UPI Led To Dip In Sales Of Toffees? CA Explains How - See Post

A very interesting, provocative post from a Chartered Accountant, Harshad Shah from Mumbai, as he shares the surprising impact of UPI on the traditional toffee business in India, which started overturning the age-old outlook that may have made that market run on coin change alone.

Shah's post said that toffees sold at major brands including Mondelez, Mars, Nestle , Perfetti, Parle, and ITC witnessed straight-line growth before UPI came about. All the companies witnessed straight-line sales for years before sales started coming with a year-to-year increase and the business model was one that saw small coin change exchanged with toffees.

Shah believes that shopkeepers would often say they don't have small coins and used to give customers toffees as change.

The rise of UPI, however, drastically changed the picture in India as digital payments are on an explosive growth curve. "Before UPI, shopkeepers would trade toffees for small change, which over time, added up to vast sums of money that were never returned to customers," Shah said. “That was a great, albeit concealed advantage for the toffee industry-encouraging daily sales customers, of course, ended up subsidizing their toffees with spare change.”

This system came to an end with the introduction of UPI, which enables consumers to pay the exact amount instantly through mobile phones. "With UPI, all of this stopped," Shah said, pointing out how the accuracy and transparency of digital payments did away with the need for small change and, consequently, reduced the impulse to buy toffees. Consequently, the sales of toffees, which had been a favorite option for people looking for small denominations, suffered a huge setback.

Hershey’s Sales Dipped

Hershey's is one of the world's largest toffee manufacturers, and the company has also recognized this change. Recently, in a statement, the company revealed that India was one of the most affected markets in the post-COVID era, as its expansion plans had been hindered by this new consumer behavior.

Shah emphasised the bigger lesson: "Technology can affect any business." In his post, he pointed out that financial products were never considered direct competitors to toffee brands, but the advent of digital payment systems, which replaced the need for small change, has inadvertently hurt the toffee market. The change in consumer behavior, with people now using UPI instead of coins, shows how seemingly unrelated innovations can disrupt entire industries.

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