Group 1: FSA Project Component 1

PARLE AGRO Pvt LTD.: Company Background: 

Founded in 1985 by Mohanlal Dayal, Parle Agro Pvt Ltd is a privately-held soft drinks manufacturer in India. The company engages in producing and selling beverages, bottled water, food products, and polyethylene terephthalate products. Over 80% of its revenues are generated by its soft drinks division. The company enjoys a nationwide manufacturing and distribution network. Frooti, a major brand within juice drinks (up to 24% juice), is the company’s flagship brand. However, within soft drinks, it is also active in bottled water and carbonates. In 2011 Parle Agro launched Frooti in glass bottles in a bid to compete with Coca-Cola India Pvt Ltd’s Maaza brand, whose high sales are supported by sales in returnable glass bottles. The company has plans to enhance its presence on the on-trade channel, hence the introduction of returnable glass packaging. Through the Frooti brand it is also targeting rural consumers, who accounted for around 19% of total soft drinks sales in 2011. The company also invested heavily in advertising in 2011, as reflected in its Crazy Mango Fun campaign that was prominent during the IPL season

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Competitive Positioning:

Parle Agro Pvt Ltd recorded a 6% share of off-trade value sales in soft drinks in 2011, placing it in fourth position. With an off-trade value share of 24%, the company’s presence is strongest in fruit/vegetable juice; it held a 13% off-trade value share in nectars in 2011 and a 31% share in juice drinks (up to 24% juice). These shares have seen a decline from the previous year mainly due to the strong performance of Mazza, Slice, Real and Tropicana brands which led to the decline in brands like Appy and Frooti. Parle Agro has brands positioned within various segments. Brands such as Saint 100% Juice target the premium segment while Bailley, Frooti and Appy are positioned for the standard segment.

and is known for its innovative products and packaging. which is a wheat-based savoury snack that was the first of its kind in India. Maaza. It was followed by Parle Agro Pvt Ltd with 24% and PepsiCo India Holdings with 21% of sales in 2011. continued to lead among brands with a 24% value share. The company was the first to offer juice drinks in liquid cartons and PET formats. . Tropicana and Slice from PepsiCo India Holdings showed robust growth in 2011. Parle Agro has introduced a range of new products. from Coca-Cola India. including LMN in 2009 or Hippo. Fruit/ Vegetable Juice Market in India (Data as on 2011):     Total value sales of fruit/vegetable juice grow by 26% in 2011 to reach Rs54 billion 100% juice registers total value growth of 34% in 2011 Unit prices increase by 2% in current value terms in 2011 Fruit/vegetable juice total constant value sales are expected to rise at a CAGR of 19% over the forecast period Competition: The leading company in terms of off-trade value sales in 2011 was Coca-Cola India Pvt Ltd with a 28% share.

The Food and Beverage Industry is one of the fast growing Industry in India. Market Size of Indian Food and Beverage Sector by Segments (INR bn) . LMN. Appy. Growth of Food Industry (INR Bn) 800 700 600 INR Bn 500 400 300 200 100 0 FY02 FY04 FY08 FY10 FY12 Segments of Food Processing Industry: The Main Distribution channels for are like Food chains and Outlets. During last 10 years this sector grew more than 10% which is very significant growth. Hippo and Bailley. Its products come under broader scope of Food and beverages industry and specifically Non-Carbonated beverages industry.Industry Analysis: Parle Agro is an Indian private limited company that owns several popular brands including Frooti.

. According to ASSOCHAM. mineral water and health and energy drinks. carbonated drinks. this market is set to grow at 35% annually mainly due to its positive health impact. Juice category was the fastest growing sub-category.The non-alcoholic beverage segment stood at around INR 300bn as of 2011. followed by fruit drinks category. The fruit-based drinks market is growing at a faster pace than the carbonated drink market. The categories in this segment include hot beverages like tea and coffee. fruit-based beverages.

and engrossing start-up/production losses. distribution and advertising are a necessity to compete with the industry giants like Coca Cola and Pepsi Co. making it one of the preferred sectors for entry into the Indian market. Production. The traditional returnable glass bottle has given way to newer plastic containers as well as cartons. packaging and distribution. is a complex technological branch in the Food Processing /Packaging industry. presence of established players in the market together with loyal customers makes it difficult for any new competitors to boom.8% of total FDI inflows in India. Nevertheless. regulations and policies allow 100% foreign direct investments under the automatic route in the food processing sector. This is a soaring barrier because there is a need to invest large financial resources in order to compete. This should be done in consultation with key stakeholders. extend their share in the large market. the incumbent will face a dilemma. At present. Thus there is a large amount of foreign capital that is flowed into this sector. . The current trend is to improve the conventional containers. Therefore. Coming in at large scale and risk strapping reaction from breathing firms or approach in at a miniature scale and accept a cost drawback hence there will be failed economies of scale. provide greater consumer convenience and ultimately to produce economic packages. A new entrants need to surpass in all areas if they are to endure in this global village. The changing Indian scenario. FDI Inflows in Food Processing Sector Packaging of Beverages: The beverage industry is one among the front-liners where massive investments are being made for expansion and technological up gradation. the sector accounted for about 1. with implementation of various technologies and market promotion activities. Environmental Issues: New Players in industry need to first assess to what extent they and their suppliers depend on water and the associated risks.Porter Five-Forces model for Food and Beverage Industry: Barrier in soft drink industry: The value -chain activity of the soft drinks expedition to the customer is centered on four functions: Production. credit. extend the shelf-life of the products. Till August 2011. However. has changed the scope for this industry exponentially. threat of new entrants is high in the Indian Food & Beverage sector. Capital is obligatory for inventories. the country’s rapidly growing middle class drives large number of companies into this sector. marketing. The packaging of beverages both carbonated and noncarbonated.

within the sector there is lot of substitutes for each product. However. It is noteworthy to mention that the growth rate of the agricultural sector during the same period was just 3. chemical suppliers and others. they have a medium bargaining power on the players. Coca-Cola launched Minute Maid 100% juice while Hindustan Unilever entered the fruit juice segment with the Kissan brand. food processing industries. For the past one year. Consumers have an abundance of choices in all product segments. Bargaining power of buyers: F&B is one of the sectors in India where the bargaining power of buyers is very high. several players have entered newer sub-segments in the fruit-based drinks category. Intense competition also exists within the supplier industries.Companies should measure their water footprint and look to how they can best manage water resources through enhanced processes and infrastructure. while within the sector it is the intrinsic characteristic. Every year thousands of new products in this industry are launched. Companies need to implement rigorous water testing and monitoring systems and install treating equipment. During the period 2004-10. the food and beverages industries grew more than 7%.0% . all at various price points. Water pollution and treatment is already a focus of Asian listed companies and with the growing emphasis on regulation and enforcement this looks set to increase. Threat of substitutes is very low for the sector as a whole. Some of the large F&B players have also gone for vertical integration to gain efficiency. some become successful while rests vanish away. nectar and 100% juice. Bargaining power of suppliers: Major suppliers to the F&B industry include agriculture sector. With the sector growing at more than 20-30% on volume basis. Threat of Substitutes: Food and Beverages sector is related to some of the basic necessities of mankind hence no substitutes exist for this industry. since suppliers have numerous choices available when it comes to selling quality products. However. and each segment is full of organized and unorganized players. For instance. growing the overall category by 26% as on 2013. farmers. it provides a fight for market share for manufacturers rather than capacity utilization issue. some of which includes ready-to-drink. Suppliers supply to both food and beverages industry.

ebscohost.References: 2. 5.parleagro.nic. http://fcamin. http://web. http://emerging_markets_database/ . http://www.EMI_Database/ 4.

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