Parle Agro, the Rs 950 crore (Rs 9.5 billion) FMCG company, has raised prices of its Frooti and Appy Classic drinks after a decade. This has come at a time when commodity prices have dropped and several companies are seeking to lower prices to boost sales.
Parle has raised prices of these drinks by Rs 2 each for a 200 ml pack, from Rs 10 to Rs 12. This, it says, will help it offer higher margin to retailers.
"While the recent drop in raw material prices have been an enabler, our margins are still under pressure due to several factors like operational expenses as well as production and packaging costs, which have peaked year-on-year," said a company official.
According to the company, Parle Agro's competition in the 200 ml tetra pack products has always priced similar products at Rs 12.
"For all our brands, we have different stock-keeping units that cater to different segments of consumers. For the cost-conscious consumer, there is a price point of Rs 5, which is available in a 110 ml pack of Frooti," the official added.
While the company expects its sales to be hit in the short term or for a brief period, it does not see any long-term impact.
"Consumers have accepted the Rs 12 price point. It may come across as a risky proposition but it is a risk worth taking, because these brands and products have already been accepted by consumers," the official said.
To push sales for Frooti, Parle Agro is planning several marketing initiatives like redoing the graphics for the Frooti brand.This summer, Frooti will undergo a complete makeover and will sport different graphics on tetrapacks and PET bottles.