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NEW DELHI : Even though covid has receded and people are out and about, in-home consumption of snacks has remained higher than pre-pandemic levels, benefitting companies like Parle Products Pvt. Ltd. In an interview, Krishnarao S. Buddha, senior category head, who oversees Parle’s snacks, confectionery, cakes and rusk portfolios, spoke about demand trends, the rise of e-commerce, and the need to maintain the right balance between taste and health for its brands. Edited excerpts:
How are your out-of-home consumption salted snacks and confectionery brands performing as covid recedes?
There’s a significant improvement actually. During lockdown, consumption had become a lot more in-home as well. When schools and colleges were shut for the longest period, our brands continued to grow, which was an indication of in-home consumption. In the last one year, or so, we are seeing a lot more receptive consumers across our portfolio, particularly confectionery. We are seeing a far better traction for confectionery as the educational institutions have opened up everywhere. It makes a huge difference for the out-of-home category, when children get pocket money every day, which means daily consumption started to happen. Typically, kids continue to spend on confectionery, snacks and chocolates.
Has in-home consumption tapered?
It has reduced, but it is still higher than what it was before covid. Snacking is a bigger part of the habit now, and more households have adopted it.
Does rural contribute to out-of-home category sale? Is rural demand lagging?
Consumption has returned in both urban and rural. In salty snacks, I would say, to the tune of about 70% sales come from the urban markets. Urban seems to be responding relatively better because the category penetration for the products is significantly higher. Let me give you some numbers: There are an estimated 330 million households in India where a product like salt is deeply penetrated at 95%, while soaps and biscuits are upwards of about 92%. Salty snacks are in the range of 72% to 73%. Likewise, confectionery, is in the range of 75-76% penetration. So, a major part of salty snacks and confectionery sales come from the urban markets.
Are premium brands selling or are consumers downtrading?
There are audiences for all kinds of products and there are all kinds of audiences. People with very high propensity to spend have not been impacted at all during covid. On the contrary, probably they’ve done better. They continue to lap up premium offerings. There are others who have suffered big blows to work and businesses. That is the audience which has gone for downtrading and they have been trying to make ends meet. So, there’s been a lot of downtrading within the SKUs (stock keeping units). But our premium portfolio continues to do quite well because it is addressing a certain need gap for a certain audience that is looking for indulgence. A lot of consumers are lapping up large packs, so consciously, we have started introducing more price points for large packs. Earlier, we had ₹5, ₹10, ₹15, ₹20 and ₹50 packs. Now we are launching ₹120, 1 ₹80, ₹200 and ₹250 packs for biscuits, which were not available two years ago.
What about online sales?
If I were to look at the online contribution to our sales in January 2020, it was barely about 1.5%. Today, it has shot up to 4.5%. It has remained and it is going to grow pretty fast in the coming years.
Until now, modern retail or modern trade has contributed about 10% to sales of companies like HUL, P&G, Godrej or Parle. Now suddenly, a new trade channel has emerged and starts contributing 4-5% to sales… It’s substantial. It may not be surprising if in the next three years 12 to 14% of our sales contribution come from e-commerce.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
