With Laban we’re eyeing big confectionery pie: Sanjay Sharma

Orkla Group, the Norwegian leader in branded consumer goods and parent company of MTR Foods Pvt Ltd, has forayed into the confectionery segment with its brand Laban. The brand’s entry also marks the first product from Orkla’s portfolio in the Rs 8,200 crore Indian confectionery market growing at 7% annually. Sanjay Sharma, chief executive officer, MTR Foods Pvt Ltd, in conversation with Ashish K Tiwari, speaks about the firm’s approach to establishing brand Laban in the domestic market and other business plans.

Where does Laban sit in the Indian confectionery market?

The confectionery segment is a Rs 8,200-crore market growing 7% year on year. Within confectionery, jelly has an industry size of Rs 400 crore growing at 10-12% annually. Laban, a stretchy chewy soft candy, is a big potential idea and we are hoping it will become a sizeable category of the overall confectionery market in the future. We have seen a newly launched brand like Pulse (owned by DS Group) deliver between Rs 200-300 crore in revenues.

Which brands will Laban compete with in India?

There is Perfetti Van Melle which has launched Alpenliebe Juzt Jelly, ITC has Candyman Jellicious Jelimals and Mapro that has Falero. Between them, they control the jelly market in India. Though a Norwegian brand, a lot of work has localising Laban, which is a 100% vegetarian confectionery with a range of popular Indian flavours such as strawberry, mango, green mango and orange. They are competitively priced at Rs 10 (pack of four pieces) and Rs 30 (pack of 10 pieces). While there are no plans to introduce more products under this brand, we may add another pack size in the near future.

Are you manufacturing these in India?

These are being made in Bangalore at MTR’s existing manufacturing facility. We have invested Rs 40 crore in setting up a state-of-the-art production line with production equipment from various countries viz. Germany, Britain and Korea. Besides the manufacturing facility, MTR Foods’ robust supply chain and distribution network of 220,000 point of sale across India will be leveraged to ensure a wider reach. In fact, we will be adding another 50,000 more taking the distribution network to 270,000 this year. Modern trade is about 13% and the balance is a conventional trade.

You were to invest Rs 200 cr for capacity expansion.

Close to Rs 120 crore, including Rs 40 crore in the confectionery facility, has been invested already. There is an upgradation of capacity for certain plants. We are also automating the manufacturing plans, thereby allowing us to manufacture in much bigger batch sizes.

Could you give us market share details of other product categories under MTR?

We have over 400 stock keeping units across categories: spices and masalas which is about 38% of our business, ready mixes (breakfast, dessert dinner) which is close to 32%, vermicelli is 14%, RTE is 7%, beverages is 6% and other categories form the balance.

How have ready-to-eat breakfast products performed?

The 3-minute ready-to-eat breakfast range has seen very good traction. We have already gained 3% points in our market share for this category in the first three months of launch.

Have you reached the Rs 1,000-crore revenue target that was set for 2015?

No. The environment is and continues to be very challenging. Having said that, post demonetization and implementation of Goods and Services Tax (GST), things are looking up. The business climate has improved and we are hoping to see business coming back to normal. We are at Rs 800 crore as of December 2016 and we are targeting Rs 2,000 crore by 2020.

That will call for more activities to reach that number.

We will definitely have to do more to drive revenues to Rs 2,000 crore and we are already doing so with the recent introductions that the Indian market witnessed earlier in March-April. The market share gains from the 3-minute breakfast range have been very encouraging. We also did a very local launch in Karnataka of Spicy Sambhar and that has also given us few more market share points in just three months. Both have become very strong revenue generators for the company and we are hoping Laban will also add to the list and accelerate growth performance in the coming years.