As the newly appointed MD of Perfetti Van Melle India (PVMI), Rajesh Ramakrishnan is focussed on leveraging its key power brands to drive growth.
As the newly appointed MD of Perfetti Van Melle India (PVMI), Rajesh Ramakrishnan is focussed on leveraging its key power brands to drive growth. In an interview with Ankita Rai, Ramakrishnan talks about distribution, pricing strategies, key focus areas to drive growth and marketing in the confectionery space. Edited excerpts:
In August, 2017, when you moved to India as the chief transformation officer at PVMI, what were the initiatives you undertook for growth? In your current role as MD, what is your strategy?
In 2017, we were undergoing transformation to improve the overall efficiency of the company across functions. As CTO, a large part of my job was focussed on transforming sales. We worked with different business teams to drive topline and bottomline growth. In my current role as MD, the focus is to leverage our five power brands — Center Fruit, Center Fresh, Juzt Jelly, Alpenliebe and Chupa Chups. We have a good portfolio and plan to leverage these brands to drive growth. There are a few things fundamental to a business in the FMCG space. One is having a good set of brands and products. Second is extensive distribution footprint. Third is to have a good team to work with. Currently, all basic ingredients are in place.
The confectionery category is highly cluttered. What are the challenges?
The challenge that is specific to this space is working on fixed price points. There isn’t much price elasticity in this category. Compared to categories like shampoo and toothpaste, there is a significant impact on volumes in this category even if you increase the price by Rs 1. While FMCG products such as shampoo are bought in baskets, the same is not true for confectionery or snacks.
Is confectionery marketing different from other categories? Can content marketing reduce marketing costs?
The principles of marketing remain the same but there is an added element in confectionery marketing — the impulsive nature of the category. It is like saying, Jo dikhta hai wo bikta hai — availability at the point of sale plays an important role. There is an element of commoditisation for most products, like a candy or a toffee. At the end of the day, they look the same. That is where the brand plays a role. The big advantage in our category is, a lot of brands are targetted at children, teens and young adults who are more into the digital medium these days.
Content marketing is still nascent at Perfetti, having just started to do it for Chupa Chups. Content marketing is not about reducing the cost of marketing, it is about adding value for the consumer. There has been a consistent increase in digital spends at PVMI over the years. However, for now, television continues to be our mainstream reach medium.
What about competitors in the space?
The confectionery business in India is worth around Rs 12,000 crore. It is an intensely competitive industry with competition both from global and local players. Local is, in fact, very hyperlocal. In Andhra Pradesh, for example, every city has its unique offerings in confectionery which may not be available in neighbouring cities. At the other end, we have global players like Mondelez and big Indian players like ITC and Parle. At Perfetti, our brands are global, but the flavours are local. We leverage local fruits such as guava, watermelon and local flavours like chatpata masala to a large extent.
Which products are you looking at for premiumisation? Is the uptake happening in the premium space?
Increasingly, there are more needs of consumers apart from monopacks (single use packs). There is convenience, shareability and in-home stocking needs. So we price the product proposition to meet those needs. The outcome of that is packs with multiple pieces in them and higher price points. So while the market is more in the range of 50 paise and Rs 1, we have higher price points of Rs 5, Rs 20 and beyond. It is a matter of the category evolving. The growth, however, is still coming from monopacks.
What would be the key point of sale channels you operate in?
A lot of our sales come from paan outlets, kirana stores, general grocery and modern trade. A bulk of sales comes from general trade — stores on the street for easy accessibility. We are available in about four-five million outlets. We also sell on e-commerce portals globally; it is an important channel. India is no different. But globally, we also have customised offerings — online-exclusive products with high price points. We will take a similar route in India too.
Isn’t it difficult to stand out?
This category demands innovation. You will be surprised to see some of the global portfolios of companies. An interesting trend is that of merging of segments such as gum-filled lollipop or chewing gum with a jelly. It is about surprising the consumer. We are innovating on our power brands, coupled with interesting advertising and unique positioning for each of our brands. For example, Center Fruit is about mood transformation while Chupa Chups is about being naughty during teenage years.