Candy-makers to get health conscious

67292 Investors following ITC. Share this News with them.

0

Like this story, share it with millions of investors on M3

Candy-makers to get health conscious

Confectionary makers are doing a lot more than just putting out eye catching ads that generate buzz. They also are going to put out value-added candies.

Post your opinion here

 

0

Tweet

Share on Tumblr

Confectionary makers are doing a lot more than just putting out eye catching commercials that generate buzz. Players like Perfetti and Lotte are rolling out value-added offerings, whether its sugar free gums or nutritious candies that are going up the value chain and going beyond standard price points of 50 paise and 1 rupee. They are relying on modern trade to provide the push and all this will help the markets - that's been flat - see some growth.

Candy might be for kids, but adult confectionery - industry jargon for mint and gum - is clocking faster growth at 10%-15%. Thanks to heavy-duty advertising and distribution push, they have young adults as consumers, who are willing to spend Rs 5 to Rs 10 on every purchase. Little wonder then that companies are giving them a thrust, while the hard boiled candy market shrinks at 6%-7%.

Managing Director, Perfetti Van Melle India, Prakash Wakankar told CNBC-YV18, "Compared to candy, gum is small but I must confess, it's growing fairly rapidly and having been pioneers of that in many ways particularly with products like centre filled gum and so on. I think the indication we have of impending launches from other players in the market, only indicates that there's an overall thrust to the gum market and it's growing."

Along with Wrigley's, the Rs 600 crore Perfetti has been pushing its teeth whitening gum, Happydent. And Wakankar believes that the sugar-free gums, that account for more than 50% of sales in Europe, have big potential in India. Also riding the health wave will be Lotte India and Godrej Foods that have lined up nutritious candies in the next 3 to 4 months. Candico's got jelly-based candies in store. Such niche offerings, will help confectionery products break the price barrier of 25 paise and 50paise. Even rural India, where unbranded players dominate, will have something to look forwrad to. 

Managing Director, Godrej Beverages & Foods A Mahendran says, "We could create health and wellness platform for rural consumers and children separately and that price point will be different. Now if I rollout, I'll roll out for Rs 2 and not for Rs 5. And Rs 2 rupees wellness candies even in rural areas is possible because the rural rich is also a big enough (segment) in India."

Meanwhile, players are banking on modern trade to drive the sales of high-end confectionery in India. Even though, formats like supermarkets bring in a measly 3% of entire sales, confectionery players like Lotte are gearing up for better visibility.

Managing Director, Lotte India, KV Ramachandra says,"The challenge for me and my team is to be able to come up with packaging that suits modern trade. Modern trade can't deal with singles, so we need to look at utility packaging and look at popular price points. I need to be able to deliver differentiated packaging for different stores." 

Thanks to the slew of launches, players across the board are looking to up advertising spends in 2007. While players like ITC have experimented with websites like this for its brand candyman, Perfetti has a similar initiative up its sleeve.

Impulse products do better when the going is good. And being around a spend-happy consumer, confectionery comapanies are innovating and entering new segments. With this, they might manage to add layers to their margins of around 3% and manage input cost pressures better.

Molshree Vaid