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Lotte India to diversify product portfolio

24-November-2004
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Lotte India to diversify product portfolio

Lotte India Corp Ltd, the erstwhile Parrys Confectionery Ltd, will look to diversify into a whole host of product categories such as chocolates, biscuits, snack foods and ice creams. The company is presently studying the market and will look to roll out its brands in a two-three year timeframe.

Early next year, Lotte plans to manufacture and market a range of chewing gums with brands such as Spout and Lotte Xylitol, a sugar free gum which is a $100-million brand worldwide.

Mr N.C. Venugopal, Managing Director, Lotte India, told Business Line that the parent company in South Korea has a huge portfolio of brands, including beverages, bottled water, flavoured water and fruit juices. The Indian affiliate could look at launching the right products for the domestic market. The Korean company, the fifth largest chaebol in that country, acquired 60.39 per cent in Parrys from the Murugappa group in January for Rs 64.47 crore, and later acquired another 20 per cent through an open offer. Mr Venugopal confirmed that there were no plans by the company to acquire all the shares from the public and delist from the bourses. Lotte will use the Parrys brand for the next five years and is paying EID Parry a royalty of Rs 5 lakh a year.

Mr Venugopal said that the company is installing an imported line at its factory in Nellikuppam in Tamil Nadu to make chewing gums at an investment of around Rs 4 crore. It will look at investing around Rs 6-7 crore this fiscal altogether in the new line and in brand building.

Lotte's chewing gum brands will take on brands such as Big Babool from Perfetti and Boomer from Wrigleys. Unlike the world market for gums where 80 per cent of the market is for chewing gums and the rest for bubble gums, the Indian market is the opposite where the major chunk of the market is in bubble gums. The gum market, Mr Venugopal said, was growing earlier at a good clip of 20 per cent a year but has slowed down of late.

The company's sales grew by 15 per cent in the first half of the year against the market growth of 5-6 per cent, he said. "We hope to maintain this growth rate," he added.

The company expects to spend 10 per cent of sales on advertising and promotion this year as well. With topline growth coming from new brand launches, the company could look at accelerated spends next year. Apart from repackaging its blockbuster brands such as Coffy Bite, Lotte recently rolled out Butter Scotch, a new sugar boiled candy.

On Tuesday, Business Line had reported that Lotte Company, Japan, plans a joint venture with the Delhi-based DS group. Lotte Confectionery Co of South Korea owns the stake in Lotte India.

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