Struggling to cope with a slump in demand for candies, Perfetti Van Melle, Italian global manufacturer of popular candy and chewing gum, has decided to postpone the development of its new production unit in India.
The company owns brands such as Mentos, Happydent, Chloromint, Alpenliebe and Center Fresh, and has three manufacturing plants in India — at Manesar (Haryana), Chennai (Tamil Nadu) and Rudrapur (Uttarakhand).
Perfetti, which had announced expansion plans in March, has now decided to put these on hold citing squeezing margins and disappointing growth this year.
"This year we have seen growth story coming down…our growth rates are not as heady as they used to be," said Nikhil Sharma, director, marketing, Perfetti Van Melle. "Hence, the plans to put new unit are on hold."
In March, Stefano Pelle, chief operating officer, Perfetti Van Melle Group, South Asia, West Asia and Africa, said the company needed to increase capacity for its current products and could possibly look at eastern India for the new plant.
In view of the squeeze on its margins, the company plans to increase the prices of its candies and lollipops by 50-100% from next year.
"Most confectionary majors are likely to follow the price revision as there is huge pressure on growth and margins," Sharma said.
The company, which is likely to register turnover of Rs. 1,800 crore this calendar year, registered a 19% annual growth last year, but sees this coming down though still ramaining in the double-digits.
"Candies come under impulsive purchase category, and its demand will go down if purchasing sentiments are impacted," Sharma said.