Mondelez rejigs sales channel

The company is expanding its pan-India footprint with a focus on underpenetrated markets

Catering to an underpenetrated chocolate market, Mondelez India is working towards securing a pan-India footprint by expanding its distribution system — both in terms of numbers and higher visibility at the point of sale. The move to serve new markets and make its existing sales channel more profitable is accompanied with key changes in the company’s approach towards mapping potential markets and a rejig in dealership relationships.

To begin with, the company is taking its cues in market expansion from the changing aspirations of rural India. Today, a majority of rural markets and smaller towns mimic consumption patterns in big cities and metros. A case in point is the telecom industry, where the rural populace in most geographies show as much appetite in consuming mobile data as their urban counterparts. Like other industries, changing aspirations of rural consumers are manifesting in the food space as well.

Mondelez India is closely tracking such aspirational changes in consumer behaviour and aligning its distribution strategy to drive growth.

“There is a greater focus on selling our brands where people shop and focus on quality of presence at the point of sale. We are deepening distribution in all geographies increasing our presence in towns, localities that we cover well and faster expansion in underpenetrated areas,” says Hemant Rupani, director, sales, Mondelez India.

Following extensive mapping of key markets across India, the company has revisited its expansion strategy. For example, Mondelez India is now looking beyond municipal boundaries and targeting suburbs and upcoming cities on the outskirts which support a population of 50,000 and above. The objective here is to tap into the growing aspirations and sizeable wallet of buyers by expanding reach in small towns across Odisha, Rajasthan and Saurashtra.

In the last 10 months, Mondelez India has added 100,000-plus stores.

Pranesh Misra, chairman and managing director, Brandscapes Worldwide, says that for an impulse product category like chocolates distribution width is a key growth driver and requires high investments. It also means higher overheads to manage increased supply chain.

Besides identifying new markets, Mondelez India is also investing significantly in profiling target outlets to figure out the right mix of product portfolio. In smaller markets such as Bihar, it has taken a call to only push through its chocolates priced at ~5 and ~10 providing consumers an affordable option. The company is opting for bundled offers by clubbing selective biscuit brands with chocolates in its bid to introduce consumers to new tastes and products and help drive sales.

Misra says that accessing lower income consumers with entry-level packs is an ideal move for companies looking to gain market share. Also, it is imperative for players to raise brand salience through shop signboards and merchandising placement.

Interestingly, Mondelez India is also experimenting with new retail (store) formats in its bid to move closer to consumers. The sales team is reaching out to gift shops which typically sell souvenirs and cosmetics for women.

Such stores dominate in north India and witness heavy footfall of women shoppers who spend a significant time in picking up small products such as nail polish. In most cases, women are accompanied by children who need to be engaged.

“Such outlets which cannot be typically categorised as a grocery or general store provide us an easy win by giving the mother an option to keep the child engaged with a bar of chocolate,” claims Rupani. The catch-them-young mantra is meant to help introduce kids to the taste of chocolate.

The company is also placing its products aggressively at neighbourhood sweet shops. A lot of people visit such shops to buy sweets not only for themselves but also for gifting. Over the last few months, 10 per cent of Mondelez India’s store expansion has come through this channel.

Targeted marketing and store profiling is helping the company drive cost efficiencies in its selling process and reducing inventory management and logistics cost. For example, Mondelez India has simplified its stock replenishment model by doing away with the practice of being in a perpetual mode of replacing stock keeping units. The company has managed to reduce its inventory cycle from 30 to 10 days. This has helped in releasing more capital for distributors as well as freed up time to help channel partners devote more time and energy in selling the brand instead of spending disproportionate hours in maintaining management order books.