From Vile Parle To World – Parle G

You know how certain smells trigger nostalgic memories? For me, it’s the pungent and strangely pleasing smell of formaldehyde and phenyl, which jolts me into the familiar comfort of a hospital operating room. It’s the fragrance of rain, the petrichor, that takes me back to my high school, where monsoons in the midst of farmlands and plantations were nothing less than magical. The musky smell of a new book, vellichor, a constant reminder of endless hours spent in my childhood bedroom, lost in a different world. The strong aroma of Malnad filter coffee never fails to remind me of my Sunday evenings with mum. 

Recently, I discovered that there is a phrase for it – the Proust Effect. Proust effect, refers to a very vivid reliving of past events or memories based on a sensory experience. For me, it’s always been the sense of smell. 

As far as my memory goes, (which by the way, my sister will swear is definitely not the greatest), the first time that I travelled to Bangalore must have been around 2005. The only reason that I remember this is because just as we were about to enter the city, the strong distinct aroma of freshly baked biscuits embraced us in a warm hug. Looking back, I remember trying to catch a glimpse of the building that was casting this mystical scent – all I could see as the vehicle sped was the name, Parle. I knew then, as I know now, that the smell of a warm Parle G will always hold a special place in my brain. 

Now looking back, I cannot help but wonder how Parle G survived and in fact, continues to thrive through several decades. Today, I’m undertaking what I consider to be a heroic task in decoding the business that is the house of Parle, in particular the biscuit and confectionery part of the business (Parle products). 

The Long Standing House of Parle G

The house of Parle’s humble beginnings pre-dates India’s independence. Early 1900s saw the influence of the Swadeshi movement spread across the breadth and length of the subcontinent. Among those that were influenced were the Chauhan family of Mumbai, silk tradesmen by profession, who sought to build a distinctly Indian business brand. 

Parle was thus founded in 1928 by Narottam Mohanlal Dayal of the Chauhan family, who then went on to buy an old factory in Vile Parle at Rs 75,000. He would then set sail to Germany to learn the ropes of confectionary making. In 1929, with a refurbished factory, imported machinery and 12 people (most of whom were family members), the factory began to produce its very first product – the orange candy. Remember those?  

It is believed that the founders had forgotten to name their company and at some point, everybody just started referring to it by the suburb it was located in – Vile Parle. Back in the day, for an Indian company to break into the confectionery industry at home, which was dominated by  European companies was no small feat. But fierce competition did not deter the Chauhan family, who started producing close to 40 tonnes of candies annually and saw turnover of Rs 50,000.  Despite a sharp hike in raw material price, during which they tentatively contemplated selling the factory, Parle soon broke even and saw profits of Rs 3,000. 

A decade later, Parle began its biscuit making operations, baking the now well loved slightly milky sweet and crisp biscuit, Parle Gluco. Again, a biscuit factory was bought, machinery was imported and Narottam travelled to England to understand the nuances of the biscuit making business. The company was intentional about positioning the product as an affordable healthy source of nourishment for the masses, as opposed to the expensive imported biscuits consumed by the European expats. As Parle Gluco and Monaco (India’s first salted cracker) took off, the House of Parle began to grow. 

But between 1950s-70s, call it family feud meets business strategy, the original House of Parle was amicably split into three separate non-competing entities, owned by various Chauhan family factions. As per reports, to date, the majority shares are still owned by Parle products.

A. Parle Products – includes biscuits and confectioneries like Parle-G, 20-20, Monaco, KrackJack, Magix, Melody, Mango bites, Poppins etc. 

B. Parle Agro – includes beverages such as Frooti, Appy, Bailey soda etc.

C. Parle –  owns Bisleri

But this did not stop Parle Products. If anything, unburdened by diverse product lines, Parle products introduced a slew of brands to deeply target the biscuit and confectionary industry – from biscuits like Cheeslings, KrackJack, to confectionaries like Melody, Mango Bite, to launching premium Parle Platina line of products, like the Hide & Seek biscuits, Milano cookies etc.  

In 2011, according to Nielsen, Parle G topped the global charts as the largest selling biscuit brand, beating the likes of Oreo.

From there, it took Parle products another decade to turn into a mammoth that no one saw coming.

Parle G – The Genius no one saw rising!

In 2022, Parle products became India’s first packaged food company to cross the $2B annual revenue mark (₹162 Bn), majority of which comes from biscuits. An overnight two billion dollar success (92 years) is no minor matter for a family business. How did they do it?

The Indian biscuit industry today is valued at ~$5.3B. The lion’s share of the biscuit market, i.e., 35-40% is made up of cookies (think the likes of Good Day), followed by plain biscuits at 25% (such as Marie and milk) and finally, cream biscuits and crackers at 15% share each. Typically, 80% of market share is dominated by organized players, such as Britannia, Parle Products, ITC and others.

Since biscuits offer minimal scope for customization and are typically small ticket size, the segment predominantly relies on volume sales. Interestingly, India’s per capita consumption remains very low at 2-2.5kg/annum as compared to, say, 4.5-5 kg in Southeast Asia or 10kg in U.S.A, chiefly due to ubiquitous availability of other more traditional snacking options. 

Again, the real question then is how has Parle products managed to consistently win within the biscuit segment? Here’s why!

• Designed a flagship product that quite literally transformed the customer’s taste and kept executing on perfection 

When Parle made its very first biscuit, it was at odds not only with its competitors and me too brands, but also with the mindset of Indian consumers, who particularly thought of biscuits as “sick people food”, something that one would eat if they were unwell. To flip that viewpoint 180 degrees into it being perceived as a high quality healthy product worthy of even being fed to the kids took quite a long time (and even more marketing budget). It sure did help that they were selling little warm biscuits, that smelled like they were baked in heaven.

Despite all the other biscuits that Parle produces, it remains true that they broke the market with the iconic Parle G.

Today according to some estimates, one could travel around the earth 192 times if we line up all the Parle-G biscuits consumed annually, end to end! 

Across 120 factories in India, 400M Parle G biscuits are baked every single day and ~4,500 Parle-G biscuits are consumed every second. Furthermore, it has an extensive loyal global customer base, as the biscuit is also exported to 100 countries. As part of their line extension strategy, Parle G has consistently introduced variants, such as Parle-G Milk Shakti, Parle G Oats & berries and so on. 

“The power of Parle-G is real, writes Deven Parik as he fondly recollects how after a hard day of work in second grade, he’d come home to some Parle-G, milk and Wizards of Waverly Place”

• Tailored the package size and price to match their target customer’s purchase power

Since 1994, the price of a small packet of Parle G has been ₹4. It was only in 2021, that they successfully raised it to ₹5. An earlier attempt in 2003, to increase the price to  ₹4.5 had backfired.  While there’s been a bit of shrinkflation, where the price remained the same, as the biscuit portion reduced from 100 gms – 50 gms, it remains true that at a price point of  ₹5 ($0.06), Parle G is considered to be one of the most affordable, high quality mass market product. It comes in varying sized packs starting from ₹3 to large family packs priced at ~ ₹120.  

To break down the unit economics – typically raw material costs are 60%, while the packaging accounts for 20-25% of the total cost. Much of the profit margin is passed on to its distributors (8%) and retailers (12%). The flagship Parle G remains a low margin product, which is counterbalanced with other non flagship biscuits (Hide & Seek, Monaco etc.) at Parle products level. One look at their website is all it takes to understand Parle’s very obvious attempt to balance and grow their books.

• Steadily built immense distribution network strength  

To operate in a market with so little customization possibilities, the only way to gain ground is majorly via sheer distribution network strength and this is what sets Parle apart from most of its competitors. It is quite literally everywhere! To be precise they are stocked at 7M retail outlets (50% of all retail outlets in India), via ~1500 wholesalers and boasts of one of the deepest distribution networks.

In a lot of ways, Parle has played a critical part in shaping the high level of penetration of biscuits (94%) and cookies (83%) across urban and rural India  – one of the highest among FMCG products. 

• Chose to stick with simple packaging and great brand recall slogan

It is counterintuitive to think that a biscuit that gets so much love has always had a basic yellow and white packaging, with the feature of a mystery young girl. The slogan? Pretty much unchanged, since the last couple of decades. The only change being the interpretation of what the G stands for in Parle G. While initially it was named very literally to represent Glucose, it has since come to represent ‘Genius’. However, this consistency has paid off, as it has created a great brand recall and built continuous trust among consumers. Thus, to consumers everywhere it is still the very same brand that they knew all too well, whilst growing up.

I have to admit that these reasons to an extent do oversimplify the effort that goes into consistently building a $2 billion dollar company.

In the end what still holds true is that for all of us, a cup of chai and Parle G almost always elicits a Proust effect; of an evening spent with family and friends chatting away our worries.

In the words of Mr Shah, the category head of Parle products,

“Parle G does not belong to us; it’s owned by consumers, each of whom has their own story and memory associated with the biscuit.”