In an interview with BW Businessworld, Mayank Shah, Vice President at Parle Products, shares insights on premiumisation, urban consumption slowdown and the company’s growth projections
While highlighting that consumers increasingly explore new, premium and niche offerings as aspirations, income levels and affluence rise, Mayank Shah, Vice President at Parle Products, states that the concept of premiumisation is still urban-centric and will take time to reach the tier two and three cities.
In an interview with BW Businessworld, Shah highlighted that with there being an expectation of healthy monsoon driving rural demand this year and with urban consumption showing green shoots of revival, the company is anticipating at least about 12 to 13 per cent growth rate this year across all segments.
The VP at Parle Products shared insights into the evolving tastes and preferences of Indian consumers, the growing trend towards health-conscious products, the impact of urban consumption slowdown, as well as the importance of having a well-directed advertising campaign. Edited Excerpts:
Since Parle’s products cater to diverse age groups, how do you ensure to have a uniform appeal?
Parle is a corporate brand, a mother brand. Parle has multiple offerings catering to diverse age groups, geographies and socio-economic classes. So, we have something for everybody, right from offerings like Parle G, which spans across multiple age groups and multiple socio-economic classes, to offerings like Krackjack and Monaco, primarily targeted at light snacking, to probably health-conscious where we have a Nutricrunch or highly indulging options like Milano, Hide and Seek.
We have something or other for every consumer and that is how we try and cater to different needs. Biscuits are not as homogeneous a food as one may think of; they are pretty heterogeneous, given the kind of options which are available today.
There has been a surge in the trend for premium products. What is your take on the acceptance of such products? What has been the company’s status on this?
As aspirations, income levels and affluence grow, consumers try out new, premium and niche things and that that is something we have seen. We have seen two divergent trends. Some consumers are looking at experiential things, indulgent things, and that is why your Milanos and black bourbons of the world are selling. We have brands like Hide and Seek black bourbon, which is a premium bourbon with dark cocoa in it, and we have hazelnut-filled cookies. Those are premium items, and consumers, by virtue of earning more income, increasing influence and changing aspirations, are consuming those products.
The second trend that we have seen is migration towards healthier options, and that is where we have another portfolio under Nutricrunch, where we have digestive, millet cookies, ginger cookies and all those things, primarily catering to the health-conscious consumers, and that is also doing very well. So, these are two trends we have seen regarding affluence and premium products.
Is the concept of Premiumisation still urban-centric or has it moved beyond the metros?
No, it is still largely urban-centric. We will see a little bit of time before we see it going down to tier two and three towns.
There has been a certain degree of urban slowdown. Has it affected the company as well? How are you navigating it? What is the core reason that has driven this trend?
There was a certain amount of urban slowdown, and we need to look at the larger picture. Why was the urban slowdown there? It was there because of the huge amount of credit off-take. Inflation and credit off-take both put together. Till about one and a half years back, auto numbers and durable numbers were at their peak. When you talk about these durables, a good part of these durables come on debt. People take debt, and they buy it.
Credit card outstandings, debt and defaults are at their highest ever levels. Normally, with most people having a fixed income, if a good part of it is going to EMIs, your consumption of other things goes down. So, there was stress in urban consumption.
There are measures which have been taken. Price hikes were there on multiple things. We have seen early green shoots of revival in consumption in urban India. We are very hopeful that in the coming year, because of the measures taken by the government, we will see a good demand coming in from urban areas as well.
How have the tastes and preferences of Indian consumers evolved over the years, in the industry that you are in?
There has been a phenomenal change in consumer expectations, how discerning consumers have become and their expectations from this category. From probably about 25 years back when I joined Parley, I still remember that glucose used to be a dominant category and almost 66 per cent of the households used to buy only one category of biscuit, which mostly would be either the glucose or Marie.
Today, less than 20 per cent of the households are buying only one category of biscuit, there are multiple categories of biscuits that they buy, including cream biscuits, cookies, crackers and all of them… On average, today, if we talk about it, there are at least four to five categories which are bought in a household of various biscuits. So, there would be glucose, there would be a cookie, there would be a cream, in different proportions.
Which is the one category that the company is betting big on this year?
Health is one category which will be really driving growth in the coming year because consumers are getting more health conscious, they are looking at options which are healthier. So, that is one category which we think would really see a huge amount of growth in the coming years. We are also betting big on it.
Consumers have doubts regarding the claims of certain products being the healthiest. How do you see this, and how is Parle ensuring that it is meeting the expectations?
Everything is relative in the world. Anything in excess is not good. Everything has to be in moderation, and it goes even for biscuits, and it is always relative. You can never say that this is a healthy thing or that this is an unhealthy thing. If there is a biscuit which has a high amount of sugar or fat in it, compared to another biscuit which has less of it and it probably gives you some added benefit. It is a relatively healthier option. It is not that you can say that this is the healthiest thing, and there is nothing healthier than this.
Companies are required to be honest there, rather than making false claims… What we are trying to say is that it has to be in moderation, and then if it is in moderation and if you are moderately consuming, but then you cannot project that product to be very, very healthy and say no matter how much you eat, there is no issue. You cannot do that.
With the tax benefits, expectation of a healthy monsoon and a rise in disposable incomes, there is a positive vibe regarding demand revival. What is the growth rate that the company is eyeing this year?
You have summed it up very nicely. With normal or a little higher than normal monsoon being predicted, it will not only drive rural demand, because we are still an agrarian economy. We have seen that the single biggest correlating factor in rural demand is the normalness of the monsoon. If the monsoon is good, you see good demand coming in from rural areas; that is the single largest correlated variable.
We are expecting good demand coming in from rural areas as well. The food industry is largely dependent on agricultural products, and inflation would be in check if a good monsoon is there. All put together, we are expecting a very good demand, urban plus rural. We are anticipating at least about 12 to 13 per cent growth rate this year across all segments.
How are the advertising marketing campaigns helping the company, and how are you making sure that they present the company’s diverse range of products to the customers?
We have multiple brands on IPL. We had started with Hide and Seek, and now, Marie is being advertised. IPL becomes a good platform for any company or brand to advertise. It has a pan-India reach. Normally, if you advertise on television, you can either advertise on a GC, which is predominantly in Hindi-speaking markets (HSM) only, or if you are doing some southern channel, you would only restrict yourself to the southern channel.
There are two very big things in India, cinema and cricket. Cinema is also very regional. If you advertise on cricket, you reach all India irrespective of which market you are talking about, because cricket is popular across India.
Secondly, it is also a very costly proposition. Ideally, the best way to use an IPL kind of property is for impact and not for frequency. It is not an efficient way. I am being very honest about it. It is a very costly proposition, but it gives you an impact and there are reasons behind it. There is a lot of buzz around what is being advertised there. People make ads specifically to air on IPL.
