about single-minded focus. If that ' s missing, then it is difficult to see a business proposition."
A part of their success could also be attributed to their heritage in confectionery, something that most previous players lacked. Driven by what the two companies did, the market had changed beyond recognition. From an estimated 50 odd SKUs( stock keeping units) of confectionery in the organized sector in 1994, there were some 500 today. Similarly, less than 10 brands of sugar confectioneries( excluding chocolates) spent Rs 7-8 crores on TV advertising then, as against 70 brands at present, with a combined spend of Rs 60-70 crores.
From a clear distribution driven, pipeline-choking approach, the two have driven home the importance of generating secondary sales. Sampling in schools, amusement parks, promotions at the point of purchase and freebies were a few things that were unheard of previously.
However, the two players had started their foray in India through very different paths. Perfetti entered as a fully owned subsidiary with an expat as its head. That hasn ' t changed over the years. Right from the beginning, Perfetti, a $ 1.3-billion giant internationally, maintained a flamboyant stance marked by high media spend and visibility. It rapidly rolled out a large portfolio straddling bubble gums, chewing gums, candies, mint and lollipops.
Joyco on the other hand was more subdued and calculated. To start with, the € 300 million Spanish major chose the joint venture route and entered into a 51:49 partnerships with Dabur. Instead of heavy media spends, Joyco used below-the-line initiatives to drive sales, while focusing on one product at a time. They worked on the principle idea of making a success of one category before they moved further.
Perfetti ' s portfolio expansion strategy was also more aggressive in the beginning as compared to Joyco. Within three years, the company had seven brands in its portfolio in India— Big Babool, Centerfresh, Brooklyn, Alpenliebe, Chlormint, Mentos and Golia C. During the same period, Joyco introduced two, but soon caught up in the following three years.
Setting up distribution was a big challenge for the two companies, given the peculiarities of Indian tax laws, logistics and trade structure. Perfetti didn ' t have any joint venture partner to piggyback on, but it took a contrarian approach. Throwing all traditional thinking to the winds, it included smaller towns like Tauroo and Rohtak in Haryana, and Bulandshahar in UP in its distribution map even as it rolled out in the larger cities. The company built its distribution coverage using a mix of wholesalers and distributors which today, allows it to sell at upwards of four lakh retail points. Almost 40 per cent of Perfetti ' s sales come from towns with less than one lakh population.
Joyco proceeded with a strong focus on the metros and large cities and then moved further, in line with its strategy of ' consolidate and move '. It heavily relied on direct distribution and focused on distributors rather than wholesalers.
However, distribution was not the only challenge faced by these players. There were other challenges which the two had not experienced in developed markets. The Indian market traditionally was, and continued to be a mono piece market were price points were discrete and low.
Also, both Perfetti and Joyco were unknown players which made the task of appointing distributors much more difficult. The answer came through rapid innovation and brand building— quickly exposing the consumer to never-before-seen quality and products. Perfetti brought in the first liquid filled bubble gum, Centerfresh and deposit candy, Alpenliebe. Joyco introduced the first genuine soft chew, Bonkers and high quality lollipop, PimPom. What began as an effort at differentiation has now become a routine for both the players.
While the two companies had a huge global portfolio to draw from, they went a step further. Perfetti Van Melle India, for instance, created a completely Indian formulation, the new coffee candy, Cofitos in 1999 to add to the parent ' s bouquet. Not to be left behind, Joyco made similar innovations with Coffee Beans and Chimos early that year. Joyco also had a strong culture of product innovation right from its inception. It had a dedicated R & D centre of outstanding capability that was responsible for its continuous new and improved product offerings, suited to the Indian market. The Organizational Structure of Joyco is shown in Exhibit 9.
On an average, Perfetti spent over Rs. 17 crores on advertising, followed by Joyco which had a more modest budget of Rs. 7-8 crores. Media visibility and retail merchandising may be misleading, but a visit to their respective offices gave a better sense of the passion with which the two companies nurtured their brands. Joyco had also been actively introducing new promotion schemes through intensive bursts of consumer promotions, tattoo, Walkie Talkie, magic glass etc. that catapulted the brand to phenomenal levels.
Then the two turned their attention to the semi-urban and rural markets. Perfetti management believed that at the 50 paisa price point, there were enough takers, but to be sure they did not want to take their eyes off the taste familiarity factor. From 20,000 population towns, Perfetti now wanted to penetrate townships under 5,000 populations. The company planned to press some 400 vans into service for a more comprehensive rural coverage.
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