*You are in the market
Shopkeeper: Chutta nahi hai?
You: Nahi, bhaiya.The next moment you see the shopkeeper starts opening a box of toffees.
Feels nostalgic?
Well, digital payments at kirana shops have changed the conversation to “UPI chalega, bhaiya? QR code dena.“
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Toffee brands used to own the “chutta” but UPI is killing the bandy business, GrowthX Founder Abhishek Patil said in a LinkedIn post.
UPI payments have increased since demonetisation in 2016 and the trend escalated during the COVID-19 pandemic.
“Back in early 2010s almost all big players, including Mondelez, Mars, Nestle, Perfetti Van Melle, Parle & ITC reported staggering growth & future prospects. Fast forward to 2020: Most of these brands have reported a steep decline in sales of toffee. Hershey’s, one of world’s biggest chocolate & toffee maker said India is one of the worst hit markets in the post COVID era, says the expansions are uncertain,” Patil wrote.
He explained, “Before UPI, shopkeepers would shamelessly trade toffees for loose cash, a transaction that wasn’t happening other way round. These small amounts over days did wound up to becoming large sums of money, as accepted by many buyers in studies. With UPI, all of this stopped. People paid the exact amount that was due with no scope for change, ultimately eating up the daily toffee sales.”
Talking about the impact of the pandemic, Patil said, “With most of the audience scared of the pandemic, everyone wanted to do contact less payments. This also created soft of push towards digital payments and toffee went off the picture.”
He added, “No chocolate (toffee) company would have ever thought of finance products as their competition.”
Patil noted, “You need to keep an eye on ‘What are the reasons people buy our product and what would change that behaviour? Do we find reasons which aren’t really our direct competition but can potentially replace our product usage?’ & evolve your product offering & distribution so you don’t get a UPI like shock.”
Netizens took to the comments section to share their thoughts.
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One user said, “Candies category first and chutta category came second and used by retailers as a smart tactic. However, these have special place and reason to buy as impulse buying. Sales may be getting effected, as no more substitute for chutta. Pulse is game changer in HBC. Now, what’s the solution?co branding, alliances, small packs etc. Who thought Choclates would compete with sweets? Now King Khan endorsing Haldirams, Son Papadi? It requires smart counter moves and repositioning, branding efforts? Remember, the cola competition is no longer pepsi but nimbu and naryal pani.”
Another wrote, “Well this is a topic of market research. Upi has added to the gravity of candy business, but it’s not that bad, KGS and pan shops who used to have candy burnies only on their counters have now replaced them partially with sweets like barfies, gulabjamuns, gud chikkis, laddus in same burnies. And sweets have faster rotation then candies and they have high margins but low shelf life. Candy’s & Chocolates can never be eliminated from market for the love of it. And all hyper marts, super markets are now selling candies in pack of 10s or so at pay and exit counters. We need to have good placement strategy, that’s it.”
A third user said, “I think it comes down to brand building. Having worked in a company that lost the plot on candy, I can say this with confidence that the businesses got intoxicated by the ‘free’ revenue they got from wholesale and ‘chutta’. They banked more on trade than consumer connection. The moment ‘chutta’ barrier was removed, all that’s left is dust. Alpenlibe, Cadbury Choclairs & Kopiko might just be exceptions, but I’m not sure.”
Yet another added, “Most of the mentioned brands, especially Hershey’s, are not in the chhuta paisa toffee category. Heck they aren’t even in the checkout counter impulse buy category. Hershey’s starts ~35. This is a correlation at best, definitely not a causation.”
