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Visual disruption is a major focus area

With the per capita consumption of beverages in India much lesser compared to other parts of the world, the growth opportunities for Parle Agro are many.

With the per capita consumption of beverages in India much lesser compared to other parts of the world, the growth opportunities for Parle Agro are many. While the beverage business will continue to be its mainstay, the company aims to focus on its various brands apart from Frooti and Appy, nationally. It is also planning new products for categories focussing on health and youth. In a tête-à-tête with BrandWagon’s Chandni Mathur, Nadia Chauhan of Parle Agro talks about the growth of each of its brands, and why sales and distribution is so important for the company. Edited excerpts:

How is Parle Agro’s beverage business performing, and what is the focus area ahead?

A growth momentum has set in over the last two years owing to external and internal factors. Last year, the category saw a growth rate of 1% or so; we grew at over 15% and continue to see that this year as well. A large part of this is driven by external factors where consumers are becoming more conscious of what they consume. But the initiatives driving transformation within sales and distribution (S&D) are what really impacted us. The heart of an organisation like ours is really the S&D system. We aim to get to Rs 5,000 crore by 2018 and Rs 10,000 crore by 2022, and a lot of this is driven by the fact that we are almost revamping the entire S&D system to be more future ready.

What is the present market standing of your brands and where do you see major growth coming from?

Appy Fizz launched a decade ago and we created this category of sparkling fruit drinks in which we today hold a majority share. Appy has around 65-70% market share and Frooti holds about 25% market share. Beverages form a large part of our business and this is where we see massive opportunity. Our water business is something that is not a metro phenomenon anymore and we see a large opportunity in driving our brand, Bailey. A lot of the new categories we will be entering into will be focussed on health and youth, but nothing that we can talk about at the moment.

How have your communication strategies evolved over time with Frooti and Appy now catering to the millennial?

Our approach with advertising is to focus more on being able to mirror the aspirations and image of the youth. A consumer associates stronger with a brand they have connections with in terms of image, brand philosophy and values. It’s important to bring that out rather than over-communicating or trying to oversell your product in a 30 second spot. Since the time we relaunched Frooti, that has been our focus — a visual disruption. Being able to stand out visually in a cluttered environment is the first point of success on whether you are really grabbing the attention of the consumer or not.

How big is your presence in the snack food category?

Currently, our snack food business is focussed on the up-country market; it’s a conscious call that we have taken. Originally, we launched Hippo in the baked foods segment and we had priced it at par with any other snack brand. But we think the market wasn’t as ready for it and a lot of other logistical challenges surrounded it. So we went on to introduce more traditional Indian namkeens. Our focus is on products that are healthy for consumers but the category is not something we are really driving with as much pressure at this point of time.

With branded coffee from various coffee chains flooding the market, how are you increasing the penetration for Café Cuba?

Café Cuba is a brand we are focussing on tremendously for on-premise segments which include institutions, colleges, etc; and that is where we have seen maximum traction from a far more evolved consumer who appreciates drinking coffee in such a format. It’s more about doing co-branded nights at pubs and merchandising within this segment. I think Café Cuba has created its own niche within a segment that enjoys the taste of coffee, and it’s bound to grow over time.

With diversification and expansion, what kind of threat do players like Paper Boat, Raw Pressery, etc pose to you?

Raw Pressery is catering to a niche within a niche — whether you look at the distribution focus or the product itself — it’s catering to a very different set of consumers and different consumption needs as well. So I wouldn’t consider it as direct competition in any form. Paper Boat has, of course, done a great job and it has tried to penetrate the market with new products and more ethnic flavours. Today, consumers want variety; so the more you have brands like these, it only helps grow the market further. It is great that brands in this category are innovating because it is helping in expanding the category.

With more consumption happening on-the-go, do you see the returnable glass bottle (RGB) model shrinking?

The RGB model has been declining for quite some time. Over the last 10 years, we have seen the shift in package formats in favour of PET bottles. So PET continues to be the fastest growing pack format followed by tetra and glass.

Parle Agro currently has Frio and Dhishoom in its glass bottle distribution network. How are you building them?

Frio and Dhishoom are part of a very different network within our S&D system. They are part of our up-country network that is focussed on glass bottle distribution. Thus, Frio is not a brand that is usually pushed. It’s more of a support brand and forms an extremely small part of our overall business. Meanwhile, Dhishoom is a huge opportunity for us. Though limited at this point because it’s only present in a few places, we will definitely take Dhishoom nationally over the next few years. @chandni_mathur