Parle re-enters dairy category after 20 years
NEW DELHI: Parle Agro that sells the popular Frooti and Appy Fizz brand of drinks has re-entered the flavoured milk category after a gap of nearly two decades with the launch of Smoodh. With this, the ₹7,000 crore packaged beverages company sets the stage to compete with the likes of The Hershey Company, CavinKare, Amul, and ITC in the valueadded dairy beverages market.
The Mumbai-based company has earmarked ₹30-40 crore in initial advertising and marketing spends in the first phase of the launch before scaling it up as it expands nation-wide distribution. It plans to distribute the ₹10 (for 85 ml) product—sold in two variants—to over 2 million outlets across both rural and urban India, said Nadia Chauhan, joint managing director and CMO, Parle Agro.
The flavoured milk market in at a nascent stage in India, Chauhan said with entry price points being a barrier for consumers at the lower end of the consumption basket.
“When we look at dairy, the biggest challenge that we saw was that while there is a huge market that exists for dairy, as you know flavoured milk or even other value-added dairy products, the price point is a barrier of price point. The flavoured milk category, almost all 200ml milk products are all priced at ₹20, ₹25 or ₹30,” said Chauhan.
To be sure, ITC’s Sunfeast and Hershey chocolate milk shake are both priced at ₹35 for 180 ml. Amul Kool, however, is priced at ₹20.
Chahuan said the company will focus on the mass market, entry-level price point that is expected to draw more consumers into the category. “Our entry into the dairy market was dependent on us being able to crack that price point. So, it’s been years of research and development that’s gone into just being able to arrive at this ₹10 price point,” she said.
Parle Agro’s new launch comes at a time when inflationary pressures are pushing food and beverage companies to launch lower grammage packs or take price increases.
Parle Agro has sustained prices, especially on its lower price packs across key brands. “Our entire approach towards being able to sustain at this price point is based on creating very high levels of efficiency across the entire operation—whether it’s from the production to the final point of sale, the efficiency that we create within this SKU, and drive profits through volume,” she said.
Smoodh is currently being produced at two manufacturing locations—Mysore and Sitarganj (Uttarakhand). By the end of 2021, Parle Agro will add two more manufacturing locations for scaling the chocolate and toffee caramel flavoured milk. The company has invested Rs 100 crore in manufacturing technologies at its plants for Smoodh. Since its soft launch, Smoodh has reported equal demand emerging from both rural and urban markets.
India’s flavoured milk market is estimated at ₹800 crore and Parle Agro expects to grow that to ₹5,000 crore in the next four years, said Chauhan. ITC’s Sunfeast brand, The Hershey Company, Amul, CavinKare, Nestle India along with several other large and regional companies sell packaged flavoured milk. “Over the course of the next five years so we should be able to grow the category multi-folds— three to four times its current size. We are looking to create a substantial dent in the ₹10 chocolate category as well,” she said.