Reference no: EM131288341
Parle Products: an Indian biscuit manufacturer is seeking agents and cooperation partners in new export markets
A long time ago, when the British ruled India, a small factory was set up in the suburbs of Mumbai city to manufacture sweets and toffees. The year was 1929 and the market was dominated by famous international brands that were freely imported. Despite the odds and unequal competition the company, called Parle Products (www.parleproducts.com), survived and succeeded by adhering to high quality and improvising from time to time.
Today, Parle enjoys a 40 per cent share of the total Indian biscuit market and a 15 per cent share of the total confectionery market in India. The Parle Biscuit brands, Parle-G, Monaco and Krackjack, and confectionery brands, such as Melody, Poppins, Mangobite and Kismi, enjoy a strong image and appeal among consumers. If you thought that a typical family-run Indian company could not top the worldwide charts, think again. The home-grown biscuit brand, Parle G, has proved the belief wrong by becoming the largest selling biscuit brand in the world.
However, in most European markets Parle Products has to fight against a particular competitor, United Biscuits (producer of McVitie's). In all European markets the market share of Parle Products is very small. United Biscuits (UB) United Biscuits was founded in 1948 following the merger of two Scottish family businesses - McVitie & Price and McFarlane Lang. In 1960 UB added to its portfolio with the acquisition of Crawford's Biscuits and MacDonald's Biscuits. In 2000 UB was bought by Finalrealm, a consortium of investors, and reverted to private limited company status. Brand muscle UB's brands rank number one or two in seven countries, they have five of the top ten biscuit brands in the United Kingdom, France and Spain, and four out of the top ten leading snack brands in the United Kingdom.
More than 89 per cent of UK households bought McVitie's products in 2001. Anyone would agree that it has brand muscle. Consumer insight UB's unique position as the largest UK snack food player, with a balanced portfolio of both sweet and savoury brands, gives it a unique understanding of how to respond effectively to changing consumer needs and wants. Parle Products Parle Products is the leader in the glucose and salty biscuit category but does not have a strong presence in the premium segment, with Hide-n-Seek being its only brand. An extensive distribution network, built over the years, is a major strength for Parle Products. Its biscuits and sweets are available to consumers even in the most remote places and in the smallest of villages in India, some with a population of just 500. Parle has nearly 1,500 wholesalers, catering to 425,000 retail outlets directly or indirectly.
A 200- strong dedicated field force services these wholesalers and retailers. Additionally, there are 31 depots and customs and freight agents supplying goods to the wide distribution network. The Parle marketing philosophy emphasizes catering to the masses. The company constantly endeavours to design products that provide nutrition and fun for everyone and most Parle offerings are in the low- and mid-range price segments based on understanding the Indian consumer psyche. This value-for-money positioning helps generate large sales volumes for the products. The other global biscuit brands include Oreo from Nabisco and McVitie's from UK-based United Biscuits.
According to market reports Parle Products commands (with Parle G as the market leader) a 40 per cent market share in the RS 3,500 core biscuit market in India. In the confectionery segment the company enjoys a mere 15 per cent market share and faces competition from Britannia's Tiger brand of biscuits, amongst others. The company's flagship brand, Parle G, contributes more than 50 per cent to the company's total turnover. The other biscuits in the Parle Products' basket include Marie, Cheeslings, Jeffs, Sixer and Fun Centre.
QUESTIONS
1. Which region of the world would you recommend Parle Products to penetrate as its first choice?
2. What kind of export mode would be most relevant for Parle Products?
3. How could Parle Products conduct a systematic screening of potential distributors or agents in foreign markets?
4. What would be the most important issues for Parle Products to discuss with a potential distributor/ agent before final preparation of a contract?
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