PERFETTI’S DISTRIBUTION STRATEGY

A Case Study

Abstract

Perfetti Van Melle, one of the top confectionery product manufacturers with brands like Alpenliebe, Big Babol, and Center Fresh in its stable, entered India in 1994. The company (Perfetti Van Melle India Pvt. Ltd.) recorded a sales turnover of over Rs 400 crore, within a decade of its entry into the Indian market. issues:

  » Global marketing communications

  » Importance of heavy promotions for impulse purchase products

INDUSTRY’S PROFILE

• Confectionery is the set of food items that are rich in sugar, any one or type of which is called a confection. Modern usage may include substances rich in artificial sweeteners as well.

• There is 38 Confectionery companies in India but prefetti is largest selling company in India.

• Mars is the number one confectionery company in the world. The firm generates revenue of $30 billion a year, selling products under an array of different brands, including Wrigley, Uncle Ben's, Dolmio, Whiskas and Pedigree.

Top Confectionary Companies• Mars • Nestlé• Cadbury • Ferrero Group (Ferrero) • Hershey • Kraft Foods• Perfetti Van Melle (Perfetti)• Lindt & Sprüngli (Lindt)• Meiji Holdings (Meiji Seika)• Lotte

Cadbury• In India, Cadbury began its operations in 1948 .

• The total confectionery market is valued at Rupees 41 billion with a volume turnover of about 223500 tonnes per annum.

• It has employ around 50,000 people and have direct operations in over 60 countries.

• Some of the key brands are Cadbury Dairy Milk, 5 Star, Perk, Éclairs.

• Now Bharat Puri is CEO of Cadbury India.

Nestle• Nestlé India is a subsidiary of  Nestlé S.A. of Switzerland

• Nestlé’s relationship with India dates back to 1912 but set up its first factory in 1961 at Moga, Punjab.

• Famous brand names such as NESCAFÉ, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID .

• It total turnover Rs 1265 .85 Crores had increased by 16 %

• Antonio Helio Waszyk is Chairman and Managing Director of nestle.

COMPANY’S PROFILE

• In 1946 Two brothers ,Ambrogio and Egidio Perfetti had founded Perfetti.

• It is largest manufacturers of confectionery and chewing gum products

• PVMI launched its operations in India in 1994. • It is a Market leader, with a market share of more than 30

percent.• Its india biggest confectionary campany and world third largest

company.

COMPANY ‘S PROFILE• It is a global confectionary company that manufactures & distributes

confectionery & chewing gum products in over 130 countries the world over with 9000 employees.

• PVM India looks after operations in several neighbouring countries including Bangladesh, Sri Lanka, Nepal, Bhutan, Pakistan, Maldives and Myanmar.

• Instead of tinkering with prices, perfetti try to bring more and more cost-efficiencies in the system.

• PVM India has managed to always grow faster than the industry, it appears unlikely that the path ahead will prove bumpy.

COMPANY ‘S PROFILE

• 5,000 distributors service.• 7,00,000 outlets across the country.• 40% of the volume from towns.• And now eyeing new retail options like juice

corners, fruit stores & vegetable vendors.• Perfetti has two manufacturing unit one in Haryana and other in Tamil Nadu

Product line• Centre fresh• Big Babol• Alpenlibe• Mentos• Center Fruit• Center Shock• Chatar Patar• Chlormint• Cofitos• Happydent white

COMPANY ‘S PROFILE

• Headquarters Milan, Italy • Industry Consumer Goods • Type Privately Held Company • Owner & CEO of the company “SAMEER SUNEJA”• Established in 1994 in India• Top locations are- Netherlands Milan(Italy) Delhi(India)

Competitors

Cadbury Nutrine Ravalgo

n Parle Nestle Wrigley Parry Hindustan lever

FACTS• PVM is the undisputed market leader in india.

• over 28million PVM india products are consumed in a day.

• Alpenlibe was rated as one the 150 most trusted brands in the country

• Prefetti top rated advertiser 3 year in row from 2003

• PVM is 3rd largest confectionery player in world.

• Its also has been rated top 10 fastest growing FMCG companies in year 2002-04

FACTS• It recorded a sales turnover of over 400 cr with a decade of its

entry in to Indian market

• Perfitti entered the Indian market in 1994.At that time unorganized players ruled the market with an aggregate market share of 80%

• But in that time van melle already present in the indian market selling popular brands like fruite-tella and marbels

FACTS• The perfetti planned to improve sales by concentrating on

specific regions and having more of a presence with these regions.

• The other problem company faced was that some of its products were competing for the same space as the retailers perceived them to be substitutes for each other.

• So the company divided the a unique distribution strategy to solve this problem it divided its 11 brands into two groups p1 and p2

FACTS• Among chewing gum market “centerfresh” captured a market

share of 35%.

• Among dispose candy category “alpenliebe” captured a market share of 80%.

ANALYSIS• PVMI has created a multi-tiered distribution system.• It emphasized on product portfolio, distribution network, brand

building & product mix.• Product range is divided into 2 categories, which in turn have

different distributors.• INTIALLY company offer a pack free of cost for promotion and

increase selling.

ANALYSIS• Its more concreted in advertisement to create brand value in mind of

customer.• Its took sponsorship in cricket match also for more advertisement.• PVM segmented its product according to psychological and

geographical • Its targeted the people , that child and youth up to 5-16 year to sell

their product.• Its manufactured the good which mostly like to child as sweet and

more chocolate and chewing gum for youth.

ANALYSIS• The margins for distributors(p2) & retailers were not increased

due to less demand in the market.

• It spend more on promotions & advertising.

• The company gave free pack offer for every pack sold to have hold of their distributors & retailers.

Q1.Analyse the distribution strategy of perfetti, which enabled it to become a leading player in Indian confectionary market.

• In the initial stage no recognition.• It aims at penetrating deeper into specific areas.• Dividend into 11 brands into two groups, p1 &p2• Company distributed the products on the basis of place & type of

market• Then , it started promoting the products.• Adverstiment• Sales linked incentives & low margins on less popular products.

Q2.The product allotment and commission strategy adopted by prefetti led to discontent among the channel members . Explain the company’s rationale in adopting such a distribution strategy.

• Developing a brand strategy can be one of the most difficult steps in the marketing plan process. It's often the element that causes most businesses the biggest challenge, but it's a vital step in creating the company identity.

• Your brand identity will be repeatedly communicated, in multiple ways with frequency and consistency throughout the life of your business.

THANK YOU Presented BySHASHI RANJAN KUMARSIBANI MOHANTYANANDVIKRAM PRATAP SINGH