Business Daily from THE HINDU group of publications
Friday, Jun 16, 2006
Business Daily from THE HINDU group of publications Friday, Jun 16, 2006 |
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Marketing
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Strategy Confectionery co Lotte to expand portfolio Nina Varghese
Chennai , June 15 Lotte India Corporation Ltd, formerly Parry's Confectionery Ltd, is in the process of consolidating its business and aims at a turnover of Rs 200 crore by next year from Rs 146.7 crore for the fiscal ended March 31, 2006. The company plans to enter higher priced categories such as lollipops and lozenges soon. Mr Shanker S., Head (Sales and Marketing), Lotte India Corporation Ltd, said after Lotte acquired Parry's Confectionery in January 2004, the strategy was to consolidate and grow the topline. Though Lotte has a portfolio across categories, the company has launched only two bubble gum brands, Sprout and Booproo. More Lotte brands are in the offing, he said. The rethink on strategy started in 2002 after Parry like other Indian confectionery brands had taken a beating with the entry of multinational brands, he said.
Building core brands
The company had launched a number of brands in the market, which had failed and were withdrawn, Mr Shanker said. The effort to regain market share was started in 2002, when the company redrew its strategy and decided to build its core brands Coffy Bite, Lacto King, Caramilk and Coconut Punch. The company also invested in strengthening its distribution channels, especially in the North, East and West. Mr Shanker said these brands had been in the market, especially in the South, for a long time. Coffy Bite, for instance, was an 18-year-old brand. The brand recall was about 94 per cent but the conversion to purchase rate was only 20 per cent. The brand was perceived to be `old' especially in comparison with the multinational confectionery brands available in the market. The move to repackage Coffy Bite and give it a more youthful proposition was successful, Mr Shanker said. Lacto King was another brand, which took a beating in the market competing with the likes of Alpenliebe and Maha Lacto. The company decided to bring back the `pure milk and ghee' value of the product.
Challenges
Rising input cost combined with a retail price, which remains at 50 paise per candy, are the challenges in the confectionery business. More than half of the company's turnover comes from the 50p category. Mr Shanker said that in the last two years, the wholesale price of sugar has gone from Rs 13 a kg to Rs 18 a kg. The cost of packing has also gone up by 7 to 8 per cent. Media cost, both electronic and print, has gone up 9 per cent, with no price increase for the customer.
Lactor King ad
The Lacto King advertising reaches out to the new generation of Indian kids who are `born wired', Mr Shanker said. These are kids who are in sync' with the interactive nature of computers and cell phones. They don't want to consume communication passively they want to be active participants if not co-creators, he said. The Lacto King advertising conceived by JWT Chennai lets them do just that, much like RL Stein's Goosebumps, he said.
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