ITC eyes Parle's candy business

NEW DELHI: ITC, which is pursuing growth opportunities through acquisitions across categories, is learnt to have approached Parle Products to buy out the latter’s confectionery business. Parle Products’ confectionery basket includes strong heritage brands such as Poppins, Kismi, Melody, Mango Bite, Rol-a-Cola, Mints and Orange Candy, among others.

ITC’s Foods Division CEO Ravi Naware said: "We do not comment on market speculation." A detailed email query by ET to Parle Products elicited a terse: "It’s not true."

However, an industry source told ET that ITC, which has two confectionery brands, Candyman and Mint-O Fresh in its portfolio, is keen on Parle’s confectionery brands, most of which enjoy healthy top-of-mind recall. "The deal, if it goes through, will give ITC a dominant presence in the confectionery sector, since Parle brands cover a large spectrum of confectionery products like eclairs, hard-boiled candies and toffees," the source said.

The Ajay Chauhan-controlled Parle Products, on the other hand, has been focusing aggressively on its biscuit business where it remains a dominant player ahead of Britannia and ITC. Parle officials have said that with the biscuits business accounting for close to three-fourths of the company’s sales, confectionery has taken a backseat. Parle’s biscuit brands include Parle G, Monaco, Krack Jack, Marie, Hide n Seek and Cheeslings.

Other family-run companies of the Parle group include the Prakash Chauhan-controlled Parle Agro’s beverage brands Frooti, Appy and packaged water brand Bailley, and Ramesh Chauhan’s Bisleri packaged water. Incidentally, both have been pursued by multinational players for buyouts.

ITC’s foods division had begun its foray in the confectionery business with the acquisition of Mint-O — a compressed mint brand which it had bought out from the Delhi-based Candico (formerly part of Bakeman’s group) in 2002.

The tobacco and hospitality giant has been consistently breaking ground in the FMCG category. While it is giving snack foods market leader Frito Lay a tough fight with its Bingo snack brand, ITC recently overtook market leader Perfetti Van Melle in the adult mint candy/cough lozenges market as per AC Nielsen data for the July-September quarter.

Godrej Foods’ acquisition of the Chitoor-based Nutrine last year was the last big deal in the confectionery business. The organised domestic confectionery market, estimated at Rs 1,600-1,800-crore (excluding chocolates), operates on wafer thin margins.