Biscuits and confectionery account for the lion’s part of the company’s sales of over Rs. 12,000 crores, and the company’s goal is to produce at least 20% of its income from emerging categories.
Parle Products, a century-old home-grown biscuit and candy firm, is evolving into a full-service food company. Parle, the maker of the legendary Parle-G and Monaco biscuits, entered the staples market earlier this year with the introduction of Parle-G atta and has since expanded into morning cereals with Hide & Seek Fills.
Its road to become a major food firm began in 2008, when it first entered the salted-snacks area with the introduction of western snacks such as potato chips, extruded snacks, and, subsequently, namkeens. Following that, it expanded into baking items, launching cakes and rusks.
Today, biscuits and confectionery account for the lion’s part of the company’s sales of over Rs. 12,000 crores, and the goal is to guarantee that at least 20% of its income comes from its newer categories. The biscuit company, on the other hand, is a late arrival in both staples and morning cereals, where significant incumbents such as ITC, Adani Wilmar, Kellogg’s, and Tata Consumer Products already exist.
Mayank Shah, Senior Category Head, Parle Products, concedes that his firm does not have first-mover advantage, but he also claims that atta, for example, is a Rs. 20,000-crore market opportunity, with just around 20% organised. “I don’t think we’re late, because the activity in the branded atta category is just getting started.” Consumers in the epidemic period are increasingly preferring packaged basics, as opposed to a few years earlier when they favoured buying loose.
Parle Products was also testing the market for other necessities like as pulses, but it ultimately decided to focus solely on atta. “Dal has a variety of regional variations. Toor dal from Gujarat differs from that found in Latur or Hubli. It is tough to purchase it in one location and sell it throughout India. We tested-marketed, claiming that we needed to do something that would appeal to a bigger audience. Atta has more bulk and greater potential “Shah argues.
The corporation is attempting to use its distribution power in breakfast cereals. Though Kellogg’s is undoubtedly the pioneer, its distribution is mostly limited to metropolitan areas, whereas Parle’s distribution reaches an 8.2 million-store network.
According to Krishnarao Buddha, Senior Category Head, Parle Products, the firm aims to provide Hide & Seek Fills to every part of the country, hence the product has been released in Rs.10 packs. “We want customers to try the product first.” If the breakfast option does not appeal to them, they might enjoy it as a delectable sweet snack. Larger packs, according to Buddha, will be issued only when the product has been approved by the general population.
He is certain that Hide & Seek Fills would be well received, claiming that the product is tastier than competitors. “Despite the enthusiasm in the category, we realised that the quality was not up to par. We saw an opportunity to provide a delectable chocolate product to the market, therefore we boosted the chocolate filling proportion to 50%, compared to rival goods, which had a 30% filling. It is a costly proposition, but we want to provide our consumers with a good product “He explains. Breakfast cereals are a Rs. 3,000-crore category, with a share of Rs. 60 crores.
Parle Products is neck and neck with arch-rival Britannia in the biscuits sector (a Rs. 40,000-crore market).
No to D2C
Unlike its competitors, Parle has no ambitions to develop direct-to-consumer methods in which it will create premium brands. “The unit economics make no sense,” adds Shah. According to him, e-commerce enterprises suffer a cost of Rs. 130 (in warehousing, packing, and delivery) for each delivery. It will be difficult to incur these expenses unless your order value is significantly more than Rs. 1,500. Despite delivering on a scooter or a bike, an e-grocer with an average bill value of Rs. 400–500 incurs a cost of Rs. 70–80. “D2C is financially unviable until there is scale,” Shah adds.Parle Products is recognised for making wise decisions. Despite announcing plans to become a full-service food company in 2013, it has taken nearly a decade to get there. During this time, however, it has been constantly trying with new categories, one of which being luxury chocolates, which did not pay off. Both Shah and Buddha state that the firm is not in a hurry to grow. “We will have to wait for these categories to penetrate deeply enough and reach scale. Only then will we explore adjacencies or perhaps branch out into fresh categories “Buddha adds.