Remember the days before demonetization, when we paid in cash for our daily supplies and the neighborhood storekeeper would hand us a candy or two in lieu of small change? Hardly anyone seemed to have a problem with it. After all, a toffee in your mouth was better than coins jingling in your pocket.
But then, Prime Minister Narendra Modi sprung a surprise on India on November 8, 2016, announcing the decision to scrap all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi series while the frustrating wait for new ₹500 and ₹2,000 banknotes continued. And ATMs across the country were left without cash.
It gave birth to a new phenomenon — digital payments. Today, some 26 crore (260 million) Indians use United Payments Interface (UPI), via Paytm, Google Pay or Phone Pe etc., to pay for groceries and other daily household items. It means that close to 19% of India’s population forwards exact amounts to shopkeepers.
A recent social media post said that this very trend has “left no scope for exchanging small change, ultimately eating up the daily sales of toffees,” which have “gone down drastically.”
GrowthX founder Abhishek Patil’s viral post on Linkedin has been shared more than 100 times.
“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,” Patil wrote. “With UPI, all of this stopped.”
And the COVID-19 pandemic, which further led to contactless payments, spelt doom for confectionary makers, he said, adding that toffee brands like Parle, Mondelez, Mars etc. had reported a steep decline in sales.
As thought-provoking as it may be, Patil’s observation might very well be a figment of his imagination, according to market analyst Deepak Shenoy.
“It’s just a small number of people who choose pay digitally. The majority is still using cash to buy supplies,” said Surender Goyal, a shopkeeper in the Malviya Nagar locality of south Delhi. “I still hand out toffees for small change.”
And even the ones using digital payment methods more often than not round off the figure and take candies, he said.
That apart, India is home to about 44.4 crore (444 million) children below the age of 18 — a major target market for confectionary makers — who buy candies on demand not as a substitute for loose change.
Lotte India, which manufactures Choco Pie, Coffee Bite, Lacto King and Lotte Eclairs, has reported bumper sales in the 2021-2022 financial year. “For the year ended 31st March, 2022, the Company has achieved gross sales of Rs. 49,654 lakhs as against Rs. 41,865 lakhs for the year ended 31st March, 2021,” it said in its 67th annual report.
Parle Products Pvt. Ltd. in 2019 stopped producing its 50-paise candies like Mango Bite, Orange Bite, London Dairy and Kismi Toffee. But the emergence of UPI had little to do with this decision. The company wasn’t able to turn a profit on its meagerly-priced toffees.
“Inflation will eventually cause the confectionary industry to lose money until they periodically raise the prices of their products. Given that the cost of making candies increased during the pandemic, this may be one of the reasons why foreign brands experienced a fall in revenues in India,” Lokesh Choudhary wrote in the Analytics India Mag (AIM).
Other than that, Pulse candy’s SG Group reported a growth in profits last year and the stock price of Sampre Nutritions Ltd. is trading at an all-time high of about ₹260.
Valued at US$ 1643.64 million in 2020, the Indian candy market is set to reach a whopping US$ 3661.68 million by the year 2026, per data by TechSciResearch.
