our products, but we are making efforts as we strongly believe that if our products are available on the shelves, consumers are bound to pick them up,” he added.
“Infrastructure enhancement or improving distribution is cost-intensive. When a distributor covers a district and other smaller towns, we ensure that his business is viable and we subsidise some of his costs so that he caters to smaller areas as well.
“To create new infra or distribution in even a smaller town calls for extra investment. So, only over a period of time as the business keeps growing, once the turnover of distributors’ business is good, we can pull out the subsidies and it becomes a self sustaining model,” Buddha explained.
Apart from enhancing its play in rural areas, the company sees opportunity in urban areas as well. For instance, this year it launched products like breakfast cereals or Parle atta that are mostly urban-centric at present. “A category like breakfast cereal is very new and not much in the habit of consumers. But eventually, the journey of every product is urban to rural,” Buddha said.
“May be in the next three years, we will distribute it in smaller towns with population like 100,000 and eventually maybe in the next 5 to 10 years, we can go to population as little as 20,000-25,000. But as Indian consumers are increasing, their disposable incomes, there is a high probability of consumers accepting a breakfast cereal like this,” he added.
Ramping up distribution in the rural sector and innovating to cater to urban consumers is part of Parle’s play to achieve early double-digit sales growth in FY23. In FY22, the biscuit maker posted a 9% year-on-year increase in net sales at `16,202 crore. Moreover , with inflation easing, the company is also looking at volume growth of 8-9% this year. “We are looking at volume recovery this year by increasing the depth and width of consumption. If we can make the consumer consume more than one pack, like 1.2, 1.3 or 1.5, that would increase the depth of consumption. We would be doing that through advertisement and promotions,” he added.
In addition, it is also looking at a robust advertising quarter and in the next quarter too, it has a very robust lineup of promotional spends to help improve the depth of consumption. The company is also exploring some consumer offers on a few brands, like giving some extra 10-20% on packs to help increase consumption.
Parle is also increasing its presence in e-commerce and quick commerce which at present contribute around 4-5% of its total sales. “We are seeing double-digit growth in these channels and are accordingly working on our assortments to get consumers to buy our products,” Buddha said.