2017-12-12
INDIA
Keeping popular products at magic price points
Since its launch in 2010 sales of Frooti in Tetra Brik® Aseptic 160 Slim have grown from 39 million to over 1.1 billion packs per year
The story in brief
Parle Agro’s flagship mango drink, Frooti, is sold in portion packs to offer on-the-go refreshment for children and young people. In an increasingly competitive market, the company aimed to appeal to a wider audience and capture a larger market share. The solution was to move from Tetra Brik® Aseptic 200 Slim to Tetra Brik Aseptic 160 Slim, enabling Frooti to remain at the ‘magic’ price point of 10 Indian rupees. That price point has now been maintained for seven years, despite inflation, and looks set to remain for the foreseeable future thanks to close partnership working with Tetra Pak aimed at continually reducing production costs.
Parle Agro and the juice market in India
Around 2 billion litres of still drinks are sold in India each year and the category is growing by 5% annually. Parle Agro is a well-established business and the country’s second-largest still drinks player, with 23% of the market share (Frooti & Appy brands). Of the three market leaders, all of which also have an installed base of PET, Parle Agro is Tetra Pak’s largest customer, producing around 1.7 billion packs per year, of which over 1.1 billion are Frooti & Appy in Tetra Brik Aseptic 160 Slim. Frooti is the second most popular mango drink in India, and mango is by far the most popular fruit flavour in the country, accounting for 80% of category sales. Tetra Pak and Parle Agro have a strong track record of innovation together, with launches including the first Tetra Brik Aseptic Slim packages to feature PullTab™ and later an attached straw, bringing confidence and convenience to consumers.
Parle Agro in numbers:
Established 1985
3000 employees
Turnover €505 million (December 2017 forecast)
41 Tetra Pak® lines
Market share (still drinks) 23%
1.7 billion packs produced 2017 (forecast)
The challenge: keeping popular products at magic price points
Frooti is distributed to around 1.2 million outlets out of a potential 3 million; a good level of penetration for India. Pricing is crucial; but it’s not just about keeping prices low. In this strictly cash economy it is important to keep prices in line with the main note and coin denominations – a price point of five or 10 rupees makes life easier for both shopkeeper and consumer. Otherwise, consumers may be reluctant to purchase, and shopkeepers are likely to round up prices to make transactions simpler. When it was first launched in 1986, Frooti was sold in a Tetra Brik Aseptic 200 Base package. In 2004, Tetra Classic® Aseptic 65 was introduced at five rupees for two packs and was later replaced by Tetra Classic Aseptic 110, at five rupees per pack. In 2010, in order to remain the popular choice, the 160ml pack for both Frooti and Appy was conceptualised at the ‘magic’ price of 10 rupees per unit, thus replacing the 200ml pack.
Partnership working and ongoing support
Tetra Pak worked with Parle Agro to help choose the Tetra Brik Aseptic 160 Slim, drawing on our deep understanding of the value chain and the need to maintain the 10-rupee price point. Existing Tetra Pak® TBA/19 lines were converted to handle the smaller packs for the 2010 launch. Since, Parle Agro was simultaneously working to increase Frooti’s overall market share through an ongoing campaign, it was also important that the price point be maintained for as long as possible, despite inflation and fluctuating input costs. So, for the past seven years Tetra Pak has worked closely with Parle Agro to improve the efficiency of the lines and bring down costs. For example, four Tetra Pak A3/Speed lines have been installed, and are achieving speeds of 26,000 packages per hour compared with the standard 24,000 packages per hour. Tetra Pak supplies four dedicated engineers to cover the 12 plants where Frooti is produced, with extra resources available during peak season to minimise downtime, and annual competence-building programmes to ensure continued machine optimisation. As the plants are geographically isolated, costs and downtime are minimised by resolving the majority of issues remotely.
Increased sales, increased market share
Since its launch in 2010, sales of Frooti in Tetra Brik Aseptic 160 Slim have grown from 39 million to over 1.1 billion packs per year. In general, the new packs are sold through the same channels as the Tetra Brik Aseptic 200 Slim packages. They are distributed using wraparound secondary packaging in a configuration of 40 x 160ml packs as opposed to 30 x 200ml packs. Parle Agro’s still drinks market share has increased from 16% in 2013 to 23%, moving them from third to second place in the category, and volume growth is 17%, compared with 5% for the category overall. The right-sizing of Frooti & Appy packages was definitely one of the key factors for this growth.
Lessons learned and future plans
It is clear that in this market maintaining the right price point is crucial. Right-sizing has proved an effective way of achieving this and the 160ml pack will better support the long-term growth of Frooti and its sister brand Appy (an apple drink also now sold in Tetra Brik Aseptic 160 Slim). Ongoing work with Tetra Pak – including installation of high speed lines, optimisation of existing lines and a sharp focus on production efficiency – has enabled Parle Agro to keep production costs low. There are further plans to ensure the lower-cost production can be maintained and the product price held at 10 rupees. Parle Agro is currently seeking a workable model for increasing their reach to a greater number of outlets. The new Frooti packs are easier to place and sell and will be a key enabler for this next stage of growth.
In August 2017, Parle Agro is the market leader in the mini-portion and portion package segment in the Fruit Flavoured Soft Drink category.
