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Sravanthi Challapalli
Vinay Kamath

Investment in India raised by Rs 200 cr over last three years

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Chennai Feb. 7 Perfetti van Melle (PVM) India's third factory, in Uttaranchal's Rudrapur, is set to go on stream in two or three months. The commissioning of this unit, capable of producing 15,000 tonnes of sweets and candy in the long run, will add to the company's present annual capacity of 40,000 tonnes across two plants.

Speaking to Business Line, Mr Stefano Pelle, Vice-President and Chief Operating Officer, Business Unit Russia & South Asia, PVM, said that the new Rs 50-crore unit would have lines to make its brands present in the market, such as Alpenliebe and Center Shock, and new varieties as well. PVM India has two facilities, one in Manesar (Haryana) and another in Chennai. Over the last three years, PVM has hiked investment in India by about Rs 200 crore.

The Rs 1,600-crore confectionery market has grown 10-12 per cent in the last couple of years, Mr Pelle said. He estimates that Perfetti's share of this market is more than one-third, helped in large measure by its zany advertising.

Chewing gum is the fastest growing category in the Perfetti portfolio. The sugar-free variety is growing rapidly, he said.

The confectionery segment's challenge, long persisting and increasingly difficult to manage, is breaking the 50 paise/piece price barrier. Companies with brands in this category have been struggling to keep input costs down despite rising raw material prices and maintain the price at 50 paise. "Selling at fixed price points ... the bottomline's a problem," he said.

Premium products

Lack of appropriate coinage makes Re 1 the only alternative but that's a big jump, so PVM is looking at more premium products to get around this situation, Mr Pelle said. Perfetti recently launched a new brand Chocoliebe, which is an éclair and retailed at one rupee.

In the PVM world, India ranks next only to Italy and China in terms of consumption, but then, China consumes thrice the amount of confectionery India does, Mr Pelle said. Overall, in cities, towns big and small and in the rural areas, Perfetti brands are available in 10 lakh outlets, he said.

PVM India ended financial 2006 with a turnover of Rs 600 crore.

Its brands of candy, chewing gum and bubble gum include Alpenliebe, Chlor-Mint, Mentos, Cofitos, Marbels, Big Babool and Happydent White and Center Shock.

Mr Pelle was in Chennai for the release of his book Understanding Emerging Markets based on his work across the BRIC countries.

The book offers an insight into the rising power of emerging economies and can serve as a guide to understanding and doing business in such emerging markets.

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