Financial Daily from THE HINDU group of publications
Tuesday, May 02, 2006
Financial Daily from THE HINDU group of publications Tuesday, May 02, 2006 |
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Marketing
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Retailing Candico to expand candy store network Dharini Nagarajan
Marketing strategy Candico is exploring the franchisee route to expand its presence. The company has been increasingly participating in international fairs, to enable the company create a wider base for itself.
New Delhi , May 1
Candico India has charted out an expansion strategy for its retail business. The company is looking to expand its network of specialised candy stores across the country. "We have around ten candy stores today, but hope to increase the number to 30 by October this year, and further the number to 50 by April next year," Mr Madhav Gupta, Executive Director of Candico India Ltd, told Business Line. The company is exploring the franchisee route to expand its presence. Though the company has three franchisee-owned outlets currently, Mr Gupta said that having experimented with such a model for the past six months, the company was now "comfortable enough to take on expansion through franchisers."
Exclusive contracts
Candico has signed long-term contracts with various builders and multiplexes to enable it to expand its business. "We have signed exclusive contracts with Parsavnath, Adlabs and PVR cinemas to open candy stores in all their buildings and cinema houses," Mr Gupta said. Terming the strategy as a "blanket deal", he that it would enable them to establish a wide presence. The company has also been in talks with various banks working out financing options that can be made available to franchisers to initiate them into the business. The pan-India expansion operation, according to Mr Gupta would focus on tier-1 and tier-2 cities.
New look
The company, for the past year, has been `re-looking' at its strategies in order to carve out a niche for itself. "Over the past year or so, we have rejiged our entire portfolio. We have re-launched our products with a different packaging and a new look. "We have added new flavours to Loco-Poco and have set the trend in marketing candies with some or other freebies," Mr Gupta said. The company has identified newer areas for growth as well. "Apart from candy retailing which offers immense scope for growth, Candico is also entering the `functional product' category," Mr Gupta said. Functional candies, he explained, were products that have other accompanying properties such as teeth whitening among others. "We would be introducing a ginseng based functional gum in July this year," Mr Gupta said.
New category
Apart from functional gums, the company is also looking to launch two to three new "category expanders" by October this year. While the company would focus on adding more products to its portfolio, Candico is also changing its marketing strategy. "We plan to spend 70 per cent of our marketing budget on below-the-line activities and another Rs 7 crore on non-promotion based activities that would benefit both our retailers as well consumers." With regard to Candico's international business, Mr Gupta said that Candico has been increasingly participating in international fairs and that such activities would enable the company to create a wider base for itself. Mr Gupta hopes to increase the company's presence to 22 countries by the year-end. "We spend around Rs 15-20 lakh on each fair we participate in. Such activities require high investment before we can expect major returns," Mr Gupta said.
Input cost pressures
The Rs 125-crore turnover company is eyeing a growth of 10 to 12 per cent this year, as compared to the five per cent growth rate registered by the industry as a whole. However, at the moment, the company is facing immense input cost pressures with rising sugar and oil prices. Though Candico is not likely to increase prices, Mr Gupta foresees a "gradual push on prices at the trade level".
More Stories on : Retailing | Food & Dairy Products | Channels and Franchises
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