India has been a key priority market for the major confectionery Perfetti van Melle. Now is its fourth largest market for income and the largest market per volume. The company, known by brands such as Center Fresh, Happy Dent, Mentos, Alpenliebe and Chuppa Chups, now sees almost 30 percent of their business from premium offers that have more than ₹ 1. Nikhil Sharma, managing director, perfetti of melle india, spoke to Business line On urban consumption trends, the company’s premium commitment and a strong focus on innovations. Extracts:
What is your opinion about the general macroconomic situation, especially with respect to urban deceleration? How was Cy 2024 for Melle India perfects? Where is that Indian doe in the global scheme of things for Perfetti?
I think that the biggest FMCG players saw the deceleration a little before us and are also seeing recovery in rural areas a little before us. We are still discovering that our wholesale demand is silenced and there is still some work to do in rural regions. In urban areas, our approach has been the premiumization with the addition of new innovations, sku and higher price points. So maybe we are a little better there.
We have the leg among those players who have managed to grow in 2024 despite the challenges. India is among the four main markets for the group worldwide with the United States, China and Italy, being the three main markets. India has been a priority market for the group for a long time. By volume, India is the number one market for the group.
The Premium portfolio is in fact growing much better than the base portfolio for now. We expect government measures, such as the benefits of income tax and other factors to help the recovery of consumption trends. As that happens, we hope that the base portfolio, which includes wholesale products such as the Fruit Center and the Fresh Center, begin to see a stronger growth, but will take some time.
Of course, goods remain a key key, especially, we cannot raise prices such as other FMCG categories. For us, the prices of basic products such as sugar are still a key concern.
How was the premiumization trip for the company?
We were the premiumization trip in 2017-18 and we have a bone focusing on innovation to support it. We begin with the introduction of the gelatin category that was unknown to India. Our strategy has been to introduce added value proposals that give us the ability to collect higher price points. So, for example, in the gelatin category, we are now selling to ₹ 10 points and that is really working well for us.
Since approximately 5 percent in 2017, the contribution of Premium Products is now 30 percent. These are products with a price of ₹ 1. We hope that the contribution of the Premium segment will be continuously grow.
Recently, we have launched the fresh mint pure chewed gum in the Nano bottle format with a price of ₹ 30. Mentos is a key brand for us worldwide and we believe that this strategy will help accelerate the growth of the brand.
Are you looking to enter white spaces or bring other brands from the global portfolio to India?
There is a lot of innovation that can reach India. But the products that are sold abroad cannot simply bring to India and need to undergo a development cycle due to factors such as the Indian climate. As market leader, it is our work to see expanding category offers and launching that are relevant to our consumer. We prosper in innovation. We focus on multiple new releases in a year, either in terms of flavors, formats, sku or price points. We have also focused a lot on ethnic flavors. We have already made four new releases this year and they will come more. Dractiatonary is a category of impulse and the new releases help us provide emotion to consumers and ensure that the central portfolio continues to obtain the impetus.
What strategies has adopted the legs to manage the duration of growth This deceleration of consumption?
We have multiple strategies instead. We continually observe our cost structures and focus on generating more efficiencies in production and the general system to strengthen profitability. We also have a leg that seeks rapid monitoring proposals and focuses more on parts of the wallets that you continue to see strong. That said, these are only flows and flows of the economic cycle. We firmly believe in the opportunity for long -term growth in India and it is a matter of time that we see the recovery of consumption and we must be in the position of the pole when it happens
With the emergence of fast trade, how is the dynamics of the channel evolving?
The entire electronic commerce piece for the confectionery industry is still small. It is even more a category to buy impulse and Indian consumers have no habit of buying it as a domestic storage article. General trade remains the largest channel for us. Therefore, the contribution of emerging channels to our business is in the range of 3-4 percent, or which electronic commerce and fast trade is approximately 1.8-2 percent. But we are hepiating strongly as a growth driver. The electronic commerce channel allows us to try our premium products and measure the consumer response. So, while for the established players like us, the contribution of electronic commerce and rapid trade channels remains small, remains a key approach to us.
What are your plans to increase distribution?
Our products are sold in almost 6 million points of sale and we have a direct distribution in 1.2 million points of sale. Our ambition is to expand the sku number sold at these 6 million points of sale. That will be the key distribution approach to us. We will continue to obtain incremental profits in terms of direct distribution, but at the end of the day there is also a cost for direct distribution and we have to do strategies.
