Hll Extending Max Brand, Test-Marketing Confectionery

Fast moving consumer products giant Hindustan Lever (HLL) has decided to extend its ice cream brand, Max, to sugar-boiled confectionery. The nascent confectionery business will be HLL's new growth engine.

Hit by sluggish sales, HLL had recently announced that it will enter potential new businesses that include confectionery, consumer healthcare and water. Confirming the development, Prince Asirvatham, group treasurer & head M&A, Hindustan Lever, said: "The company has started test marketing candies under the Max range in South India."

"HLL has launched ChocoMax, a chocolate deposited candy, Max Magic, a centre filled candy, as well as Max, a candy available in orange and mango flavours in Chennai and Salem," sources familiar with the launch said.

The sugar-boiled confectionery market in India is estimated to be around 80,000 tonne in volume terms and Rs 700 crore in value terms. Nutrine is the leader in the confectionery market with 25 per cent share followed by EID Parrys with 23 per cent, analysts tracking the sector said.

"As a late entrant, HLL may take time to get a foothold in any of these new businesses. But HLL's key advantage lies in its extensive distribution reach," analysts said.

The company will be in a position to leverage its existing distribution infrastructure and investments in new product forays will be lower than is the case with most competitors. "HLL, with its wide distribution network and rural presence, can actually expand the sugar confectionery market," analysts said.

The move to bring out the confectionery range under the Max range is to better utilise its established brands. The company is implementing an exercise focusing on pruning HLL's 110 brands to 40, of which 30 will be national power brands and the other 10 regional.

These 40 brands contribute 90 per cent to the turnover. The parameters for selection of these brands were size, strengths and competitive positioning.

The move gains significance since HLL has become active on the foods market, which is expected to explode in the years to come. M S Banga, chairman, Hindustan Lever, had mentioned that cross-categorisation will be undertaken to get better value of the brand strength.