Despite GST disruption, Complan gains market share with price tweaks

Abhishek Law Kolkata | Updated on January 09, 2018

Kraft Heinz may also look at brand extensions of Complan. These offerings will target young adults and pregnant women

Despite channel disruptions, Complan has gained market share post GST launch.

A tweak in product prices coupled with a focus on distribution saw Kraft Heinz, owners of the malted food drink brand Complan, gain 20-odd basis points in June and 10-15 basis point jump for the April-June quarter.

Complan has around 8 per cent market share in the ₹5,500-crore malted food drink segment. Horlicks is the market leader.

“GST saw disruption in trade channels and de-stocking. But we managed to gain market share by 20 basis points (0.2 per cent) in June and around 10-15 basis for Q2,” Vikramjeet Singh, CMO, Kraft Heinz, told BusinessLine.

Kraft Heinz follows the calendar year. This means that Q2 for the company will mean the April to June period.

Two-fold strategy

According to Singh, the company did a complete portfolio study to understand product demand movements following a possible tweak in prices. This coincided with GST rollout.

The strategy was two-fold — price cuts in the elastic and in-demand segments for volumes and price rise in inelastic ones to get value, trade sources maintain.

Kraft Heinz increased prices by 5 per cent in “non-elastic SKUs”, for example, a 500-gm pack or in 1 kg pack. In fact, the fast moving and much-in-demand 200 gm segment, saw a total price cut of ₹20 in the initial days finally settling at ₹10.

For the lower unit price (LUP) segment, it came out with ₹5 offering. The company bundled offerings in the LUP segment — a pack of two was earlier priced at ₹15.

“We previously had a pack of two at ₹15. But during the April-June period we came out with ₹5 sachets,” Singh said. In case of Complan, the LUP segments (between ₹5 and ₹25) account for 10 per cent of its sales, while 200 gram and 500 gram packs form the bulk 80 per cent. The remaining 10 per cent comes from high-value packs (one kg).

“We also looked at increasing our distribution network, especially the ones directly catered to,” the CMO said. Complan currently has a direct distribution reach of 200,000 and a total of 800,000.

Retaining margins

With trade channels showing signs of recovery, the company today re-launched Complan as “New Best Ever Complan”.

However, despite the increase in tax rates to18 per cent (from around 12 in pre-GST days), the company has not hiked prices.

“Trade channel stabilisation is expected during the July to September period. We have not hiked prices of Complan and would look to hold on to margins,” Singh said.

Kraft Heinz may also look at brand extensions of Complan. These offerings will target young adults and pregnant women segment.

Published on August 14, 2017

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