Market candy

Candico India hopes to taste success by increasing its geographical reach

How does Candico India, maker of products such as Loco Poco, Time Bomb, Gol Maal and others, plan to grow exponentially in the confectionery market which is growing at a rate of only 5 per cent to 6 per cent annually?

Simple, it's increasing it's geographical reach by catering to markets in Africa, South Asia and the Gulf.

Says Karan Gupta, executive director, Candico India, "Since the market in India is growing at very slow rate, the only way to grow is to increase geographically. Since we are already present all over India we had to look at other countries."

That's not unusual in itself for a large number of companies export. So what's so special about Candico? Candico is not planning to export or get its products manufactured on a contract basis, instead it is setting up full-fledged manufacturing plants.

The company is setting up a $5-million manufacturing plant in South Africa for catering to seven countries in the South African region. The Johannesburg plant is Candico's second unit in Africa since the acquisition of its plant in Tanzania for $1 million in October 2003.

Says Gupta, "We want a 8-10 per cent market share in every market that we enter and therefore we are setting up manufacturing units."

Besides Africa, Candico will be setting up manufacturing units in Nepal and Bangladesh.

Says Gupta, "In Bangladesh the duty on confectionery is 153 per cent. In order to compete in that market you have to have your own manufacturing plant."

In the next five years Gupta hopes to earn 50 per cent of his revenues from his international operations. "Our brands are well known in South Asia and Middle East since we advertise heavily on satellite channels in these countries."

But Gupta is also revamping his operation in India and hopes to grow at 15 per cent annually. First, he has cut down his product portfolio from 18 products to just nine.

"We now want to be very focused with only one product in each category. No overlapping,"he says.

Second, he is relaunching all the traditional products. In the last few months four products have already been relaunched and the remaining will be relaunched in the next two months.

Says Gupta, "Launching a new product in the market costs around Rs 7-8 crore and the failure rate is very high. Only one is four succeeds. On the other hand, relaunching an existing product doesn't cost as much and success rate is much higher as you do not need to educate the customer."

Gupta has introduced three new flavours in the fruit candy segment "" green mango, lychee and tamarind. The fruit candy segment is one of the largest in the Rs 2,000 crore confectionery market of which Rs 1,500 crore is organised.

Nearly 6,000 tonnes of fruit candy are sold per month of which over 60 per cent is from the unorganised sector. "We were selling only 55-65 tonnes a month earlier, but with the new flavours we are selling between 125 and 140 tonnes."

The relaunch took place a couple of months back. Besides the new flavours, the packaging has been improved.

"Since not much technological knowledge is required to make a fruit candy, the unorganised market is huge. We want to eat into their share," says Gupta.

Other products such as Koffi Toffi and Lacto have also been repackaged and relaunched. Koffi Toffi is now a coffee and cream toffee and comes with a tattoo.

"We are the first ones to introduce a tattoo in a 50p product," says Gupta.

Will Candico taste sweet success? Wait and watch.