Chocolate Industry - India

Topics: Chocolate, Cadbury plc, Cadbury Dairy Milk Pages: 30 (5442 words) Published: June 25, 2008
Chocolate and Cocoa : A Rich History

Chocolate dates back to ancient America when the Mayans, and later the Aztecs, ground the beans of the Theobroma cacao tree into a bitter beverage, which they prized for its mystical and medicinal attributes. Chocolate’s name comes from the Aztec word, xocalatl, which means bitter water. Cortés, the conqueror of the Aztecs, brought the beans to Europe in the 1500s, where they were used to treat anemia, fever, gout, hemorrhoids, poor digestion, depression, and heart ailments. Today, chocolate is usually a highly processed blend of chocolate liquor, cocoa butter (all fat), cocoa powder, sugar, emulsifiers, and milk—far different from its origins. White chocolate contains no real chocolate at all—it’s just cocoa fat, sugar, and flavorings.

Chocolate market in India

The size of the chocolate market in India is about 4,000 tonnes and is valued at Rupees 6500 million (US$ 130 million). Cadbury India has the biggest market share at 70 per cent while Nestle is the second largest at 20 per cent. Cadbury’s reaches 0.6 million retail outlets.

Sugar Confectionary / gums (Volume)Tonns163110101761708 Sugar Confectionary / gums (Value)Rs Billion16.81018.56 Chocolates (Volume)Tonns2700093000010
Chocolates (Value)Rs Billion8.5129.410

Chocolates is impulse category

The impulse category is finally driven by visibility and purchasing power of consumers. Traditionally, this is how products are positioned within the impulse category. First come soft drinks, which is a major market. They are followed by biscuits, sugar confectionery, ice creams and salted snacks. In the past, chocolate companies used to consider only the different brands in the chocolate market as their competitors. That was a mistake.

In real life, chocolate products are fighting for a share of the consumers' pockets. They are facing competition not only from chocolates but also other impulse products such as soft drinks, biscuits, salted snacks and ice-cream. To maintain the share of the chocolate market in the impulse market, the chocolate industry has to make sure that it grows in

line with the impulse market or grows faster than that. Since the share of chocolates in the impulse category is just six per cent, the opportunities are plenty here. Despite the fact that Indians have strong affinity for sweets, the size of domestic confectionery market is small on account of traditional consumer tastes and habits. The Chocolate market in India is a niche market penetrated largely in urban areas and per capita consumption is low as compared to those in developed countries of the West.

SWOT ANALYSIS of chocolate industry


Customers of chocolates are not price sensitive
The consumer is not price sensitive. But the category is price sensitive. Downgrading does happen in other FMCG products. Chocolate demand is however more a function of affordability. Demand growth depends on shifts in income pyramid. When the economy grows at a lower pace, the upward shift in income pyramid is slower. This affects the rate at which new consumers are added. But existing consumers, who can afford the product do not downgrade. When we introduce lower priced products in smaller sizes, we add to the consumer base. Our existing consumers do not start buying the smaller chocolates.


Building a direct network of retailers i.e weakness of storage and logistics Chocolate needs to be distributed directly, unlike other FMCG products like soaps and detergents, which can be sold through a wholesale network. 90% of our products are sold directly to retailers. Building such a direct network in for distribution is a daunting task.

Chocolates are not viewed as a snack food
Behaviorally, chocolates are still consumed as a chocolate and not as a filler. Perk still competes with a Dairy Milk and not with biscuits/ other snack foods....
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