Global confectionery giant Perfetti Van Melle will complete 30 years of operations in India next year. The company’s key brands include Center Fresh, Happydent, Center Fruit, Mentos, Chupa Chups and Alpenliebe. In an interaction with businessline, Rajesh Ramakrishnan, Managing Director, Perfetti Van Melle India, said that India is a key growth engine for the confectionery major and the India business is growing in double digits in post-Covid times. He also pointed out that the company has made significant progress in its premiumisation strategy. Excerpts

Q

Perfetti Van Melle will complete 30 years of operations in India next year. Is India considered a key market by the company for future growth?

Given the size of the opportunity in the market, India is a growth engine for many global companies. In that sense, we are no different. We are among the top five markets for Perfetti that are driving growth for the business and, in the last few years, we have been driving profits as well. We would continue to focus on being a business where we are able to sustain profitable growth. In India, we are market leaders with 25-plus per cent market share. There is enough and more headroom to grow both in terms of household penetration and share gains. I think providing consumers with choices in a relevant and differentiated manner is critical. Per capita consumption of confectionery is still low in India. Overall the confectionery category is growing strongly at 8-10 per cent in India.

Q

What do you make of the current macro-economic conditions and how have you maintained your popular price points amidst inflationary pressures?

It has been challenging times due to various geopolitical factors and volatility in commodity prices, which have put a lot of pressure on the bottonlime of companies. But inflationary pressures have been easing up in the last few months. Uncertainty remains with the kind of unpredictable weather conditions being witnessed. This situation gets amplified for categories like us, as we operate at fixed price points of ₹1 and ₹5. Unlike other categories we can’t take price hikes and cannot price a ₹1 product, for instance, at ₹1.20. So we have been focusing on value engineering, product optimisation and productivity enhancement to maintain our popular price points.

Q

What kind of growth did the company see in 2022? What are the plans for further distribution expansion? What has been the growth rates in rural regions?

Post Covid, we have been witnessing a very healthy double-digit growth on the back of distribution expansion and introduction of new products.

Confectionery products are sold in about 8 million outlets in the country and our products are being sold at about 5 million outlets. We also have direct coverage of 1.1 million outlets. We continue to focus on growing our rural penetration and have also tied up with players who aggregate products for multiple companies and use their network to service rural outlets. Our endeavour is to grow our overall reach closer to about 8 million outlets.The growth rates of rural and urban regions are very similar for us. While others have been facing slowdown in rural regions, we did not really face that kind of a situation due to our popular price points.

Q

What brands are leading the growth for the company in India? What is the innovation pipeline looking like for the coming months?

I think we’re blessed to have a fairly balanced portfolio. Our big brands Center Fresh and Center Fruit continue to grow. At the same time brands like Mentos and Chupa Chups are doing exceptionally well. So while the big brands continue to grow at moderate growth rates, relatively newer brands are growing at higher growth rates. Each brand in has a specific role in terms of share gain versus penetration versus frequency among others.

In the confectionery category, consumers expect to see innovations constantly. It’s a key driver of growth and part of our DNA. In the past few months, we have launched a chewing gum under brand Center Fruit at ₹2 shaped like a tennis ball and it has got very good traction. Two months ago, we launched Chupa Chup sour tube belts, which is also doing quite well. We will continue to roll out our new products across brands.

Q

Are you witnessing premiumisation trends gain traction ?

We have had an extremely productive journey on premiumisation. Five years ago, more than Rs 1 priced products used to contribute only 10 per cent to our portfolio sales. Today this contribution is at over 25 per cent. So we have been on a journey to get consumers to uptrade by providing the right kind of value with the right price pack architecture. We will continue to focus on that because consumers are looking for these kind of propositions and it also hedges our portfolio against inflation. We have also been leveraging e-commerce to launch concept-based packs and occasion-based packs (such as Halloween), which offer high value.