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Waiting For Kraft
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Perfetti can hardly afford to rest on its laurels, though. "The who's-who of the world are here," says Suneja. That includes the world's biggest foods company, Nestle, which now sells the Fox's brand of candy-mints in India. There is Mars-Wrigley that owns some of the more famous confectionery, candy and gum brands, including Mars chocolate and Wrigley's gum. Other international biggies include the US-based Hershey's that has a joint venture with the Godrej group and there is South Korean major Lotte.
Perfetti's space might be getting crowded in recent times, but many of these global players are yet to bare their fangs. "I hope they remain dormant," says Suneja. That is because Perfetti has had to contend with an attack from another front in recent times.
In the past 8-10 months, the category has been seeing a more concerted push by Cadbury. Two of its focus brands, Cadbury Dairy Milk Eclairs and Halls directly compete with Perfetti brands such as Alpenliebe, Mentos and Chloromint, respectively. In the eclair and toffee space, the market share of Cadbury's flagship brand Cadbury Dairy Milk Eclairs has moved up from 10 per cent to 13.5 per cent, according to retail audit numbers from Nielsen.
While Cadbury senior executives claim they can take a pretty good shot at market leadership soon, the market leader, Alpenliebe, has already embarked on a flanking strategy offering two variants of eclairs, to protect its market share and make a mark in the eclair segment. The eclair segment is estimated by Nielsen to be about 17-18 per cent of the Rs 3,700-crore market. "We are taking on the gods of eclairs," says Suneja, with an obvious reference to you-know-who.
Perfetti's strategy is two pronged. Build independent brands such as Alpenliebe, Center Fresh, Mentos, and launch a flurry of extensions around these brands to keep competition at bay. Another extension in 2010 was in the form of Alpenliebe Mango Fills. "In a category like this, one must have the ability to come up with loads of offerings and be dispassionate to accept that some might not work," says Suneja, adding that in low involvement categories like candy and gum some extensions might hit a peak for 3-6 months and fade away while the others will continue to grow at a feverish pace. Some examples in recent times are Chocki and Choco Stix from Cadbury and Nestle, respectively. In Perfetti's own case, Center Shock gum created waves some years ago, but has now faded away. That place has now been taken up by Center Fruit.
Perfetti is now using Alpenliebe to cover nearly 60 per cent of the market — 40 per cent of the value in the segment comes from candy-toffees and 18 per cent from eclairs. Of the rest, 22 per cent value comes from gums, 13 per cent from mints and, the remaining 7 per cent from lollipops, jellies, digestives, and so on. In mints, Cadbury's Halls has bagged leadership in 2010 with a 22 per cent share of a market dominated by brands such as Nestle's Polo, Perfetti's Chloromint and Mentos, and ITC's Mintofresh.
Is Halls growing at the expense of brands such as Mentos? Suneja does not seem to be disturbed. He says consumers are increasingly using mint for masking their breath, rather than as a medicated lozenge. But that is a category on the decline, he says, as consumers increasingly opt for longer-lasting chewing gums over mints. And in the case of Mentos, if the brand is losing share in the mint segment, it is making a mark as a candy and growing because of its fruit variants. "Mentos is built on the premise that consumers like soft chews," says Suneja.
Perfetti's strategy is to keep on offering consumers something novel. To get consumers to migrate towards higher price points, in an otherwise low unit price segment, Perfetti has recently launched Fili Folly, a candy floss that melts in your mouth to become a chewing gum, at Rs 10 in south India. In the past year, the company claims to have doubled its sales from bulk packs — that now account for about 5 per cent of sales. It is simultaneously attempting to push growth deeper into rural markets with the low unit price offerings. Someone is clearly prepared to ‘sweet' it out.
"We have designed our portfolio for Kraft," says Rahul Akkara, vice-president, marketing for Parag Foods that markets the Go brand of cheese across the country. He is probably hinting that Go has a future-ready portfolio, with a product offering that goes beyond the common Cheddar. But that statement underlines what many Indian households still believe in — think Kraft, think cheese.
It is a perception that only got strengthened in the previous decades when anyone coming home from a foreign trip, especially the Gulf countries, invariably got back packs of Kraft cheese in their luggage. "That perception is more in India than anywhere else," says Anand Kripalu, managing director, Cadbury India. So, does that not warrant Kraft to push cheese into India? "Cheese is not driven heavily in emerging markets," says Kripalu.
|Rahul Akkara, vice-president, marketing, Parag Foods "We have designed our portfolio for Kraft... We are taking Indian consumers closer to a cheese connoisseur experience" (BW pic by Satheesh Nair)|
But as one Kraft Foods executive privately admits, "Will it be an easy game to beat Amul in cheese? They are completely backward-integrated. The ability and investment it takes to win in categories like these are questions," he says. And there are more Amuls being born. Till a couple of years ago, Parag Foods, which started off in 1992-93 with a farm in Manchar that now has about 3,600 Swiss cows, was content selling ghee (clarified butter), butter and gulab jamun mixes and so on, under a rather desi name, Gowardhan. Now, with the much younger and cooler brand Go, and with former Amul executives on its payrolls, Parag Foods has taken it upon itself to get Indian consumers differentiate the Cheddars from the Mozzarellas and the Goudas. "We are taking Indian consumers closer to a cheese connoisseur experience," says Akkara. It also claims to own the largest cheese production facility in Asia.
While Kraft may not be ‘officially' available in India, it still finds its way into large format outlets through imports. To compete with brands such as Kraft's Philadelphia and others such as Happy Cow, Go focuses on its packaging — such as offering its cheese spreads in glass bottles instead of plastic tubs that are commonplace. This also helps the brand sit pretty on large format store shelves next to the imports.
In the cheese slices segment, Go has launched an attack against Amul and Britannia by selling 12 slices in a pack when the competition sells 10.
Go is also actively trying to make cheese a part of the mainstream by providing consumers with different recipes using cheese. Kraft may not be looking at the cheese segment in India, but its competition is waiting. Kripalu says half-jokingly, "Once they are really tired of waiting for us, maybe then we would come in." Till then, Go goes for it.
(This story was published in Businessworld Issue Dated 31-01-2011)