CASE STUDY: NEW PRODUCT DEVELOPMENT

SMOODH
Parle Agro is an offshoot of Parle Products, which was founded in 1929 in British India. It was
owned by the Chauhan family of Vile Parle, Mumbai. Parle Agro commenced operations in
1984. It started with beverages, and later diversified into bottled water (1993), plastic
packaging (1996) and confectionery (2007).
In 2021, home-grown beverage manufacturer, Parle Agro (maker of Frooti and Appy Fizz)
entered the dairy-based beverage business with the launch of Smoodh, its flavoured milk
brand.

PRODUCT
Type Flavoured Milk

Identification Smoodh

Feature Smoodh is a milk based beverage produced and marketed

by Parle Agro Pvt. Ltd
Packaging 85 ml Tetra Pak cartons

Flavors Chocolate Milk and Toffee Caramel

Price 85ml- Rs.10/-

New Product Development Process

1. Idea Generation
2. Idea Screening
3. Concept Testing
4. Business Analysis
5. Product Development
6. Test Marketing
7. Commercialization
8. Review of the Marketing Performance
IDEA GENERATION
The first stage in the new product development involve generation of new product idea.
Dairy farming has progressed by leaps in the two decades enabling Parle Agro to secure
consistent, standardised access to high quality milk. Covid-19 has led to rising health
consciousness among consumers and dairy, with its perceived health benefits, is best placed to
capitalise on the shift. Dairy innovation are focusing on consumer need for convenience, dairy
snacking, higher protein, more variety in flavour. SMOODH as a brand that provides the
benefits of drinking the delicious and wholesome milk-based beverage as an alternative to less
healthy options.

IDEA SCREENING
Parle Agro that has been dominating the fruit-based drinks category in the country for over
three decades with iconic Indian beverages, has announced its diversification into the Dairy
Category. Parle Agro makes its entry into the dairy segment with a high quality and premium
range of flavoured milk products – SMOODH.
Smoodh indulge in the silky, creamy and rich taste, a range of good for consumer products
beginning with an assortment of flavoured milk products. Smoodh is available in two exciting
flavors, chocolate milk and toffee caramel.

CONCEPT TESTING
Smoodh meets the need of consumers looking for a quick energy boost or a quick sweet fix,
equivalent to that of a Rs. 10 chocolate bite. Smoodh aiming to target consumers across all age
group. The high quality and rich taste of the product, coupled with its disruptive price and pack-
size has helped the company garner extremely positive responses from consumers and retailers
alike.
Small packs of thick milkshakes are perfect for those post-play hunger pangs or as an ideal
carry-on in a school tiffin.

BUSINESS ANALYSIS
The idea, which comes out of the concept testing stage, is analysed in terms of demand, cost
and profit potential.
The Company officials said that Smoodh is a product that can be described as a
technological marvel from all aspects – product, quality, price and pack-size. With the
immense consumption opportunities that it presents, Parle Agro are looking to create a
substantial dent not just in the beverage category, but in the Rs 10 chocolate category
as well, which is currently a Rs. 4,300-crore industry.
The Rs 10 pricing of Smoodh gives Parle Agro the opportunity to break the pricing
barrier, a factor that has hampered the growth of the flavoured milk category in India.
The price and pack size enable Parle Agro to achieve high penetration and distribution
for the brand. Smoodh is sure make an impact not only in the flavoured milk category, but in
the Rs. 10 chocolate category as well.
PRODUCT DEVELOPMENT
Product ideas that survive the business analysing stage are transformed into actual product
development.
Nadia Chauhan, joint managing director and CMO, Parle Agro said, “Years of dedicated R&D
have gone into developing this incredible product. Their conscious effort to bring Indian
consumers high quality and rich in taste products at the best value.
The move is backed by years of devoted in-depth research and extensive investment in modern
and innovative technologies to build a robust dairy infrastructure and introduce novel products
to the Indian consumers. With this, Parle Agro is set to dynamically transform the dairy
universe in India with innovations and new consumer experiences that haven’t existed in the
category before.
Over the last few years, the team had researched and developed over 1,000 prototypes before
arriving at what was to become Smoodh.

TEST MARKETING
Parle Agro aggressively adopts new strategies and innovative initiatives to connect with its
consumers. A large part of its growth strategy is driven by sales and distribution and its
manufacturing capabilities.
The Rs 10 price point was crucial for making Smoodh a success. Innovation at both the front
end and back end went into achieving it.
For example, much thought went into developing an 85 ml pack. The Rs 20 priced 180 ml to
200 ml packs available in the market today from the likes of Amul, Hersheys, Cavin
Kare, Britannia, ITC, Mother Dairy, Parag and so on, are more than what a child can consume.
So the drink is either wasted or an adult has to finish it off. Parle Agro’s 85 ml, however, is
large enough to satiate a child and just enough to serve as a pick-me-up in between meals for
adult consumer.
Parle Agro had to be innovative in how it approached the product financially. Unlike its
competitors, it has set up multi-location dairy plants to be closer to consumers. In Sitarganj
(Uttarakhand) and Ambala (Haryana) in the north, near Kolkata (West Bengal) in the East and
Mysore (Karnataka) in the South and actory covering central India (Bhopal in Madhya Pradesh.

COMMERCIALIZATION
As Parle Agro re-enters the dairy segment with SMOODH, they have launched an aggressive
multi-channel campaign with actor Varun Dhawan as their brand ambassador to promote the
flavoured milk product. It will be rolled out nationally across channels including print, mobile,
TV and Digital. The campaign will also be aggressively promoted during IPL on television.
The brand has even deployed OOH for higher and deeper impact. Through Dhawan the brand
is targeting maximum reach and awareness of the new product. Featuring him in a double role,
he represents the two flavours of SMOODH- Chocolate Milk and Toffee Caramel. As the brand
is introducing the flavours to the audience, they feature both the personas of Dhawan in a dance
face-off challenge.
The Company is delighted to have Varun Dhawan as the face for SMOODH. Varun is an
admired youth icon who is extremely fit, energetic and health conscious which resonates with
our brand personality. Moreover, his popularity cuts across all generations and geographies
which will accelerate the reach and awareness for SMOODH in the dairy beverage category.

REVIEW OF THE MARKETING PERFORMANCE

SMOODH has been seeing almost equal offtake in rural and urban markets, a phenomenon that
has never been experienced by existing branded flavoured milk brands in aseptic cartons as
they don’t exist in rural markets. With this breakthrough combination in price and pack size,
Parle Agro has brilliantly activated almost 80-90% of the rural market for flavoured milk which
has never been activated to date, until the launch of SMOODH.
One of the distributor with Parle Agro for nearly 22 years. He sells Smoodh stock worth over
Rs 8 lakh a month to retailers. Moreover, kids, he says, are now choosing Smoodh over a Rs.
10 Cadbury Dairy Milk chocolate bar. “It’s the same price and its more filling than Cadbury.”
Sales across the country have ensured Smoodh is growing explosively: 300 million packs were
sold in the seven months since its launch in September 2021. The company is on track to sell
1.3 billion packs by the end of this year. Already, it claims to have captured 33 percent share
of the Rs 800 crore flavoured milk market by number of packs sold.

REFERENCES
• New Food Product Development Book by Gordon W. Fuller.
• https://nzifst.org.nz/resources/foodproductdevelopment/documents/FoodProduc
tDevelopment-Chapter7.pdf
• https://www.forbesindia.com/article/take-one-big-story-of-the-day/how-parle-
agro-is-milking-the-market-with-smoodh/76395/1
• https://bestmediainfo.com/2021/07/parle-agro-diversifies-into-dairy-category-
launches-flavoured-milk-product-smoodh
• https://www.afaqs.com/news/mktg/parle-agro-forays-into-dairy-segment-with-
smoodh-milkshake