The Hindu Business Line : Candico bid to focus on domestic market

CANDICO India Pvt Ltd is leaving no stone unturned to boost sales. After embarking on an overseas expansion strategy last year, with entry into the South African and Tanzanian markets, Candico is now training its guns on the domestic market.

Over the next few months, the company will relaunch its products in the country, with "improved formulation and packaging while maintaining current prices".

While hard-boiled toffees, lacto and éclair have been relaunched, other products will be revamped over the coming months.

The Candico Executive Director, Mr Karan Gupta, told Business Line that the company had outlined this "back-to-basics" approach for several reasons.

"What we call traditional products hold immense untapped potential in terms of innovation, market segmentation and market size. Also, the investments required in these product categories are smaller compared to those needed to create a new category.

"So, this year, Candico will invest only in revamping the existing product portfolio. We expect to invest more than Rs 5 crore in this."

He said that typically creation of each new product segment and communication to consumers needs investment of more than Rs 5 crore. And despite this, product sales cannot be assured. However, dealing with existing and traditional products obviates the risk involved in developing new categories.

Candico will also venture into nascent areas including the sugar-free confectionery market, with the launch of a candy later this year.

To take its business overseas, the company had, late last year, announced two separate joint ventures in Tanzania and South Africa with a combined investment of $6 million.

Mr Gupta said talks were on for similar ventures in Sri Lanka and Bangladesh. According to industry estimates, about 25 per cent of the Rs 2,000-crore Indian confectionery market lies with the unorganised players. In the organised segment, 70 per cent sales come from `traditional' products including toffees, candies and éclair.

Cadico's focus on these products comes even as the domestic confectionery market is likely to witness a host of product launches. Korean major Lotte is expected to bring in its gum variants as well as other products from its global portfolio. Other domestic companies including Perfetti Van Melle India are also planning more launches.

However, despite rising input costs and shrinking margins, the confectionery industry is reluctant to hike prices so that a majority of the products will continue to be priced at 50 paise each.

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