Musst chips launched with much fanfare in 2008 flopped, but the firm isn’t giving up yet on the fast-growing fried snacks segment.
Two years ago, Parle products, the market leader for biscuits, had forayed into the fried snacks segment with much fanfare. The products, launched under the brandname, Musst Chips and Musst Sticks, were supposed to take on the big boys in the segment – Pepsico’s Frito Lay’s (60 per cent market share) and ITC’s Bingo (15 per cent). Parle, which had also launched Musst Bites in the flavoured cheese category, was looking at a market share of 20-25 per cent within one year of the launch.
But the experiment bombed as Musst could never go beyond a 3 per cent share in volume terms. Lack of adequate independent wholesalers led to distribution problems. Product quality also needed to be worked on as some of the flavours were not up to the mark. Add to that a not-so attractive packaging, and the company had to withdraw the snacks brand.
Cut to 2010. Parle has relaunched the potato wafers line under a new name. Parle Chips, as the wafers are now known, is the company’s plan to take home a part of the big pie. The names have been changed to Parle Chips and Fulltoss and the flavoured cheeselings segment has been renamed as Parle Cheeselings.
The company now hopes the ‘Parle’ in the name will help as there is a strong consumer recall of the name, which is known as a trusted biscuit maker with products such as Parle-G, Monaco and Krack Jack.
Pravin Kulkarni, general manager (marketing), Parle Products, says “We had launched the products under the brand ‘Musst’ as we felt the density in advertising would work in our favour. Instead of advertising for two separate brands, we were talking about one. It should have saved us on advertising costs. However, consumer research showed that the same brand name was creating confusion in the buyers’ mind. Therefore, we rebranded the categories.”
Parle is now talking about a 20-25 per cent market share within the next one year. That can be a difficult task. The organised snack category — estimated to be around Rs 3,500-Rs 4,000 crore (the chips and sticks type of snack variety only) has a bevy of players already. Pepsi’s Frito Lays is the current market leader in the segment, followed by ITC, which came out with Bingo in early 2007. Parle Agro’s Hippo Chips has also caught the consumer’s eye with its smart packaging and innovative flavours. However, Hippo is not a direct competition as it falls under the baked snacks category.
But mere rebranding may not be enough. So Parle has gone in for a change in packaging and an improved distribution system. “With an impulse-driven category like chips, one has to be seen to be sold,” says Kulkarni. Parle has invested in separate racks and hangars to display the products in shops and has roped in independent wholesalers. It has also tied up with modern store outlets for the whole year, where the brands would be rotated every two months. The modern store outlets is more of a brand building step, and accounts for only five to six per cent of the brand’s total sales.
The company has not yet started using much of its advertising budget of Rs 5-10 crore for each brand and will launch above-the-line advertising campaigns shortly.
The products are priced at Rs 5, Rs 10 and Rs 20 per pack. Since there is not much leeway for pricing in this category, Parle has decided to offer more in quantity to stay ahead. Musst followed the same strategy, but Parle is now being more rational in view of the rising input costs. While Musst offered as much as 50-60 per cent extra every pack, Parle chips will give 20 per cent extra as compared to competition.
But the problem is this may not be enough, as regional players like Balaji and Haldirams can still afford to offer more in quantity since they do not advertise their products much. So margins are wafer-thin, more so because of the rising costs. Kulkarni plays down the problem and says, “once production increases, costs will come down.”
Parle Chips has been launched on a national scale after the rebranding. In the urban market, the cream and onion flavour, made famous by Lays, has proven to be a safe bet so far. For the mass market, the tomato flavour has proved to be one of the biggest draws. Parle now is planning to add more spice to the snacks war by launching its signature flavours such as ‘red chilli achar’ and ‘aloo chat’.
