Perfetti Van Melle India not impacted by slowdown in FMCG demand, says MD

Firm says bulk of its revenue came from the one-rupee price point, which is largely immune to an economic slowdown

Consumer companies have been struggling with sales especially in rural areas, but Perfetti Van Melle India has not been impacted and has seen a sharp rise in demand after the lockdown as it sees bulk of its revenue comes from the one-rupee price point.

“The bounce back has also been very fast, because we look at ourselves as affordable treats. No mother is going to deny the child one rupee to buy a candy, (just) because there is an economic slowdown,” Rajesh Ramakrishnan, managing director, Perfetti Van Melle, told Business Standard.

He added, “Demand is there across regions across urban and rural, we don't see any major difference in sales. If I were to look at the total sales growth, it's the same urban versus rural.”

Perfetti Van Melle, which houses confectionary brands such as Alpenliebe, Centre Fresh and Happy Dent, is growing faster than the category and has managed to consolidate its leadership position. It now has a market share of over 25 per cent, making it the No. 1 player in the country. It has a total reach of five million outlets across the country and has a direct reach of one million outlets.

"I think growth in India is not so much a challenge. But profitable growth is the challenge," Ramakrishnan said, while talking about high commodity prices.

He explained, “I see some softening happening in the last few months (in commodity prices). There is a cascading effect, and it may take a few months to fully materialise. We are all hopeful that if there is some softening that we see in that direction, that will also allow companies to further invest behind growth and further fuel growth. Hopefully, that's a good trend in the coming months.”

While confectionery is an impulse purchase category, Perfetti Van Melle India is working on becoming a planned purchase by offering consumers options at higher price points. The intent is to find ways of upgrading consumers.

The intent is always to try and find ways of upgrading consumers. “Once consumers buy bigger packs, then they are more likely to stock it at home and consume it, or consume it at a higher frequency,” Ramakrishnan explained.

To get consumers to move to higher price points, the firm is exploring how it can bunch up its candies in a pack and sell that pack on specific occasions. During Halloween, which is gaining some traction in the country, it put together a pail of its candies and sold it on e-commerce sites and modern trade, where it received goods traction.

The company sees one per cent of its revenue coming from e-commerce and about five per cent from modern trade.

Perfetti Van Melle is focusing on upgrading consumers, as it will eventually want the contribution from higher price points to go up thus bringing down its dependence on the one-rupee pack over time. Ramakrishnan did not specify when it will start to see an increase in higher price point packs gaining traction.

He also expects that as consumers start adopting higher price point packs it will see the salience of ecommerce also increase.

“We have made good strides on ecommerce in the last two, three years. While one per cent sounds less, it’s actually a good number for us,” he said.