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“Both premium-end and mass-end are opportunities”
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Monday, 28 December, 2015, 08 : 00 AM [IST]
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Nandita Vijay, Bengaluru
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Global Consumer Products Pvt. Ltd, the packaged foods start-up, is now making deeper forays into southern India beginning with LuvIt brand and its range of chocolates. The brand is available in nine variants and 14 SKUs (stock keeping units). The company, incepted by A Mahendran, in partnership with Goldman Sachs and Mitsui Ventures, is making its forays into the FMCG market with product offerings not just in chocolates, but
confectionery, beverages and snacks. It is looking to build a strong portfolio of consumer brands on the back of secular growth trends driven by increased consumption spending in the country. The Bengaluru-based company is building its own sales and distribution network and will create strong consumer franchise by disruptive brand building. Anuradha Narasimhan, executive VP, Global Consumer Products, in an email interaction with Nandita Vijay delves into the details. Excerpts:
The company has raised Rs 315 crore from Goldman Sachs and Mitsui Global. Tell us about your action plan with the help of this revenue support.
Global CP was set up in 2014 by A Mahendran, a serial entrepreneur and ex-MD, Godrej Consumer Products, with an investment of Rs 315 crore. The private equity partners for this entrepreneurial venture are Goldman Sachs and Mitsui Ventures. We will utilise this investment for building brands in our mandated categories. We intend to be continuing on our asset-light model, which means that our capital will be deployed largely in brand and distribution building.
The key players in the Indian chocolate market seem to be taking a dip in revenue generation. How are you looking to position LuvIt in the market?
We are seeking to position LuvIt as a challenger brand in the marketplace, and as a young, vibrant, indulgent brand in the consumer’s mind. We are targeting 14 to 30 year olds who form a primary part of the consuming group for chocolate – consumers here believe that Indulgence begins with an I. A product as delicious as LuvIt chocolates will never be shared by them – and in the event someone shares it, it is with a hidden agenda. Our packaging, our communication, our activation – all of this targets young people in the urban centres of South India.
What according to you are the key strengths of your brand to drive sales off shelves of outlets in the southern states?
The entire marketing mix of LuvIt has been created to build superiority and differentiation. The product portfolio that we are launching with is our biggest advantage. It has nine variants and 14 SKUs and is a comprehensive product range in the mid-premium segment. Products have been carefully created to beat industry benchmarks, there are new differentiated products like the ChocWich White wafer, ChocoPops etc. Pricing has been mapped to market, with packaging being extremely pop and appealing to the young consumer.
Where is the product manufactured and would you continue with your strategy of asset-light model in production option for contract manufacturing?
LuvIt products are currently manufactured in Hyderabad and in Mangaluru, and depending on sales growth as well as portfolio expansion, new centres would get added. We will stay true to our asset-light manufacturing model to free up capital to invest behind brands.
When would the company look at launching beverages and confectioneries?
We are looking to launch beverages, and are already working on products for the confectionery sector.
Would you only focus on the southern Indian markets or do you intend to also export to South Asia among others?
We believe that south India offers immense opportunity for growth – however we would be open to business propositions in both exports as well as modern trade.
What are the opportunities and challenges in India for chocolate marketing?
The largest opportunities that we see in the chocolate segment are an under-penetrated segment (10% consumer penetration), currently low on consumption as well as high scope for brand differentiation. Creating a stand-out brand for the young target consumer is a big opportunity in the chocolate segment. We know that by creating the right distribution and availability, we can create the right channels for trials by consumers – one challenge the industry faces is creating the right avenues for distribution. The premium-end of the market as well as the mass-end of the market are both opportunities for a chocolate marketer which needs to create the right portfolio / technology competencies to address these segments.
With the rise in prices of ingredients, how are new entrants like GCP going to drive the sales from a Cadbury-dominated scenario ?
Trial generation is our first imperative – both through mass media as well as experiential activation with our target audiences. We are targeting a critical mass of trial generation through both these routes to generate word of mouth as well as repeats.
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