Plagued by rising input costs, Parle Products has decided to reduce grammage for its offerings by 5-6 per cent instead of a price hike. The market leader in the glucose segment has been feeling the pinch of the slowdown in the past two quarters. Grammage means the weight of the product in a packet. The number of biscuits in the pack has been reduced across its biscuits portfolio.
Praveen Kulkarni, Marketing Manager, Parle Products, said, “There is a definite slowdown in demand for biscuits this year compared with last year. This year, it has grown by 6-7 per cent compared with double-digit growth between 8 per cent and 10 per cent last year.”
The biscuits category is estimated at Rs 15,000 crore, with the glucose segment comprising 40 per cent where Parle Products is a leader with an 80 per cent volume share with its Parle G brand.
Considering that the category has already slowed down, Parle is against any price hike. Kulkarni said, “Instead, we have reduced grammage by 5-6 per cent and will continue till the price of raw material comes down to its original levels.”
Raw material costs
The cost of raw material such as wheat flour, milk, sugar and even packaging material has increased for the biscuit company. Its 80-gram pack of Parle G, which costs Rs 5, has now been reduced to 76 gram.
Besides, growth in the glucose segment has slowed down faster compared with its premium offerings. “The demand for some of our brands has slowed down much more than the others. But in the case of the premium segment, the slowdown has not been that stark as in the case of the glucose segment,” he said.
Glucose, being the largest category, has been facing slower growth at 8-10 per cent, compared with the new and smaller categories such as cookies and cream biscuits which are growing at 20 per cent. Unlike the glucose category which is already penetrated, cookies and cream segments have much lower penetration levels, at around 12 to 15 per cent, and hence are growing at a faster pace than the glucose segment.
However, demand for biscuits has been a tad better in the rural markets. “Demand in the rural markets is better, but the difference in growth rates may be just 2 per cent compared with the urban markets,” added Kulkarni.
Parle is now trying to lure consumers with exciting offers. “Instead of giving extra weight for categories such as snacks, we are trying out more consumer-led offers. For our Full Toss brand, we are planning to give away trading cards from the soon-to-be-released Disney movie Planes ,” added B K Rao, Group Product Manager, Parle Products.