Companies

CavinKare plans confectionery foray

| | Updated on: May 20, 2011
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Consumer goods and foods company CavinKare Pvt Ltd plans to foray into the confectionery segment with “innovative products”. Asked how different it will be in a highly competitive market, Mr C. K. Ranganathan, Chairman and Managing Director of the company, told Business Line, “Our products will be very different. After all, we do not want to be a me-too player.” Refusing to elaborate further, he said the company will outsource these products, and the rollout is set to happen next month.

The organised Indian confectionery market is pegged at Rs 3,000 crore, with an equally large unorganised sector. The organised market is served by home-grown players such as Parle and Nutrine, and international brands such as Perfetti Van Melle, Cadbury and Lotte.

‘fragmented market'

A top executive of a major confectionery brand Business Line spoke to said as the market “is pretty fragmented, it's not so easy to break the clutter and grab a sizeable share”. According to this person, the size of the organised sector is 2.25 lakh tonnes a year (valued at Rs 1,300 crore). “And the unorganised sector could be as big, if not bigger.” Even the market leader — Perfetti Van Melle — has only 15-16 per cent share by value. Parle, the second-biggest brand, commands around 13 per cent share of this market. Hard-boiled candies, toffees and ‘lactos' put together account for 70 per cent of the confectionery market. “So, it all depends on what category the company is looking to enter in the first place,” the executive said.

lankan plans

Talking about CavinKare's growth plans, Mr Ranganathan said the company plans an infusion of private equity, “preferably [by] a foreign fund with good global exposure which can advise us on taking the company forward”. The company would take a call by the end of the year. “We are prepared to dilute up to 15-20 per cent stake in the company,” he said. In the immediate future, the company plans to set up a manufacturing facility for personal care products in Sri Lanka, involving an investment of Rs 25 crore. He said Sri Lanka, where it is already present, is a key market for the company. CavinKare currently exports to countries in West Asia, South-East Asia and the US.

With its expanding food portfolio contributing over 35 per cent, CavinKare achieved a turnover of Rs 1,040 crore for the year 2010-11. In the personal care category, the company is the second-largest player in shampoos by volume, with over 21 per cent share. In addition, CavinKare's Fairever has a 7 per cent share in the Rs 1,300-crore fairness cream category, and its Spinz range commands close to 6 per cent share in the Rs 1,200-crore deodorant segment. Its fruit drink brand, Maa, is now a Rs 85-crore brand. (The company acquired it for Rs 27 crore in 2008.)

Besides, CavinKare is also phasing out its brand, Chinni's, from the snacks category. Subsequent to the acquisition of the Maharashtra-based traditional snacks brand, Garden, the company plans to extend this brand to its south Indian snacks portfolio. “Garden is doing well for us. Our plan is to bring all our snacks products under this brand, and then expand our distribution network,” he said. However, Chinni's will be retained for its other food products, such as pickles and vermicelli.

Published on May 20, 2011

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