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What Can a 50-Paise Coin Buy You? Not Even a Candy While confectionery makers have abandoned the 50-paise candy offerings, telecom operators too have increased the minimum recharge rates.

By Prasannata Patwa

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Parle Products Pvt. Ltd.
Parle Products launched new flavors of Kismi Toffee for INR 1 abandoning the 50-paise price point.

About seven years ago, customers could get two Halls—Mondelez India's mint-flavoured candy—for INR 1. Today, shrinking profit margins, a congested candy market and rising inflation has pushed confectionary makers to completely shun the 50 paise price point. A few are even moving towards INR 2 from INR 1 price point.

Maker of Kismi Toffee and Mango Bite, Parle Products Pvt. Ltd—which was gradually pushing out its 50-paise confectioneries—has now completely pulled off the rug for most of its brands. "A significant chunk of our business is still at 50-paise units but now it is becoming increasingly difficult to sustain at this price point and consciously we are looking at moving to INR 1 price point," Krishnarao S. Buddha, senior category head at Parle Products, told Entrepreneur India.

Last year, Parle's Buddha had said the company will stop producing London Derry, Kismi Toffee, Orange Bite and Mango Bite. Parle started selling INR 1-priced rose milk and kulfi-flavoured Kismi Toffee, among other variants, with almost double the size along with the original 50-paise cardamom-flavoured candy.

Parle is upgrading packaging of INR 1-priced variants and providing gifts, such as scissors, in its jars leveraging the mom-and-pop stores to retail the new variants instead of the old ones.

In fact for all practical purposes, 50-paise coins though legal tenders are hardly accepted by anyone anymore.

"As money loses its value in the market, brands need to redefine their SKUs (stock keeping units) and the old 50-paise becomes the new INR 1. Now, the new INR 2 is the old 50 paise," said Harish Bijoor, brand strategy specialist, Harish Bijoor Consults Inc. "But even that INR 1 is not okay in the eclair category, INR 2 rupee is," he added.

Confectionery space has had a few major entrants in the last few years cluttering the space. Traditionally an infrastructure developer and home to Rajnigandha, a pan masala brand, among others, Delhi-based conglomerate Dharampal Satyapal Group, entered the candy business in 2015. Their masala-filled raw mango candy, Pulse, generated INR 100 crore in sales in about 8 months coming on par with Coca-Cola's Zero, an aerated beverage.

The trend of moving out of small-ticket offerings is not only limited to confectionery. It also includes telecommunication and mobile phone companies. In December, India's second-largest telecom operator, Bharti Airtel Ltd, replaced INR 23 base pre-paid recharge plan with INR 45 pack, keeping local and international calling and messaging charges intact. Telecom companies have been bleeding since Reliance Industries launched its telecom brand Jio, offering free calls and Internet connectivity to its users in 2016. To keep customers intact, telecom companies were offering data and calls at dirt-cheap rates. But as the strategy did is not sustain in the long run, Airtel decided to increase tariffs.

Similarly, mobile phones below INR 5,000 may soon be discontinued as distribution cost is high and not many customers are buying entry-level phones, according to a report by The Economic Times.

A space where companies have been launching low price point products are cosmetic and personal care and fast-moving consumer goods (FMCG). L'Oréal SA launched lipsticks and mini foundation packs for almost half the price of the original. The Paris-headquarter personal care brand launched Maybelline's lipstick for INR 300 and Fit Me foundation tubes for INR 299, while bottles retail anywhere between INR 600-700.

Hindustan Unilever Ltd also slashed prices for cosmetic brand Lakme by almost half for lipsticks, among other products. India's largest FMCG brand also slashed prices by 4-6 per cent among its highest-selling soap brands Lux and Lifebouy, in August 2019, to increase demand amid the economic slowdown.

Prasannata Patwa

Entrepreneur Staff

Correspondent

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