Is UPI killing the toffee business? The numbers say otherwise for Lotte India

Is the rise of UPI killing the toffee business in India? This topic has been much discussed and debated over the last few days, with industry experts opining that digital payments have been largely responsible for the decline of the once-commonplace practice of shopkeepers handing out candies instead of loose change to customers.

In an Economic Times report, one expert of market research firm IMARC pointed out that kirana stores providing toffees or candies instead of small change was a “big sales route” for candy companies. “But with the digital payment ecosystem getting more prevalent, confectionery makers have to find a way to stay relevant,” the expert said.

Meanwhile, in a LinkedIn post, GrowthX founder Abhishek Patil noted that manufacturers like Mondelez, Mars, Nestle, Perfetti Van Melle and Parle have all reported a steep decline in the sale of toffees post-2020. However, Lotte India’s annual report seems to defy the trend.

Deepak Shenoy, CEO of Capitalmind, tweeted about Lotte’s annual report. “I don't really think UPI is killing the toffee business. Seems like a figment of imagination. Here's the results of Lotte India, which is largely a boiled candy manufacturer,” he wrote, adding: “Their annual report says they were hurt in FY21 from schools shutting down. FY22 was bumper sales.”

I don't really think UPI is killing the toffee business. Seems like a figment of imagination. Here's the results of Lotte India, which is largely a boiled candy manufacturer:

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Their annual report says they were hurt in FY21 from schools shutting down. FY22 was bumper sales. pic.twitter.com/iEHR1LpbCt — Deepak Shenoy (@deepakshenoy) October 14, 2022

Lotte India is best known for manufacturing Choco Pie, Coffy Bite, Lotte Eclairs and Lacto King.

In its 67th annual report, the company said: “For the year ended 31st March, 2022, the Company has achieved gross sales of Rs.49654 lakhs as against Rs.41865 Lakhs for the year ended 31st March, 2022.”

Profits also rose to Rs 1150.16 lakhs as against Rs 1,004.39 lakhs for the year ended 31st March, 2021.

“Company continued its focus on its power brands Choco Pie and Coffy Bite. Both have registered growth over the previous year,” the report said.

In his LinkedIn post, Abhishek Patil wrote: “Before UPI, shopkeepers would shamelessly trade toffees for loose cash, a transaction that wasn’t happening other way round. These small amounts over days did wound up to becoming large sums of money, as accepted by many buyers in studies.

“With UPI, all of this stopped. People paid the exact amount that was due with no scope for change, ultimately eating up the daily toffee sales.”

He said that the Covid-19 pandemic made things worse as more and more people wanted contact-less payment, which UPI offered.