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Happydent Maker Perfetti Van Melle sees one of its slowest rates of growth in a decade
www.economictimes.indiatimes.com, Mumbai, 8 November, 2017


MUMBAI: The maker of Happydent and Mentos, Perfetti Van Melle, witnessed one of the slowest rates of growth in India last year in more than a decade, with muted consumer spending and increasing local competition denting the company’s sales.


The Italian company, which entered India 23 years ago, posted less than 1% increase in sales to Rs 1,663 crore during the financial year to March. Net profit rose 24% to Rs 40 crore. “The year under review remained subdued with slow market growth, muted consumer spending, heightened competitive intensity, and volatile input cost environment,” the company said in its latest filings with the Registrar of Companies Tuesday.

The world’s third-biggest confectionery group after Kraft-Cadbury and Mars-Wrigley, Perfetti makes candy and gum brands Mentos, Chlormint, Center Fresh, and Happydent. The company is known for its punchy advertising tag-lines.

About three years ago, the company increased the pricetag for some of its products, including the Alpenliebe caramel toffee, to Rs 1 after a consistent rise in the prices of sugar, other raw materials and packaging. This seems to have affected the category growth, including that of market leader, say experts.

“The year had several issues including demonetisation that affected growth. However, brands that have stuck to 50 paise pricing have been doing well,” said B Krishna Rao, category head at Parle Products, India’s second largest confectionery player. “We have been growing by over 18% and have increased new launches in the segment,” he added.

This is the second consecutive year in which Perfetti posted below 1% growth — it registered 0.6% growth during FY15-16. The declining sales growth also coincides with DS Group’s launch of Pulse candy that was introduced in 2015 and is now the largest hard-boiled Indian candy, with sales exceeding Rs 300 crore.

“Your company continues to be the market leader in the confectionery category by a significant margin over the nearest competitor. However, competition is getting intense, especially in the candies segment. Whilst we had moved much of our portfolio from the 50 paise price point to Rs 1, with product value addition, the bulk of the market stays at 50 paise, leading to strong market challenges,” it said in the filing.

A wholly owned subsidiary of its Italian parent, Perfetti Van Melle India began operations in 1994 with Center Fresh gums. Perfetti Italy was founded in 1946 by brothers Ambrogio and Edigio Perfetti in Lainate, a small town outside Milan.

Last year, Perfetti launched the Chupa Chups brand in India, and also introduced gum filled lollipops and extruded jellies, both new for the Indian market.