Ecommerce, Availability In Non-offline Formats Critical For Our Success: Gunjan Khetan, Perfetti

Perfetti Van Melle India's third decaversary this year is a testament to the power of the organisation and its values, echoing its impeccable understanding of the consumers, their taste palettes and the cultural nuances of the country. It also speaks volumes about their belief in the India story and their investment plans that are bearing candies, in their case. 

With eight brands under it currently, the brand pillars its success on maintaining the right culture, staying agile, incorporating technology into experiences and offering products that serve consumer needs. 

We spoke with Gunjan Khetan, Marketing Director, Perfetti Van Melle India, on what it takes to maintain a healthy brand identity and consumer loyalty, that, strengthens with time.

Excerpts:

Q. Perfetti is completing 30 years of its operations in India. Take us through some of the big wins and the lessons learned and how are you looking at the next decade to unfold for the brand?

It's been a very interesting journey. Honestly, 30 years is not easy. Brands that used to exist 30 years ago may no longer exist today. It's a testament to the power of some of the brands that we have built and the power of the organisation's culture and values that we're still here and doing so well. 

We were outsiders when we entered India. And today, we are the market leader in confectionery. It speaks volumes about the kind of talent and investment we have made in India and our understanding of the Indian consumer. 

One of the principles that has worked very well for us is a deep understanding of Indian consumers. Food is a very personal and cultural thing. Being able to understand what appeals to a consumer is super important. The second thing is essentially our relentless focus on innovation. This is a category where people look for experiences. With Perfetti and its access to global technology, we have been able to bring new concepts to India and transform the business. The third thing is affordability. And when I say affordability, I don't mean price, but value. Delivering a certain benefit or certain experience at the right price has been one of the core strengths of the organisation. And the fourth, but not the last, is accessibility. Being able to drive distribution and build an extensive distribution network for the organisation has also been key.

The next 10 years and 20 years look equally exciting to us. There's a lot of transformation happening in India. And we want to enable some of these transformations by setting up the right culture and the need for agility. We are looking at technology and how it can be incorporated into our experiences. 

Q. Can you take us through the profiles of the consumers who typically interact with you? What are the traits that they exhibit? And how do you navigate the varied cultural nuances and the taste profiles of these consumers at Perfetti?

Well, there is no standard answer to this. The reason is that we have about eight brands, and every brand has a different target group. Say, Alpenliebe, which works across families, or Chupa Chups, which is focused on teens.

So, we focus on the brand objectives and have a very clear target group in mind, understanding the social, functional, and emotional drivers of consumption. And that drives the actions we take.

There is a whole lot of thinking that goes into understanding the target group and then designing a proposition that works for the target group. It is horses for courses for us. To sum up, we do a lot of consumer work, a lot of immersion, and understand our consumers well, their pain points, and their needs, then design a proposition that enables us to unlock those needs.

Q. Can you also take us through your rural and urban penetration as well as your online and offline numbers? And have these patterns or trends taken a different form post-pandemic?

Unfortunately, we don't measure our rural penetration. However, our urban penetration is quite significant, but that again varies according to the category. 

Confectionery is not one category; it is a combination of categories. So, we have got the hard-boiled candy, which is the most penetrated category; it has almost 80 per cent urban penetration. On the other hand, we have soft mints like Center Fresh mint, which has just about 20 per cent penetration. So, penetration does vary across the board, and therefore the brand task changes. 

If you want to drive consumption in a highly penetrated category, say gum, for example, which is a 65 per cent penetration category, then the marginal utility of your effort is much higher if you drive consumption. We are one of the lowest-consumption gum categories in the world. US or UK is almost six to seven times bigger than us. So, that is where the meat on the bone is for us. In a low-penetration category like soft mint, the job is to drive penetration. This is broadly how we look at urban penetration and the variance in urban penetration. 

For our online and offline businesses, it is primarily offline. But this is one thing that we are headstrong about wanting to change, and that is one thing we learned as part of the pandemic: that ecommerce and availability in non-offline formats are going to be critical for success in the future. We are relatively small in that sense. Part of the reason is how the category is. It's not an urgent category; it's an impulse category. And the second thing is that it's a low-unit price category, which makes it an addition to a basket. Because no one buys it as an independent entity, it has historically restricted the online presence of this category. 

Q. Can you explain the challenges that hover over an impulse category like confectionary? And how do you navigate these at Perfetti?

There are a few challenges, or opportunities, depending on how you see them, to consider. Given that it is an impulse category, the way you consistently trigger top-of-mind awareness is the key. This has significant implications from an above-the-line perspective: What does your media strategy need to accomplish? How should your communication be presented? 

The other challenge is the in-store execution. Where and how are you positioned? How do you drive impulse purchases in these locations? 

The third opportunity lies in the current structure of the category, which heavily relies on 50 paise and one rupee items. In a highly inflationary environment, sustaining this model becomes difficult. How can you upgrade consumers to higher-value propositions? What role does innovation play in this process? How does distribution factor in? These are the questions we grapple with. 

The journey towards finding answers began five years ago. Back then, our contribution from high-value propositions was minimal. Today, it accounts for almost one-third of our business. 

Q. How do you strategise your communication so that it breaks through the clutter in the market as well as gives you a competitive advantage? Who do you look at as your competition? 

There's always competition. I think there are many good brands out there, and some fantastic work is happening in the market. Competition can be defined as a company, a brand, or even a category. Technically, competition for us is even the sweet confection category. For argument's sake, competition for me also includes chocolate, which is much more prevalent. So, I think the lens that we use is to see what occasions we can be relevant in and where we have the right to win.

In terms of communication, I think because of the nature of the category we're in—impulse—we tend to focus a lot on driving impulse. It started with Center Fresh, Mentos. These are iconic ads that are embedded in the memory of India. And that journey continues. The idea is to stay top of mind. We have been lucky enough to work with some of the best agency talent that you can find in India. They've been great partners.

Q. Can you also take us through your marketing plans for this year? And will we see an increase in your marketing budget for 2024?

I think we've got some super exciting ideas lined up for our consumers this year—a lot of innovation. We'll continue to innovate with some exciting new ideas and a plethora of new launches that we plan early next month. Unfortunately, I can't divulge too much detail, but all I can promise is that we'll constantly stretch ourselves and bring the best ideas and the best technology to our consumers to elevate their experiences and their moods throughout the year.

In terms of marketing expenditure, I think it's a cluttered market, whether it's TV or online. Plus, it's highly fragmented across platforms. So, we do a lot of strategic work with our agency to identify how we allocate money across platforms. We believe in the India story, and to that extent, we continue to overinvest in India. And that also reflects in our media plans and our investments. 

Q. Could you give us a sense of your premiumisation journey? How do you ensure that the right value is delivered with the right price-backed architecture?

Our premiumisation journey started about five years ago, in 2018. We did massive demand space work and that unlocked some spaces for us. That's when we decided that we needed to move to more premium experiences and higher price points.

When we started the journey, we were about 5 per cent in non-rupee one pricing. Today, it's almost close to about 1/3 of our business. We will continue to push boundaries, and we have an ambition to go much beyond this. Some of the principles that we use in this are essentially finding the right product innovation that can command a premium. 

In terms of the value that we are delivering to our consumers, we are experimenting with many new formats and many different pricings. Some work, some don't, and that's part of life. So, we have a very clear plan to unlock premiumisation by delivering great innovations and making those innovations accessible to consumers through superior distribution.

Q. Perfetti, as we all know, is one of the few brands that enjoys an exceptional brand identity and customer loyalty. What does it take to position a brand like that?

A short answer would be blood, sweat, and tears. And I have been lucky enough that all my predecessors had already put in that, so I am now reaping a lot of that benefit. 

Essentially, having a very clear strategy in place that is built on strong consumer understanding is how I look at it. We have eight brands, and all of these are positioned in a unique space. This accounts for a lot of hard work, debate, discussion, and experimentation. And that's why we are where we are. So, identifying what the brand stands for, what difference it makes in consumers' lives, and therefore, what role we can assign to this brand, and how do we keep driving that role and that positioning in everything we do, whether it's communication, media, or activation.

Q. As an individual, your interests go beyond marketing. You are an investor, a mentor, on the advisory board of CII and MMA and also a wonderful parent. How do you manage to wear so many hats at the same time?

A part of that is how I manage my team. I am a strong believer in delegation and unlocking the potential of people. And I have been fortunate enough to have that clarity at a very young age about what is important and urgent, what needs to be done by me, and what needs to be done by the team. This is something I continue to practice, something refined when I stepped out of India. I learned from my international colleagues how they compartmentalise things and how they assign responsibilities. It comes from a very different culture, which in India when I stepped out, wasn't there. So, that is one part. The second thing is that I use my time productively; I have an agenda for the week. I use my weekends to accomplish some of these goals. I'm genuinely interested in technology and finance.