New Delhi: Days after deciding to drop Cadbury Plc.’s products from its stores’ shelves after a spat over a range issues from pricing to stocking, Pantaloon Retail (India) Ltd plans to launch its own line of chocolate products, say people close to the situation.
The company that runs Big Bazaar stores plans to “test-market” its own chocolate products during Raksha Bandhan, a popular Hindu festival that falls in mid-August.
“There is a festival-specific strategy,” said Santosh Desai, the chief executive of Future Brands Ltd. an arm that creates new products for the retailer. The chocolates will be sold under the ‘Tasty Treat’ brand name.
Another Pantaloon official who didn’t wish to be identified because he isn’t authorized to speak to the media, confirmed the company would launch an in-house brand of chocolates. He said Pantaloon plans to source it from a chocolate manufacturer whom he couldn’t name. He said the launch would be restricted to some stores as part of the test marketing before the products hit hundreds of company-owned stores nationwide.
“It’s a tough product to deal with,” this person said. “We have to get everything from manufacturing to supply chain right before going all over (the country),” he said.
In India, where temperatures can soar up to 42 degrees Celsius in some parts of the country, storing and transporting chocolate and other perishables is a constant challenge. Chocolate makers have in the past had to grapple with a raft of problems which included worms in chocolate which food experts attributed to poor packaging and storage.
Pantaloon officials say the company has plans to come up with private labels for several items ranging from coffee to cosmetics. The company also plans to launch male grooming items, and skincare products targeting women. Pantaloon will launch in the next six months, skincare products in collaboration with the Canadian firm, Faces Cosmetics, that Future Group acquired last year.
Last week, Pantaloon said it will stop stocking Cadbury’s products, blaming the UK company’s “discriminatory” practices towards Pantaloon and accused the multinational of imposing “unacceptable conditions” on the country’s largest listed retailer.
“The terms we had with Cadbury were not commensurate with the efforts which you put in,” Sadashiv Nayak, chief executive of Pantaloon’s Food Bazaar supermarket format, said in a phone interview last week. “We find that the terms are not transparent and impartial towards us,” he said without giving details. Pantaloon officials said the differences with Cadbury had been brewing for the last eight months.
The official who said chocolates were a tough product to deal with, also said Pantaloon has been working on its plans to come up with its own chocolate products for almost five months and the proposal has “no connection at all” with the company’s current spat with Cadbury, and the timing is just coincidental.
The company has been studying various aspects of chocolate-making, ranging from processing, packaging, manufacturing to supply chain. Large retailers overseas such as Tesco Plc. of the UK have their own line of food products from pasta to chocolate that is priced more competitively than well established brands.
Currently, in-house products make up for about 7% of Pantaloon’s food business and the company is hoping revenues from the private label category in food products will double to about Rs110 crore by December. The company sources around 400 private labels ranging from food to personal care products from more than 60 vendors nationwide.