Perfetti's Distribution Strategy: Presented by Bhakta Ram Rana

Perfetti’s distribution
strategy
Presented
by
Bhakta ram Rana
Company profile
 Perfetti Van melle is a Italy based parent company.
 World’s third largest confectionery group.
 It have 31 manufactory plants in world wide
 130 – country
 Its headquarters are located Italy (Lainate) and
Netherland (Breda)
 17000 Employee
 Net sale in 2008 $1972 million
 40% chewing gum
 60% candies
 Itsturn over is Rs. 400 crores.
 5,000 distributors service.
 Perfetti enter to the Indian market in 1994.
 It has two manufacturing plants in India — at
Manesar (Haryana) and Tamil Nadu.
 Perfetti brands would be distributed across 6.5
lakhs outlets and the combination of right-priced
products, distribution reach and fat ad spends has
ensured it a 25 per cent market share.
competitor
 Cadbury’s
 Nutrine
 Parry
 Parle
 Nestle
 Wrigley
Products
 Alpenliebe
 Big Babul
 Center Fresh
 Center Fruit
 Center Shock
 Chatar Patar
 Chlormint
 Cofitos
 Happydent white
 Protex
 Marbles
 Mentos
Vision & mission
Vision
We will enhancement world leadership be
confectionery by creating value for people
through delightful and imaginative high quality
product.
mission
Develop, manufacture and market, high quality and
to provide innovative product to the consumer
through efficient use of our resoueces and
partnership with our customer.
FACT
 1- Perfetti van Melle entered the Indian

market in 1994.
 2- The turnover of the company is 400 cr., and
there market share is 80%.
 3- They are offers to selling products at
25paise.
 4- The company decided to sell the product
by the small retailers.
Continue-----
 5- The company divided its 11 brands into 2

groups , p1 and p2.
 6- P1 is doing very well but p2 is not.
 7- The p2 company decided to more
advertising the products.
 8- the advertising cost is 17 cr.

Analysis
I have done case analysis on these following

points.
Market Analysis
 perfetti entered in indian market in 1994.
 There was 80% market share of unorganized
companies.
 The organized market was dominated by
perry’s, nutrine and cadbury.
Conti…………….
 The foreign tag was the problem for perfetti.

 In contrast to other MNC who came into the
market through partnership with indian
companies.
 The acquisition brought a distribution
network of 3 lakhs outlet into perfetti india’s
fold.
 Ven mell was already present in Indian
market.
 Increasing the outlet was difficult task for the
company .
 So company was start focusing penetrating
deeper into specific areas.
 The company felt that small retailer could
provide the much required sales for the
company.
 There was a small hitch in the implementing
this strategy
Product Analysis
 The other problem for company was that some
of its product were competing for the same
space as the retailer received them to
substitutes for each other.
 It divides its 11 brand into 2 group that is P1 and
P2.
 The sells of P1 group were double the sell the P2.
Promotion Analysis
Cont……..
 Company seemed to want to focused on to

promoting of product.
 Its mainly investment done in R&D and to
improve its product mix and network channel.
 Company felt that to heavy advertising and
marketing of the product, and could pull the
customers and thereby improve sell.
 This thinking was reflected in company
advertisement budget .
Related Analysis
 By revamping the distribution network

company went on to become the market
leader .
 The reason behind the success of perfetti was
distribution strategy that its competitor
adopted itself.
 Cadbury and joyco also followed the similar
strategy with small difference .
Question 1
 Analyze the distribution strategy of Perfetti, which enable it to
become a leading player in the indian confectionary market .
Ans.-
 Perfetti has created a multi-tiered distribution system.
 Product range is divided into 2 categories, which in turn have

different distributors. It divided its 11 brands into two groups
— P1 and P2. Non-conflicting brands like Alpenliebe original,
Chlormint, Big Babol and Centerfresh were grouped under P1.
 CenterShock, Chlormint gum, Mentos, Marbels, Fruit-tella and

Happy Dent were planted in P2.
 Perfetti spends Rs 17 crore for advertising and
marketing of the product to attract customers and
to improve sales.
 The company offered hefty sales-linked incentives

such as increase in margin in percentage terms with
increase in sales and offered one pack free on every
pack sold.
Question 2
 The product allotment and commission

strategy adopted by perfetti led to discontent
among the channel members. Explain the
company’s rationale in adopting such a
distribution strategy.
Ans: 2:
 Perfetti entered into the Indian market.

 During the entrance in the Indian market, Perfetti
did not merge or acquired any company.
 It adapt the simple way that how much the goods
wills be demand that much will be supplied.
 The great change occur when it acquired the van
melle
 The acquisition brought a distribution network of
3 lakh.
Cont….
 Instead of expanding the distribution network over

a large of region, they focused on specific areas .
 Company focused on small retailers .
 Small retailers unable to purchase large quantity.
 The company felt to service twice in a week to the
outlets.
 Retailers were not willing to buy the same brands
twice a week.
 Some brands are perceived as substitute by the
retailers.
Cont….
 To solve this problem and to keep flow of product in

the market, the company had divided their product
into groups.
 P 1 group consists of Alpenliebe original, Chlormint,
Big Babol. P2 group consisted of Centershock,
Chlormint gum, Mentos, Marbles, Fruit-tella and
Happy Dent.
 The company had assigned the two groups to
different distributors means one distributors can not
had two groups together.
 P1 got double sale than p2.
Cont….
 Distribution costs were same for the both product.

 The Company did not increase margins for
distributors.
 The company paid 5 percent margin to the
distributors compared to the average industry
figure of 10 percent.
 Retailers were paid 15 percent when the industry
standard was around 30 percent.
 These are the basic reason for product allotment
and adapting such strategies.

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Perfetti’s distribution

 1- Perfetti van Melle entered the Indian

 5- The company divided its 11 brands into 2

I have done case analysis on these following

 The foreign tag was the problem for perfetti.

 Company seemed to want to focused on to

 By revamping the distribution network

 Product range is divided into 2 categories, which in turn have

 CenterShock, Chlormint gum, Mentos, Marbels, Fruit-tella and

 The company offered hefty sales-linked incentives

 The product allotment and commission

 Perfetti entered into the Indian market.

 Instead of expanding the distribution network over

 To solve this problem and to keep flow of product in

 Distribution costs were same for the both product.

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