Sweet at 25: How Perfetti has stayed ahead of rivals in toffee market

A quirky brand narrative and flexible prices and formats have helped the confectioner stay on top. But is this enough to keep new rivals at bay?

Known for brands such as Happydent, Center fresh, Center fruit, Alpenliebe, and Mentos, Perfetti Van Melle has spent years spreading itself wide and deep in the Indian candy heartland. Now as it completes 25 years in the country, the challenges are different and competitors, multiplying by the day. But the firm says, its formula of out-of-the-box branding and marketing while offering customers a new sweet to snack on at regular intervals will help keep it a head above the rest.

The Dutch major, which was formed in 2001 following the merger of Van Melle of Netherlands and the Perfetti group of Italy, has been known to keep its ear close to the ground when it comes to consumer communication and designing products to suit the Indian palate. That is how Perfetti has kept the lead in the Rs 12,000-crore domestic confectionery market. This despite competition from global names such as Mondelez, Mars Wrigley Confectionery as well as local giants such as Parle Products, ITC and DS Group (makers of Pulse candy) only growing over the last few years.

Perfetti is estimated to have 20-25 per cent of the overall market, according to industry executives and experts. While the total market, comprising gums, candies and lollipops, is growing at 10-12 per cent per annum, players such as Perfetti, say analysts, have been growing faster due to an aggressive overall push. Perfetti is also present across segments within confectionery, giving it a well-rounded edge in a highly competitive market, experts add.

“We’ve tasted success due to strong pillars in our portfolio,” says Rajesh Ramakrishnan, managing director, Perfetti Van Melle India. “One is the brand assets we have, which are well-known and can be taken into multiple areas. The second is our retail footprint, which, at four million, is wide and cuts across the country. The plan would be to build on these strengths,” he says.

Will this be enough to stave off competitors?

To an extent Perfetti has been smart to'; keep its finger in multiple candy jars, in terms of formats and price points. Another plus, say industry analysts is its strong retail distribution network.

Perfetti brands, Alpenliebe and Mentos use humour in everyday situations in their ads

Perfetti, say experts, is best known for its innovations with traditional candy formats. With liquid-filled gums, extruded jellies and hybrids (lollipops and candies and lollipops and gums) among other products, it has kept consumers and rivals guessing. Most of these innovations have disrupted the market and helped Perfetti keep an edge over the rest when it comes to pricing. While most players have also chosen to operate at price points such as 50 paise and Rs 1 in keeping with their core target audience of children, Perfetti has strived to move up the pricing ladder by innovating and extending its brands.

While Perfetti’s price points start from Rs 1, sales traction, say experts, is higher at price points such as Rs 5 and Rs 10. “The pricing journey for us,” says Ramakrishnan, “has been about moving from lower to higher price points. In modern trade, for instance, we have products which are more than Rs 10 in terms of price points.”

The innovation cycle at the company, say experts, has also allowed Perfetti to trade up without the firm losing consumers to rivals. The trick, Ramakrishnan says, is to continue surprising people with interesting value-additions across brands. This way, he says, they will stick with the brand even when it offers itself at a higher price point.

In the last nine months since coming on board, for instance, Ramakrishnan has overseen the extension of Center fresh, which is a liquid-filled gum into the mint candy segment, while Alpenliebe, which is available in multiple variants across candies and lollipops, has been extended into the tangy fruit-candy segment with Alpenliebe Chatpata.

Ramakrishnan says there are more innovations in the pipeline and that the firm will continue to extend the boundaries. “There are still a lot of opportunities within the confectionery market to capitalise on,” he says. “Ultimately, it is about marrying local strengths and global expertise.”