Biscuit-maker Britannia Industries has partnered with a snack company from Greece and would be soon launching croissants with chocolate filling. But the first mover in the sweet snack category is actually the Indore-based Prataap Snacks, which owns the Yellow Diamond brand of snacks. Prataap Snacks has recently launched Yum Pie, a Rs 5 chocolate-coated cake with a fruit-cream filling. Prataap Snack MD & CEO, Amit Kumat, is confident that Yum Pie would soon contribute over 10 per cent to his revenue. In a conversation with Business Today's Ajita Shashidhar, Kumat talks about his vision for his sweet snacking brand and how he is creating an entirely new category.
How did you stumble upon the idea of sweet snacks?
I was travelling to Assam and after lunch I had a craving to eat something sweet. That's when I realised that there was nothing that was sweet available that one could actually buy and eat on the go. That's when the idea of launching an affordable sweet snack came to my mind. We got some sweet snack products from US and Europe and experimented, but we had to come out with a product that would suit the Indian palette. Then we zeroed down on Jaffa cake. Jaffa is orange in Brazil. So, what brand a like McVities does, is make cake and spread orange jam in between the cake and puts a coating of chocolate on the top. We decided to call our product Yum Pie. We launched it in mixed fruit, orange and strawberry flavours. When we launched we realised that if we hang it along with the snack packets it will not only get lost, but will also get crushed. We have now shifted to table-top dispensers.
Do you see potential in sweet snacks?
Huge potential. I am convinced that this category has to grow big in India. Indians have a terrible sweet tooth and that has to reflect.
If you see the Indian market, the younger generation's taste pattern is totally different from ours. If you see the evolution of potato chips, we started with plain salted, then masala and tomato, but now in the last few years it's cream and onion which is most popular. It is the highest seller for all the chips brands. So, taste pattern is changing. The kids who are consuming besan ka laddoo at homes today, 10 years later will have a totally different taste pattern. That's what I believe, people will eat various kinds of cakes.
Britannia has cakes, but they never made it that big. What makes you believe that a cake dessert will work?
I am quite sure a Rs 5 cake will work. 85 per cent of my revenue comes from Rs 5 price point. No one has tried offering cakes at Rs 5 price point, therefore, we are trying. We are a company for the masses and we have to come out with options that the masses can afford.
Does it make sense from a cost perspective to offer a cake at Rs 5?
Definitely. It will be much more profitable. The challenge of course is mass production, mass marketing. We have to create this category.
How are you going to build this category?
We have deep distribution. We cover around 1.23 million retail outlets. Our idea is to place this sweet snack in these outlets, advertise on kids channels and let people try the product. The learning curve for the first three-four months was how to place it. The chocolate coating melted and we don't have the wherewithal to offers coolers at outlets, so we had to convince the retailer not to expose the product to sunlight.
The problem of breakage in snacks is not so much, but this will break, so we started putting them in bottles. We took six months to zero down upon the product, we got a line from Italy and that took time. When we established the product, we test launched it in Pune and Mumbai.
Cadbury had launched Bytes, a chocolate-filled snack, but it didn't work. Do think a Rs 5 cake will sell in rural markets?
I had that belief, hence I plunged into it. You obviously can't compare with salted snacks, but if we can sell 20 per cent of what we do in salted snacks, it will be a huge volume for us. It will help us in reducing transportation cost quite a bit. Transportation of potato chips is close to 7-8 per cent and this will be close to 2 per cent%. It increases the ROI of super stockists and distributor as they have to carry in the same van. You also get a separate space on the retail shelf as the product can't be hung along with the salted snacks. So, Yum Pie will not compete with salted snacks for retail space.
Why did you not think of launching an Indian mithai?
I would love to launch rasgulla and rasmalai, but shelf life is a challenge.
What are the other changes happening in the snack market?
If you see a 10-year horizon, there were around 300 companies who thought chips was a profitable business to be in, but most of them have vanished. Creating a snack food brand in India is difficult. One has to try different snacks as potato prices are shooting up. So, we tried Nachos at Rs 10.
Do you have an edge over MNCs?
We should be grateful to the MNCs for creating the category. But the reason we are doing better is because our cost structure is leaner and our response time is shorter. If we zero down on a product, we can launch in months, but they take years. Hence we have a better chance in gaining market share.