South & West gazing DS Group sets 10% of budget to ads, aiming for Rs 5,000 crore in confectionery biz

The brand sees potential in Rajnigandha Silver Pearls and Pass Pass, Jyotiroop Barua, business head of confectionery told us.

In FY 2023-24, DS (Dharampal Satya) Group, a homegrown FMCG conglomerate, surpassed Rs 1,000 crore in revenue from its confectionery business. Founded in 1929 in Chandni Chowk, Delhi, DS Group is known for brands like Pulse, Pass Pass, and Rajnigandha Silver Pearls. In 2023, the company expanded into the chocolate segment by acquiring LuvIt.

The Noida-headquartered DS Group is now aiming for Rs 5,000 crore in revenue from its confectionery business within the next five years. 

While the company asserts that the confectionery market has grown at a CAGR (Compound Annual Growth Rate) of 9%, DS Group's business has achieved a remarkable CAGR of 20% over the last three years. Their sweet product, Pulse, is the largest contributor, accounting for 45% of the segment's revenue. 

The group has invested Rs 100 crore in FY24 to advertise its confectionery products.

In an email interaction with Jyotiroop Barua, business head of confectionery at DS Group, we discussed their strategies for achieving this milestone, new product launches, distribution plans, and advertising budget allocation.

(Edited Excerpts)

Q: Pulse accounts for nearly half of your candy sales. Do you expect it to remain your top seller? If not, which other DS Group candies do you see becoming major sellers in the next five years?

The confectionery division of DS Group has set an ambitious goal to achieve Rs 5,000 crore in revenue over the next five years, driven by both organic growth and strategic acquisitions in its core product categories.

Currently holding a dominant position in North and East India, the company is now strategically expanding its presence in South and West India.

The Pulse candy is expected to continue being a revenue generator for the company due to its strong consumer appeal and brand loyalty. Additionally, the company sees significant potential in brands like Rajnigandha Silver Pearls and Pass Pass.

The company is committed to creating a diverse portfolio in the confectionery and Indian ethnic confectionery categories by introducing new formats, line extensions, and brand extensions within the lollipops, éclairs, gums, and mouth fresheners categories.

Q: What unique qualities or factors have driven the significant growth and popularity of Pulse candy?

In 2015, we launched the product and disrupted the market. For the past eight years, Pass Pass Pulse has maintained its position as the number one brand in terms of market share within the HBC (hard-boiled candy) category.

Over the past five years, Pulse has consistently shown growth within the HBC category, while also upholding its leading position within the market. Pulse is renowned for its unique selling proposition (USP), which delivers a tangy twist and an element of surprise that captivates consumers' imaginations.

Q: What factors have driven DS Group’s confectionery segment to achieve 20% growth over the past three years, outpacing the overall category's 9% growth?

In the rapidly changing impulse purchase market, our strategy emphasises the continuous introduction of new products and variants. For example, with Pulse, we've successfully launched innovative lines like Pulse Shots. Currently, we offer five flavours of Pulse candy, including Kachcha Aam, with several more formats and flavours planned for future release.

These initiatives played a crucial role in driving our company's strong performance across the entire category.

Q: DSFL invested Rs 100 crore in advertising its confectionery products in FY24. Which channels received the most investment, and how much will you increase spending to reach the milestone?

At DS Group, we strategically allocate our budget between traditional and digital channels to maximise our strengths.

Television remains pivotal for broad brand discovery and visibility. Meanwhile, digital channels complement our TV campaigns by extending reach and enhancing frequency.

We tailor our media spending to fit each brand's campaign needs and product life cycle stage. Additionally, our out-of-home (OOH) advertising strategy strategically disrupts markets in alignment with campaign goals and market dynamics.

We aim to maintain a year-round presence by allocating approximately 10% of revenue to advertising spend in the coming years. As we near our targets, we plan to adjust this allocation to around 6% of revenue.

Q: The chocolate market is dominated by a couple of players like Mondelez, Nestlé, Mars, Ferrero, and Amul. How do you plan to strengthen your presence in the segment?

For the chocolate market, LuvIt has identified its core focus as chocolate confectionery. The portfolio will be enhanced through strategic launches/renovation in éclairs, pops, and wafers categories.

Q: How is DSFL using e-commerce and quick commerce to enhance sales and brand visibility amid rising digital transactions?

Understanding the importance of a strong presence in the impulse purchase category, we are expanding the distribution of Pulse Candy, Pass Pass, Rajnigandha Silver Pearls (RGSP), and Luvit across all major e-commerce and quick commerce platforms in key regions.

Q: Given the substantial investment in advertising, how is DSFL assessing the ROI and effectiveness of its marketing campaigns?

To assess the ROI and effectiveness of our marketing campaigns, we regularly analyse the brand tracking metrics for DSFL brands. For performance campaigns on e-commerce platforms, we evaluate success using key metrics such as return on ad spend (ROAS) and advertising cost of sales (ACOS).