Summary

“An Analytical Study of Chocolate Industry in India with Special Reference to Cadbury’s
India” is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA,
which
enlightens us about the size & status of chocolate industry in India. The project gives information
about the competitors, their market share, and their product basket and highlights success
features.
The project also presents data on types & categories of chocolates, a brief study of chocolate
manufacturing process
The project also covers a brief study of Cadbury’s India Limited – the biggest player in the
Indian Chocolate Industry with reference to its presence, market share, product offerings,
marketing
strategies, strengths & weaknesses, success factors and Worm Controversy Management. Also,
the
implication of pricing, distribution strategies and impact of external environment has been
recorded.
The project throws light on problems and challenges of the Indian Chocolate Industry, growth
opportunities and strategies to be adopted for growth in this industry.
Finally, the project gives information about home-made chocolates and Chocolate Boutiques
and the ways in which Indian consumers and Chocolate players are experimenting and
innovating
chocolates and giving the Indian Chocolate Industry a new sweetness.
Table of contents
Sr. No Topic Page
No
1 Project Objective 6
2 An Overview of Chocolate Industry in India 8
3 Types of Chocolates 12
4 Categories of Chocolates & Form of Consumption 14
5 Chocolate Manufacturing Process 15
6 Market Size (by value & by volume) 16
7 Major Players & their Market Share 17
8 Cadbury’s India Limited – A Study 18
9 Cadbury & The Worm Controversy 37
10 MARKETING - PROMOTION of CHOCOLATES in INDIA 46
11 Nestle India 50
12 Amul (GCMMF) 53
13 CAMPCO 59
14 Home-made Chocolates 62
15 Interesting Chocolate Facts 63
16 Problems & Challenges in Indian Chocolate Industry 64
17 External Factors affecting Growth of Chocolate Industry in INDIA 66
18 Growth Opportunities in Indian Chocolate Industry 67
19 Strategies for Growth & Success in India 69
20 Chocolate Boutiques & Designer Chocolates 70
21 Conclusion 72
22 Bibliography 73
Project Objective
This project aims at understanding the overall Chocolate Industry in India, the product
portfolios of different players in the market, various factors affecting the growth and success of
chocolate industry in India, the challenges and opportunities which the market offers and the
changing trends in the Indian Chocolate Industry. The project also covers a brief study of
Cadbury’s
India with reference to above points.
An Overview of Chocolate Industry in India
The chocolate industry in India as it stands today is dominated by two companies, both
multinationals. The market leader is Cadbury with a lion's share of 70 percent. The company's
brands (Five Star, Gems, Eclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s,
Cadbury had a market share of over 80 percent, but its party was spoiled when Nestle appeared
on
the scene. The latter has introduced its international brands in the country (Kit Kat, Lions), and
now
commands approximately 15 percent market share. The Gujarat Co-operative Milk Marketing
Federation (GCMMF) and Central Arecanut and Cocoa Manufactures and Processors Co-
operative
(CAMPCO) are the other companies operating in this segment. Competition in the segment will
get
keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian
chocolate pie.
Per Capita Chocolate Consumption (in lb) of first 15 countries of the world
Rank Countries Per Capita
Consumption (in lb)
1 Switzerland 22.36
2 Austria 20.13
3 Ireland 19.47
4 Germany 18.04
5 Norway 17.93
6 Denmark 17.66
7 United Kingdom 17.49
8 Belgium 13.16
9 Australia 12.99
10 Sweden 12.90
11 United States 11.64
12 France 11.38
13 Netherlands 10.56
14 Finland 10.45
15 Italy 6.13
INDIA, stands nowhere even near to these countries when compared in terms of Per Capita
Chocolate Consumption. The Indian chocolate industry is extremely fragmented with a
range of
products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops, toffees
and
sugar candies.
Given India's mammoth population, it comes as a surprise that per capita chocolate consumption
in
the country is dismally low - a mere 20 gms per Indian. Compare this to over 7 kgs in most
developed nations.
However, Indians swallowed 22,000 tonnes of chocolate last year and consumption is
growing
at 10-12 percent annually.
The market size of chocolates was estimated to be around 16,000 tonnes, valued around Rs.
4.16 billion in 1998. Volume growth which was over 20% pa in the 3 years preceding 1998,
slowed
down thereafter.
Both chocolate and sugar confectioneries have abysmally low penetration levels, in fact, even
lower than biscuits, which reach 56 per cent of the households. Market growth in the chocolate
segment has hovered between 10 to 20%. In the last five years, the category has grown by 14-
15%
on an average and will expect it to continue growing at a similar rate in the next five years.
The market presently has close to 60mn consumers and they are mainly located in the
urban areas. Growth will mainly come through an increase in penetration as income levels
improve.
However, almost all of this consumption is in the cities, and rural India is nearly
‘chocolate-free’. But the fact is that three quarters of Indians live in Rural Areas. “Average
summertime temperatures reach 43 degrees Celsius in India. Chocolate melts at body
temperature of
36 degrees.”
Per capita consumption of chocolates in India is minuscule at 20gms in India as compared
to around 5-8 kgs and 8-10 kgs respectively in most European countries. ... Awareness
about
chocolates is very high in urban areas at over 95%. ...
Growth of other lifestyle foods such as malted beverages and milk food have actually
declined by 3.7 per cent and 11.7 per cent, however the CHOCOLATES continue to grow at
the rate of 12.6%.
Low priced unit packs, increased distribution reach and new product launches can be
said to have fuelled this growth.
The launch of lower-priced, smaller bars of chocolate in the last two years and
positioning of chocolate as a substitute to traditional sweets during festivals, have boosted
consumption. This is also because chocolate, which was considered to be an elitist food, has
caught
the fancy of buyers looking for a lifestyle item at affordable cost.
Till recently, chocolate consumption had been restricted by low purchasing power in the
market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only
for
the well-off.
After economic liberalization in 1991, major changes have occurred in food habits, partly on
account of rise in gross domestic product (GDP) growth and higher purchasing power in the
hands of
the middle-class representing a third of the total population. Availability of chocolate products
has
also exploded.
A study had projected that sales of the Indian chocolate industry would rise from $125/$130
million in 1998 to $175/$180 million by the year 2000 and to $450 million by the year 2005
which
ACTUALLY happened irrespective of various negative factors.
Per capita chocolate consumption continues to be low at about 200g per person, being
mainly consumed in urban areas. In the middle and higher income groups, 70 per cent of
children, 43
per cent of young adults and 16 per cent of adults consume chocolate.
Chocolate Consumption Structure - 2004
Children
55%
Adults
12%
Young Adults
33%
Chocolate & Confectionery Market of India - 2004
Chocolate Counts
Rs. 250 Cr.
10%
Chocolate Bar
Rs. 350 Cr.
14%
Mints & Chew ing
gums
Rs. 325 Cr.
13%
Sugar Boiled
Confectionery
Rs. 1600 Cr.
63%
AC Nielsen ORG Marg report estimates the Indian Chocolate Industry’ worth at Rs
2,000-crore (Rs 20 billion)
Types of Chocolates
Depending on what is added to (or removed from) the chocolate liquor, different flavors and
varieties of chocolate are produced. Each has a different chemical make-up, the differences are
not
solely in the taste.
1. Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is used
primarily as an ingredient in recipes, or as a garnish.
2. Semi-sweet chocolate is also used primarily in recipes. It has extra cocoa butter and sugar
added. Sweet cooking chocolate is basically the same, with more sugar for taste.
3. Milk chocolate is chocolate liquor with extra cocoa butter, sugar, milk and vanilla added.
This is the most popular form for chocolate. It is primarily an eating chocolate.
Cocoa is chocolate liquor with much of the cocoa butter removed, creating a fine powder. It can
pick up moisture and odors from other products, so you should keep cocoa in a cool, dry place,
tightly covered.
There are several kinds of cocoa
Low-fat cocoa has the most fat removed. It typically has less than ten percent cocoa butter
remaining.
Medium-fat cocoa has anywhere from ten to twenty-two percent cocoa butter in it.
Drinking or Breakfast cocoa has over twenty-two percent left in it. This is the cocoa used in
chocolate milk powders like Nestle's Quik.
Dutch process cocoa is cocoa which has been specially processed to neutralize the natural
acids in the chocolate. It is slightly darker and has a much different taste than regular cocoa.
Decorator's chocolate or confectioner's chocolate isn't really chocolate at all, but a sort of
chocolate
flavored candy used for things such as covering strawberries. It was created to melt easily and
harden
quickly, but it isn't chocolate.
Categories of Chocolates
Commercial Chocolates are available in the following forms:
1. Bars or Moulded Chocolates
2. Counts
3. Panned Chocolates (Gems)
4. Éclairs
5. Assorted Chocolates
Bars or moulded chocolates (like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium,
and
Nestle Milky Bar) comprise the largest segment, accounting for 37% of the total chocolate
market in
volume terms. ... Wafer chocolates such as Kit-Kat and Perk also belong to this segment. Panned
chocolates accounts for 10% of the total chocolate market. ... Wafer chocolates such as Kit-Kat
and
Perk also belong to this segment. ..
Form of Consumption
a. Pure Chocolates
b. Toffees
c. Cakes & Pastries
d. Malted Beverages
e. Wafer Biscuits & Baked Biscuits
f. Chocolate Desserts
Chocolate Manufacturing Process
Workers cut the fruit of the cacao tree, or pods open and scoop out the beans. These beans are
allowed to ferment and then dry. Then they are cleaned, roasted and hulled. Once the shells have
been removed they are called nibs. Nibs are blended much like coffee beans, to produce different
colors and flavors. Then they are ground up and the cocoa butter is released. The heat from the
grinding process causes this mixture of cocoa butter and finely ground nibs to melt and form a
freeflowing
substance known as chocolate liquor. From there, different varieties of chocolate are
produced.
What is conching?
Raw unprocessed chocolate is gritty, grainy and really not suitable for eating. Swiss
chocolate manufacturer Rudolph Lindt discovered a process of rolling and kneading chocolate
that
gives it the smoother and richer quality that eating chocolate is known for today. The name
'conching' comes from the shell-like shape of the rollers used. The longer chocolate is conched,
the
more luxurious it will feel on your tongue.
Market Size (by value & by volume)
The Indian chocolate market is valued at Rs. 650 crores (i.e. Rs. 6.50 billion) a year. The
Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tonnes per annum, and
is
valued in excess of US$ 80 million.
Chocolate penetration in the country is a little over 4 percent, with India's metros proving to
be the big draw clocking penetration in excess of 15 percent. Next, comes the relatively smaller
cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in the rural
segment,
which explains the mere 2 percent penetration in villages.
The market presently has close to 60mn consumers and they are mainly located in the
urban
areas.
Major Players & their Market Share
The major players in the Indian Chocolate Industry are:
1. Cadbury’s India Limited
2. Nestle India
3. The Gujarat Co-operative Milk Marketing Federation (GCMMF) – AMUL
4. Cocoa Manufactures and Processors Co-operative (CAMPCO)
Bars Count
Lines Wafer Panned Premium
Cadbury’s Dairy Milk &
Variants
5-Star, Milk
Treat Perk Gems,
Tiffins
Temptation &
Celebrations
Nestle Milky Bar Bar One,
Crunch
Kit Kat,
Munch Nutties
Amul
Milk Chocolate
Fruit ‘n’ Nut
FUNDOO
Bindaaz
Almond Bar
Campco Campco Bar,
Cream
Krust,
Turbo Treat
Cadbury’s India Limited – A Study
CADBURY’S INTERNATIONAL
Cadbury is a very old trusted name. It all started in Birmingham in England when John
Cadbury started his family grocery shop with side business of cocoa and chocolate products in
around 1824. His two sons, Richard and George, expanded their family business of cocoa and
chocolate. Bournville, a town near Birmingham, was build by them as a part of expansion of
their
business.
Cadbury family is also known for their contribution in social reforms and considered as liberals.
This family was in the forefront of adult education movement in England.
CADBURY’S INDIA LIMITED
Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes
Overseas Ltd (CSOL) in 1948. The company’s original name was Cadbury Fry (India) Ltd. In
1978,
CSOL diluted its equity stake to 40% to comply with FERA guidelines. In 1982, the name was
changed to Hindustan Cocoa Products. CSOL’s shareholding was increased to 51% in Jan ’83
through a preferential rights issue of Rs700mm. The current name was restored in Dec ’89. In
2001,
Cadbury Schweppes made an open offer to acquire the 49% public holding in the company. The
parent holds over 90% of the equity capital after the first open offer. A second open offer has
been
made to buyback the balance shareholding, after which the company would operate as a 100%
subsidiary of Cadbury Schweppes Plc
Ever since the Cadbury is in India in 1947, Cadbury chocolates have ruled the hearts of
Indians with their fabulous taste. The company today employs nearly 2000 people across India.
Its one of the oldest and strongest players in the Indian confectionary industry with an
estimated 68 per cent value share and 62 per cent volume share of the total chocolate market. It
has
exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent
throughout the 1990’s. Cadbury is known for its exceptional capabilities in product innovation,
distribution and marketing.
With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations, Bytes, Chocki,
Delite and Temptations, there is a Cadbury offering to suit all occasions and moods.
Today, the company reaches millions of loyal customers through a distribution network
of 5.5 lakhs outlets across the country and this number is increasing everyday.
OBJECTIVES AND VALUES
Our objective is to
Grow shareholder value…over the long term
Cadbury in every pocket
Our marketing strategy is aimed at achieving this vision by growing the market, by
appropriate
pricing strategy that will create a mass market and to have offerings in every category to
widen the
market
Our Managing For Value Process incorporates
Setting stretched financial objectives.
Adopting Value Based Management for major strategic and operational decisions and business
systems.
Creating an outstanding leadership capability within our management.
Sharpening our company culture to reflect accountability, aggressiveness and adaptability.
Aligning our management rewards structure with the interests of our shareowners.
VISION
Life Full Of Cadbury
Cadbury is an organisation which impacts and interacts with the consumers.
Cadbury is present in most happy occasions in the life of our consumer.
Our brands excite our consumer.
Cadbury is an expression of a consumer's life.
Cadbury Full Of Life
Cadbury as a company is vibrant.
Cadbury ia a fun and energising workplace.
Cadbury is robust and alive.
Business
Cadbury dominates the Indian chocolate market with above 65 – 70 % market share. Besides, it
has a
4% market share in the organized sugar confectionery market and a 15% market share in milk/
malted foods segment.
Changing product mix
Contribution to turnover
1994
Contribution to turnover
2001
Chocolate 59% 65%
Sugar Confectionery 9% 10%
Food Drinks 32% 24%
Categories/ Brands
Chocolate Bars , Count lines , Panned confectionery ,
Wafer chocolates, Assorted Chocolates & Gift Chocolates
Sugar Confectionery Googly , Mocka, Gollum, Frutus & Nice Cream
Food Drinks Bournvita, Delite & Drinking Chocolate
Cadbury's Indian operations are not just the largest in Asia but also the cheapest. In India,
Cadbury has the largest market share anywhere in the world and has been the fastest
growing
FMCG Company in the last three years with a compound annual growth rate of 12.5 per
cent.
Plant locations
Cadbury’s manufacturing operations started in Mumbai in 1946, which was subsequently
transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view to
promote
modern methods as well as improve milk yield. In 1981-82, a new chocolate manufacturing unit
was
set up at the same location in Talegaon. The company, way back in 1964, pioneered cocoa
farming in
India to reduce dependence on imported cocoa beans. The parent company provided cocoa seeds
and
clonal materials free of cost for the first 8 years of operations. Cocoa farming is done in
Karnataka,
Kerala and Tamil Nadu. In 1977, the company also took steps to promote higher production of
milk
by setting up a subsidiary Induri Farms Ltd near Pune. In 1989, the company set up a new plant
at
Malanpur, MP, to derive benefits available to the backward area. In 1995, Cadbury expanded
Malanpur plant in a major way. The Malanpur plant has modernized facilities for Gems, Eclairs,
Perk etc. Cadbury also operates third party operations at Phalton, Warana and Nashik in
Maharashtra.
These factories churn out close to 8,000 tonnes of chocolate annually.
Raw Material Composition in 2004
Product Name Quantity
(in Kgs)
Cost
(Rs) / Ut
Total Cost
(in Rs.)
Milk Powder / Liquid Milk / Cream 26232610 15.79 414212911.9
Dry Fruits 432340 162.6 70298484
Edible Oil 2167450 51.72 112100514
Glucose-Liquid 27061090 13.17 356394555.3
Cocoa Beans / Butter/ Powder 8478460 109.95 932206677
Malt Extract 8679690 20.39 176978879.1
Total 2062192021
Cadbury's India Limited
Raw Material Composition in 2004
(in Rs.)
Malt Extract
9%
Cocoa Beans/
Butter/Powder
46%
Edible Oil
5%
Dry Fruits
3%
Milk Powder/
Liquid Milk/
Cream 20%
Glucose-Liquid
17%
FINISHED PRODUCTS DETAILS (as on 2004)
Product Name Stock
(%)
Production
(units)
Sales Qnty
(units)
Sales
(Rs. Cr.)
Chocolates / Coated Wafer & Confectionery 58.57 23810373 22064912 518.51
Malt Foods (Jar/Refill/Tin) 22.02 3206253 3030579 194.97
Excise duty 13.69 - - 121.23
Confectionery- Hard Boiled 4.04 4425758 4023276 35.79
Cocoa powder (Tin/Bags) 1.67 33312 29904 14.78
Total 99.99 31475696 29148671 885.28
Cadbury's India Limited
Finished Products - Sales Revenue - 2004
(in Rs. Crores)
Cocoa powder
(Tin/Bags)
2%
Confectionery-
Hard Boiled
4%
Excise duty
14%
Chocolates/
Coated Wafer/
Confectionery
58%
Malt Foods
(Jar/Refill/Tin)
22%
Cadbury’s India Limited
Sales in Rs. Million
Years 1998 1999 2000 2001
Sales 3354 3892 4324 4716
Sales
3354
3892
4324
4716
0
1000
2000
3000
4000
5000
98 99 00 01
Years
Rs. Million
PRODUCT MIX - CHOCOLATES
PRODUCT BASKET
Category Brand Variants
Bars Dairy Milk
Plain
Fruit n Nuts
Double Decker
Roasted Almond
Chunky
5-Star
5 Star
Count Lines 5 Star Chrunchie
Milk Treat Chocolate
Orange
Wafer Chocolate Perk Perk
Perk XL
Other Chocki Mint, Strawberry & Chocolate
Premium/ Gift Chocolates Temptation Rum, Cashew, Almond & Orange
Celebrations Various Gift Packs
Cadbury’s Dairy Milk (CDM):
Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but world wide. CDM
is
the single largest selling unit in India. It has annual sales to the tune of Rs 200 crore. CDM not
only
accounts for 30 per cent of the total chocolate market in value, but commands nearly 26 per cent
in
volume terms and close to 30 per cent of Cadbury’s annual turnover.
Moving from a predominantly adult positioning in the days of the legendary dancing girl ad, to
the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a long
sweet
journey. In spite of the new categories being explored by Cadbury, its star brand remains
Cadbury
Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market.
Cadbury’s Temptation:
Cadbury’s Temptation is premium chocolate brand aimed for high value consumption. Various
variants available are Almond, Rum, Cashew & Orange. Cadbury’s temptation is priced at Rs. 40
Cadbury’s Celebration
Cadbury India launched its premium Celebrations range, which contains traditional Indian dry
fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving away
dry
fruits — which Indians traditionally consider a premium, healthy gift — with chocolate.
Cadbury
now has 90 per cent market share in this profitable segment.
PRODUCT REVAMPING & INNOVATIONS
Cadbury’s chocolate brands registered double-digit growth in 2002, touching an astounding
19 per cent in the second half of that calendar year. Getting the power brands right was the first
priority, so genuine re-launches of the products were made.
However, the growth rate was declining after that. The growth went down from 19 per cent
in 1999 to 12 per cent in 2000 to single-digits, with seven per cent in 2001. If it staged a smart
recovery to nearly 10 per cent in 2002, it was largely on the back of Chocki and the revamped
power
brands.
PRODUCT INNOVATIONS:
5 STAR:
Consumer feedback suggested that the old 5 Star was too chewy, and people complained of it
sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5 Star
Crunchy
PERK:
Perk was made much lighter and the size of the bar increased to match Nestle’s Munch. Perk
had been under fire from Nestle’s deadly duo of KitKat and Munch, but after the relaunch, its
marketshare is two per cent more than KitKat’s. And, the five-year-old brand is now almost as
big as the decades-old 5 Star in size, both in the region of Rs 50-55 crore.
HEROES:
Packaging innovation has played a vital role in revamping of various Cadbury’s brands.
Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single
outer case.
NEW PRODUCT LAUNCHES
Rich Dry Fruit Collection
For Gifting Festive Season
Cadbury Celebrations’ Rich Dry Fruit
Collection – a range of premium
chocolate gift boxes.
Available in attractive packs, the Collection caters to a premium gifting consumer and is an ideal
festive gift. It is a unique combination of the best Cadbury chocolate and premium dry fruits and
comes in four different formats each of which is a mix of select premium dry fruits enrobed in
rich
Cadbury Dairy Milk chocolate.
Cadbury's Creative Launch
A new ‘after dinner' segment
Cadbury Desserts
“for sweet moments after dinner”
“Khaane Ke baad Kuch Meetha Ho Jaye”.
Rs. 20/- per packet of 44 gms
Cadbury Dairy Milk (CDM) Desserts – with rich indulgent crème center, in exotic & traditional
flavors of Tiramisu and Kalakand. CDM Desserts offer the perfect rounding off taste, after meal
that
adds special ‘Meetha' moments to the family. The rich tastes of CDM combined with the unique
crème center in exotic flavors provide a special chocolate experience. CDM Desserts add delight
to
the after-meal moments, especially with the consumers whose current choice of sweets range
from
home made delicacies to fruits to meethai.
PRICING
After the roaring success of Nestle’s Munch and Chocostick, Cadbury’s empire struck back hard.
The Rs 5 price point accounts for more than half of all chocolate sales. Nestle had seized the
initiative at this price point, with its launch of Munch, now a roaring success (and the largest
selling
product at that price point). Today, Cadbury has four products at this price point: CDM, Perk, 5
star
and Gems — and the five-rupee CDM bar is its single largest-selling SKU.
“This is a potent price point in India, because the average purchasing power is abysmally
low,” is what industry analyst have to say.
Nestle kicked off one of the biggest success — the liquid chocolate category with its brand
Chocostick priced at Rs.2 — three months ahead of competition. Cadbury did react with Chocki,
priced at Rs 2, expanding the concept of sachetisation to new frontiers. Chocki has been the
single
biggest growth driver for Cadbury as well as the entire chocolate category. The novelty of
the
format endeared itself to the existing customer. In less than one year, it constituted nearly 10 per
cent
of the total chocolate market, split equally between Cadbury and Nestle.
Volume led growth strategy
Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller
unit
packs at lower price points. Simultaneously, the company seems to have astutely juggled with the
larger pack sizes and raised prices to a degree higher than what appears at face. The strategy has
driven volumes in the last two years and we expect the volume growth to continue in the next
two
years.
PRICE WOES
Chocki, selling at a potent price point of Rs 2, was ideal for smaller towns, especially since it did
not
need refrigeration. But Chocki started to cannibalise other higher-priced chocolates in larger
markets.
The students of Bombay Scottish (an upmarket school in Mumbai) are not supposed to eat
Chocki, they should not have even heard of the product.
Distribution
Chocolate needs to be distributed directly, unlike other FMCG products like soaps and
detergents, which can be sold through a wholesale network. 90% of chocolate products are
sold
directly to retailers.
Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has
to be kept cool in summer and also has to be adapted to suit local tropical conditions.
Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers.
The company has a total consumer base of over 65 million. Besides use of IT to improve
distribution
logistics, Cadbury is also attempting to improve distribution quality. To address the issues of
product
stability, it has installed VISI coolers at several outlets. This helps in maintaining consumption
in
summer, when sales usually dip due to the fact that the heat affects product quality and thereby
offtake.
To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is
setting up two separate distribution channels – one for CORE business & other for MASS
markets,
with different stockists, wholesalers and retailers. One set will be dedicated to Cadbury’s high-
end
products and traditional chocolates. The other will cater to the mass market brands namely
Chocki,
Halls, Eclairs et al — all products priced below Rs 3.
But today, Cadbury's distribution network reaches out to six lakh outlets each for its
chocolate & confectionery brands (i.e. total reaching12 lakh outlets).
Promotion
Typically it is said that chocolates are being eaten when everyone is happy. And this is
something advertising has always portrayed. But it is found chocolates are eaten under diverse
conditions and moods - when people are anxious, when they are sad, when happy - a whole
range of
emotions. Condensing these views & thoughts, it can be said chocolate is a true soul mate.
Someone
who is with you through the ups and downs of life, helping you bounce back. And that's what
Cadbury's Dairy Milk (CDM) positioned itself as - a special friend.
% Share of various Brands Ad spending of Cadbury
Here, the 6 Cadbury brands shown in the graph comprise 85% of the advertising pie, whereas,
rest of
the 9 brands advertised by Cadbury comprise 15% of the advertising. Cadbury Dairy Milk
Chocolate
is the most advertised brand (with 22%).
RE-INVENTING CABDURY
“Kya Swad Hai Zindagi Mein” redefined the way Indians looked at Cadbury
Chocolates. (The commercial showed a beautiful young lady overcoming all obstacles on the
cricket
ground, crossing boundary, watchman, securities and embracing her lover who won the game by
hitting a six). This theme introduced in around mid 90’s bought instant growth to Cadbury’s
Dairy
Milk. The Ad campaign ran successful for about four years and immersed deeper inside hearts of
Indians.
In March 2002, Cadbury launched its next advertisement campaign for its flagship chocolate
brand, Cadbury's Dairy Milk (CDM). The campaign featured a television (TV) commercial that
was
significantly different from the company's earlier commercials for the brand. It featured Cyrus
Broacha interviewing college students and asking why they liked to eat CDM. This was followed
by
college students 'singing' their excuses for eating CDM. Just as the commercial seems all set to
end
with the students and Cyrus singing the famous CDM theme, 'Khane Walon Ko Khane Ka
Bahaana Chaahiye' (those who want to eat, will find excuses), a student comes up and
questions
Cyrus,
The advertisement aimed at conveying the idea that no specific occasion is required for
consuming CDM. This was a significant departure from CIL's strategy of appealing to
adults
in India, who sought a rational justification for indulging in chocolate consumption.
Cadbury roped in Preity Zinta for its PERK brand. Preity Zinta’s angelic dimples laid the
foundation for what would become the Indian teenager’s favorite snack. After this campaign,
PERK’S sale surged
Cadbury’s advertising has, over the past few years, aptly reflected India’s passion for
chocolates.
CADBURY ADVERTISEMENTS
Dil ko jab kushi choo jaye..."...kuch meetha jo jaye.."
Akhir barvi pass ho hi gaya." kuch meetha jo jaye..
Log Cadbury Kyon Khate Hai….Khaane waalon ko khaane ka bahaana."
Cadbury’s Dairy Milk…..Asli swad zindagi ka
CADBURY DESERTS
“khaane ke baad kuch meetha ho jaaye.”
CADBURY CELEBRATIONS
Looking wistfully at a photograph, Mr. Bachchan
thinks, he recollects the photo-shoot when he had
thrown the cap off his friend's head.
Aaj dil ne socha yun, kissi apne ko kya doon?
Jo usse kahe tum apne ho,
.jo apne aap mein khaas ho,
jo sirf taufa nahin ehsaas ho
Jisme rishto ki mithas ho….
Cadbury’s Celebrations
Rishto ki Mithas
Cadbury And The Worm Controversy
The discovery of worms in some samples of Cadbury’s Chocolate in early October 2003
created one of the biggest controversies in India against a Multi National reputed for being a
benchmark of QUALITY.
The controversy created an deep adverse impact on the company with their sales not only
drastically dipping down, but at the same time allowing the competitors to establish their
foothold
and taking maximum advantage of Cadbury’s misfortune.
The controversy, and the adverse publicity received in several countries, set back its plan of
outsourcing model which would have resulted in significant revenue generation, several months
back.
The "worms’ controversy" came at the worst time….the next few months were the peak
season of Diwali, Eid & Christmas. Cadbury sells almost 1,000 tonnes of chocolates during
Diwali. In that year, the sales during festival season dropped by 30 per cent. The company
saw
its value share melt from 73 per cent in October 2003 to 69.4 per cent in January 2004. In
May,
however, it inched up to 71 per cent. CDM sales volumes declined from 68 per cent in
October
’03 to 64 per cent in January 2004
Clearly, the worm controversy took a toll on Cadbury's bottom-line. For the year ended
December 2003, its net profit fell 37 per cent to Rs 45.6 crore (Rs 456 million) as compared
with a 21 per cent increase in the previous year.
However, Cadbury’s reiterated that all through the 55 years of leadership in India, that it has
remained synonymous with chocolates and have remained committed to high quality and
consumer
satisfaction."
CABDBURY’S FIGHT-BACK
'Project Vishwas'
“Steps to ensure quality & regain the confidence”
Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiled
'Project Vishwas', a plan involving distribution and retail channels to ensure the quality of its
products.
The company's team of quality control managers, along with around 300 sales staff, checked
over 50,000 retail outlets in Maharashtra and replaced all questionable stocks with immediate
effect.
The Vishwas programme was intended to build awareness among retailers on storage
requirements for chocolates, provide assistance in improving storage conditions and strengthen
packaging of the company's range of products.
Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60
bars. These helped stockists display and sell the products "safely and hygienically" 190,000
retailers
in key states were covered under this awareness programme.
The Big ‘B’ FACTOR
The big factor that has pushed up CDM sales is the Amitabh Bachchan campaign. It helped
restore consumers' faith in the quality of the product. In early January, Cadbury appointed
Amitabh
Bachchan as its brand ambassador for a period of two years.
The company believed that the reputation he has built up over the last three decades
complements their own, which was built over a period of 50 years.
Yet, the entire credit of recovery could not be attributed to the brand mascot.
Incisive action taken by the company also helped. Some of which were:
1. Responded to consumers concern over the issue rapidly. Also, the communication campaign
worked effectively in giving out the central message.
2. The packaging was changed to include a sealed plastic wrapper inside the outside foil.
Cadbury’s launched a new 'purity-sealed' packaging for its flagship product, Cadbury Dairy
Milk. The packaging is in response to foreign bodies, notably worms, being found in its
products. Over the next few weeks Cadbury will work towards introducing either a
heatsealed
or a flow-pack packaging that offers a high level of resistance to infestation from
improper storage.
3. New advertising & promotion campaigns were in place which accounted for an Ad spend of
nearly Rs 40 crore (Rs 400 million)
Cadbury invested nearly Rs 25 crore (Rs 250 million) this year on new machinery for the
improved packaging.
Addressing his audience, Mr. Bachchan says, "Mujhe aapse kuch kehna hai, jis kaam
mein manushya ki antar aatma uske saath na ho, uss kaam ko karne se usse sab kuch
mil sakta hai... man ki shaanti nahin mil sakti. Isliye jab Cadbury walon ne mujhe kaha
ki unki baat main aap tak pahunchaoon, to pachpan saalon se Cadbury khaane wala
main bhi thoda sa hitchkichaya.... ...Maine unse ek sawaal poocha,ki kya iske baad main
chain ki neend so paoonga ya nahin, to jawaab mein voh mujhe apni factory le gaye."
Walking into the Cadbury factory,
he takes a look at their complete
manufacturing process and continues,
"Aur mujhe apni international
technology....apne kade quality controls
aur double protection... ...packaging
dikhayi."
Saying which he takes a bite of the
chocolate.
Finally giving his personal assurance and
approval he says,
"Aaj kal mein badi
chain ki neend so raha hoon."
"Ab aapki favourite Cadbury Dairy Milk
naye purity seal pack mein."
CADBURY’S SINGING SWEETLY AGAIN
All is well that ends well. And for Cadbury’s India, nothing can be sweeter than
Regaining Back the Consumer Confidence.
Thanks to quick action taken to recover the damage done by the worm controversy like
Operaion Vishwas, adopting new packaging & massive advertising with Mr. Amitabh Bachchan
as
their brand ambassador, Cadbury’s regained its market share.
The survey conducted by the company says that consumers have long forgotten the
controversy and are back to their merry chocolate-chomping ways. Sales were back to the
precontroversy
levels. Consumer confidence in the product was back and there was a steady progression
in sales .The company posted a high double digit sales growth in that year end.
The recovery began in May 2004 when Cadbury's value share went up to 71 per cent.
Hires AT Kearney to curb costs
Cadbury India appointed management consultancy firm AT Kearney to draw up a strategy to
control
costs in several areas, including sourcing of raw materials and packaging. This was partly an
outcome of the worms’ controversy more than a year ago. Among other things, it changed the
wrappers for its Cadbury Dairy Milk brand and introduced better coolers.
The consultancy firm will also look at the sourcing of direct and indirect materials like
renegotiating with suppliers for longer term contracts and vendor management. Other costs
(indirect
expenses) like travel costs and hotels were also being studied.
In other words, Cadbury is trying to reduce the cost per stock keeping unit (SKUs, or packs).
The aim is to improve efficiencies.
Earnings sensitivity factors
Cocoa bean prices: Domestic as well as international prices of key raw material - cocoa have
significant impact on margins.
Excise duties : Changes in excise levied on malt and chocolate influences end product prices
and
thereby volume growth as well as margins.
Changes in custom duties and foreign exchange fluctuation: As 20% of raw material is
imported,
changes in custom duties & foreign exchange fluctuations have significant impact on the final
cost of
the product.
Competition from MNCs like Nestle as well as imported brands. Increasing competition puts
pressure on advertisement budget and margins. However on the positive side, it helps in
expanding
the market.
Success factors of Cadbury’s India Limited
1. Global management processes:
India occupies a high profile position in the global organization, with advocates in regional and
global headquarters. Global management has allowed the local operation a high degree of
flexibility
in growing the business, understanding that asset utilization may be lower and returns slower to
arrive, but expecting volume share to compensate for lower margins in the long run.
2. Local management processes:
The Cadbury India team is all-Indian and has a deep understanding of local market dynamics.
The business is set in a way that highlights localization across all facets – driving the belief that
the
only way to succeed in India is by developing localized business models. For example, the
company
tailored the chocolate formula in India to prevent melting in the country’s open-air high
frequency
store environment.
3. Customized business models:
Local management has set up systems to test and develop products from the ground up with
specialized interlinked cells that execute innovation and market testing hand-in-hand. Cadbury
India
is known as a key product innovator. Besides Dairy Milk, the entire Cadbury product portfolio in
India has been developed locally to suit Indian consumer tastes. Packaging, marketing and
distribution have all been tailored to local market conditions.
4. Royalty Structure:
Royalty to Cadbury Schweppes Plc., is around 1 per cent of the turnover. But with that, the
company gets unlimited access to latest technology, new products and so on. They can also
introduce
new products from the parent, if it is suitable for Indian market.
5. Subtle reengineering of raw material mix led to cost savings:
Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile raw
material
prices as well as cutting costs.
It appears that they have subtly altered its recipe by using less of costlier cocoa and more of
milk and sugar. Cadbury's launch of Perk has also contributed significantly in reducing the
proportion of cocoa in the overall raw material mix. Consequently, Cadbury saved about
Rs.94mn (1.8 percent of net sales) in FY1999.
MARKETING - PROMOTION of CHOCOLATES in INDIA
Traditionally, chocolates were always targeted at children. But stagnancy in growth rates
made the companies re-think their strategies. Cadbury was the first chocolate company that took
the
market by storm by repositioning brands at adults, as opposed to children.
I
BUYING BEHAVIOUR
Chocolates are consumed as indulgence and not as snack food, as prevalent in western
countries. Almost 75% chocolates are impulse purchases. Chocolates are bought predominantly
by
adults and gifted to children. On an average the wholesalers sells Rs50000/month of
Chocolates
(all brands included). Also the wholesaler usually deals in all kinds of FMCG goods, Foodstuff
in
addition to the chocolates. The items like chocolates are placed near the counter.
Chocolates are kept in cardboard boxes and are also delivered in the same. ... In a few of the
cases the chocolates were kept separately (as per equipment provided by the manufacturer – e.g.
VISI Coolers), In addition to marketing promotions companies have been focusing extensively
on
the promotions by the sales staff. Also the companies can devise there marketing strategies that
are
catering to specific segments and are thus more effective.
II
NATURE OF RETAIL OUTLET
Chocolates are primarily sold through Kirana Stores, Gift stores, Medical Stores, canteens,
Pan-Bidi stores, Bakeries, Sweet Shops etc. This is true for chocolates also. The space allocated
for
the chocolates was less when compared to the total area of the shop. Of the space allocated for
chocolates, Cadbury brands occupied more than Nestle brands.
The chocolates category thrives on excitement. It's all about giving the consumer a
choice and taste which they enjoy.
III
STOCKING OF THE PRODUCTS
In most of the cases, various brands of chocolates are kept together. In some of the cases the
chocolates are stocked depending on the manufacturer’s provision. The chocolates are kept in
Glass
Jars and boxes – These are provided by the respective companies along with the product. The
chocolates are kept there. But in most of the cases chocolates are stocked near the counter.
Ideally
the shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance.
Chocolates are kept at or below the eye level. This is to facilitate visibility of the chocolates
for the
customer who is visiting the store.
Medium size retailers sell chocolates of about Rs. 400 – Rs. 800 per week while big
retailers sell chocolate worth Rs1000 or more per week.
CHOCOLATE ADVERTISING IN INDIA
Growth of Chocolate Advertising on Television: Year 2003 - 2004
Company-wise Ad Spending
The graph shows that Cadbury's India Ltd. tops with 52% share of the advertising pie on
television. Nestle India Limited grabs the 2nd position with 34% share, whereas, Parle
Products gets the 3rd position with 8% of the advertising share.
Chocolate Ads shift focus from KIDS to YOUTH
Indian chocolate market is almost totally depended on purchases of kids. In recent times, the
chocolate majors, Cadburys and Nestle took major initiatives to bring in grown-ups into this
market.
While Cadbury is trying to sell indulgence to adults, Kit Kat is selling 'ritualistic' break to
teenagers/ young adults. This is reflected in the changing advertising patterns across different
channels.
Out of 100 channels, eight channels account for 40 per cent of chocolate advertising.
This pack of eight is headed by Cartoon Network, which is obvious, since the main buyers
of
this product category are children.
But heavy advertising on channels like MTV, MAX, Star Plus, Zee, Zee Cinema, Discovery
and Channel [V] proves the changing profile of the potential consumer for the advertisers, in this
category, from children to teenagers/young adults as well as adults.
NESTLE INDIA
Background
Nestle India was promoted by Nestle Alimentana, Switzerland, a wholly owned subsidiary of
Nestle Holdings Ltd., Nassau, Bahama Islands. Nestle is one of the oldest food MNC operating
in
India, with a presence of over a century
Nestle has a presence in 83 countries worldwide. It has a total number of 509 factories out of
which 220 are located in Europe, 153 in America and 136 in Africa, Asia and Oceania
The Swiss food giant has been in India for 90 years, with six manufacturing plants,
3,500 employees and almost $500 million in sales in 2002.
Business
Nestle has a presence in the following categories - Baby Food, Milk products, Beverages
(Coffee,
malted beverage), Chocolates & confectionery and other processed food products.
Chocolates & Confectionery
Nestle forayed into chocolates & confectionery in 1990 and has cornered a fourth share of the
chocolate market in the country. Chocolates contributes 14% to Nestle’s turnover. It has
expanded its products range to all segments of the market. In fact, Nestle is the fastest growing
company in chocolates in India.
The Kitkat brand is the largest selling chocolate brand in the world. Other brands include
Milky Bar, Marbles, Crunch, Nestle Rich Dark, Bar-One, Munch etc. New launches such as
Nestle
Choco Stick and Milky Bar Choo were made at attractive price points to woo new consumers.
The
company introduced two new brands, Charge and Crunch, in 1998. The company has
discontinued
products Chocostick, as it did not add value to the its portfolio. Nestle achieved roaring success
by
grabbing the Rs 5 price point. From Jan – Sep ’05, Nestle chocolates witnessed a growth of
14.8
per cent.
New Product Introduction & Innovations
The Company sustained momentum during the year by driving distribution through innovative
consumer promotions and trade offerings and supporting key price points.
High temperatures are a typical characteristic of Indian subcontinent. Chocolate starts
melting at such high temperatures thus making chocolate unfit for consumption. Hence, Nestle
introduced an innovative LIQUID CHOCOLATE – CHOCO STICK at a price tag of Rs. 2/-
which was in instant hit.
NESTLE MUNCH, which is the largest selling unit in the wafer segment and the most
widely distributed, continued to gain in volumes. NESTLE CHOTU MUNCH, which was
launched at Rs. 2/- price point, was well received.
A range of other innovative and renovated products were launched which included NESTLE
Milk Chocolate, NESTLE Fruit & Nut, NESTLE Krunchy, NESTLE MILKYBAR STARZ,
NESTLE CHOO, NESTLE Chocolate Eclairs, NESTLE Coffee Eclairs and various flavours for
CHOCOSTICK,
NESTLE CHOCOLATE PRODUCT PORTFOLIO
NESTLE MAHAMUNCH
A ROARING SUCCESS
NESTLE MAHA MUNCH
Ruk Na Paye…… Ruk Na Paye
Nestle MAHA Munch…only Rs. 5
Amul (GCMMF)
The Rs 2,748-crore GCMMF is in chocolate segment since quite some time. However, its market
share is just 5% and the company did not look aggressive till recently. Amul chocolates used to
come
in not so attractive packages and very little marketing effort was seen.
But things have changed and for good. Amul is now an important player in this growing
chocolate industry. It has firmed up its measures with marketing and new product launches and
revamping its packaging.
Amul just recently launched new chocolate brands in the market - Rejoice, Kite Bite and
Nuts `bout You.
Cadbury’s Worm Controversy & AMUL
The breakup of Cadbury’s worms’ controversy accelerated & facilitated Amul’s marketing
efforts. The direct impact of Cadbury’s loss was Amul’s GAIN.
In Mumbai, which accounts for almost 10 per cent of the Rs 650 crore (Rs 6.50 billion) a year
chocolate market in India, the company raised its market share from 2 per cent in the beginning
of
October 2003 (time when worm controversy broke) to 15 per cent by the end of the month. The
company sold nearly 20 tonnes in Oct 2003 in Mumbai, against only 2 tonnes in Oct 2002
20 % overall growth of Amul’s chocolate share can be purely contributed to the Cadbury’s
worm controversy.
In an attempt to boost sales, the company launched three new chocolates in Mumbai
under the brands Fundoo, Bindaas and Almond Bar.
While the first two were been priced at Rs 10 for a 30 gm stick, Almond Bar carried a price tag
of Rs
10 for a 35 gm chocolate.
Launch of Cooking Chocolate
Though, cooking chocolate is available in the market, it is offered only as a commodity, not
as a branded product. The Gujarat Co-operative Milk Marketing Federation (GCMMF), owner of
the
brand Amul, is strategized to capture a lion's share in the chocolate segment by tapping the
hitherto
untouched sub-segments with the launch of its new brand Amul Chef in July 2003, making it the
first
ever branded cooking chocolate to be made available in the Indian market.
The `premium' variant of the cooking chocolate was priced at Rs 110 for 500 grams and the
`classic' variant was priced at Rs 100 for 500 grams.
Amul targeted various segments with its new product, including housewives from SEC
A and B households, caterers, bakeries, restaurants, biscuit manufacturers, ice-cream
parlours, and confectioners. Amul also aimed to capture a market share of 20 per cent in the
first
two months in Delhi and Mumbai.
The market size of cooking chocolate in Mumbai and Delhi alone is estimated at 50
tonnes per month.
Brand New Products & Packaging to push Chocolate Business
Amul revived its chocolate business with new products and renewed packaging.
The company launched Chocozoo brand of chocolates in December 2004, to target the age group
of
four to 14 years.
Besides introducing new products in the chocolate segment, Amul also revamped its
packaging with the help of TMA, which is an international agency.
Amul also launched occasion-related sub-brands. Its Nuts ‘bout U brand was launched
on the eve of Valentine’s Day, while the Kite Bite brand was unveiled during the kite-flying
festival in Ahmedabad.
Amul has decided to segment the market with brands catering to the `impulse’ and `teen’
segments, as well as having brands catering to different occasions.
Amul, which reaches out to over five lakh retail outlets, has over 2,600 distributors under
its fold.
GCMMF has also drawn up plans to make its chocolate business a separate division of the
company.

CAMPCO
Central Arecanut and Cocoa Manufactures and Processors Co-operative
A sudden withdrawal by the buyers of cocoa from the procurement operations
due to crash in the international market came as a shock to cocoa cultivators in India. Karnataka
and
Kerala Governments enthused, at this stage, the CAMPCO to enter on the scene to rescue the
farmers
from distress. CAMPCO willingly took up the responsibility to enter the cocoa market and
performed a savior's role.
As a strategy for survival in the International scene the CAMPCO played a major role in
establishing a name for Indian Cocoa, which hitherto had not been achieved. It procured cocoa
pods
from growers and adopting scientific processing methods to market standards, released dry cocoa
beans matching in quality in the world market equal to that of Ghana, Brazil and other cocoa
cultivation nations.
After entering into the Cocoa market, the Co-operative was able to export Cocoa Beans worth
Rs 40 million to European countries in the initial phase of operations. India was not known as a
Cocoa producer in the international Trading Community, since yearly production was hardly 5 to
6
thousand tonnes which is not even 0.3% of the total world consumption.
Through sustained efforts CAMPCO has been able to ensure reasonable prices to Cocoa
growers. The Co-operative had to face the problem of a limited internal market and un-
remunerative
export market. With the setting up of the chocolate manufacturing factory at Puttur, 50KM from
Mangalore, the Co-operative has been able to increase local consumption of cocoa based
products
and to export value added semi-finished products. With a view to creating a permanent
demand
and a steady market for the
beans, CAMPCO established a Chocolate Manufacturing Factory at Kemminje village in
Puttur Taluk in Dakshina Kannada district, adopting foreign technical advancement in
chocolate making. The Factory was set up in 1986 at an initial investment of Rs.116.7
Millions.
CAMPCO CHOCOLATES

CURRENT STATUS of CAMPCO

However, the company does not have much visibility in the Indian market. No advertising are
seen
being aired on TV…at least not on the prime channels. The company seems to have restricted its
marketing efforts in south India only.
Campco, being a co-operative is functioning under pressures from various political parties and is
surrounded by various controversies all of which arising out of internal disputes.
Home-made Chocolates
Another area of chocolate industry in India is HOME-MADE CHOCOLATES. This segment
is
highly fragmented and operates independently. They are more pronounced for manufacturing
distinct
flavors and varieties of chocolates in various shapes and size. But, these chocolates are usually
priced at a higher price than that available for branded products for the same quantity. House-
wives
from elite class usually indulge in this kind of business. They usually operate in local area and
through their contact network. Some home-made chocolate manufacturers manufacture really
attractive GIFT CHOCOLATES.
Interesting Chocolate Facts
Why is Chocolate in India different than most European chocolates?
The temperatures in India are much higher than that of the European countries. To prevent
the chocolate from melting and to enable shape retention under such high temperatures the recipe
of
the chocolate is adapted to the Indian climate. Therefore the milk fat content in Indian chocolates
is
lesser than that of European chocolates and hence they taste different.
Sometimes, white spots appear on Chocolates sometimes. Is that safe?
When a chocolate gets exposed to temperature variances from a hot day to a cold night
(which is very common all across India), the fat expression happens on the surface of the
chocolate.'
This means white spots emerge on the surface of the chocolate. This phenomenon is called 'fat
bloom'. It is entirely safe to consume chocolates however the feel and the taste of the chocolate
may
not be the same as is originally intended to.
Are chocolates available for diabetics?
Currently in India no manufacturer produces chocolates for diabetics, as the government
regulations do not permit manufacture of such chocolates. The industry majors are liaising with
the
government authorities to enable manufacture of such chocolates in India. Chocolates for
diabetics,
though, are available in certain parts of the world.
Chocolate: the new solution for blood pressure?
Cocoa beans have antioxidant compounds called flavanols, and scientific research suggests
they do good things to blood vessels. Dark chocolate contains flavanoids, an antioxidant
which
helps the body by neutralising potentially cell-damaging substances known as oxygen-free
radicals, a normal byproduct of metabolism.
Problems & Challenges in Indian Chocolate Industry
1. TEMPERATURE:
A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to
melt
under even moderate heat. The temperatures can reach as high as 48 degrees in summers,
whereas
chocolate starts melting at body temperature (about 37-38 degrees) .Manufacturers have to
take
precautionary measures to ensure the preservation of chocolates especially in summer.
2. UNAVAILABILITY OF CONTROLLED REFRIGERATION:
India does not have controlled refrigerated distribution. Air-condition supermarkets are rare.
Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companies
revise
ingredients to make chocolate withstand heat, and so Indian chocolates are more resilient to heat
than
Eurupean chocolates by a factor of 2 degrees. Ironically, the chocolate market has grown recently
because smaller retailers have stuffed fridges and coolers supplied by the cola companies Coke
and
Pepsi with chocolates.
Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but to hold down
power costs the shopkeepers switch off the fridges at night. As a result the cocoa fat melts and
migrates to the main body of the chocolate bar. When the cooling is switched on in the morning,
the
cocoa fat solidifies and turns white, presenting a bizarre, un-sellable white on black form. Nestle
tried to provide fridges with see-through doors, but was appalled to see its chocolates
sandwiched between dead chicken, butter and vegetables.
Small coolers were provided to retailers to keep the chocolate from melting, but that didn't quite
do
the trick. Electricity costs money and is not provided in a uniform way, so on and off the
electricity goes and the product may suffer sometimes
3. RAW MATERIALS:
Cocoa is the key raw material and accounts for around 35% of the total material cost
(including packaging) of chocolates. The price of cocoa has been hitting a new high of late.
Cocoa
prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India does not
produce
cocoa to any noteworthy extent but is a large consumer of chocolates. Consumption of
chocolates
and other cocoa-based products, especially among the middle class, has been growing.
4. TRANSPORTATION:
Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products are
sold directly to retailers. Building such a direct network in rural areas is a daunting task since the
infrastructure is poor in India in rural areas.
5. THREAT FROM IMPORTED BRANDS:
Free availability of imported brands bought through illegal routes pose a threat to the domestic
chocolate industry. Usually, these imported chocolates taste better than domestic chocolate due to
recipe difference. Hence consumers who are willing to spend a little more, prefer these imported
chocolates.
However, the premium brands, which come through official channels, do not pose a threat to
the market, as these cater to a small niche market. However there is a lot of dumping from
neighboring countries like Dubai, Nepal, etc of inferior brand of imported chocolates. These are
not
only of low quality, but are brought very near to their expiry dates. Most of the cheap chocolate
brands that are available do not meet Indian Food Regulations.
External Factors affecting Growth of
Chocolate Industry in INDIA
Good monsoon ensures adequate availability of raw materials, which are mainly agricultural
in
nature. Raw material prices have significant influence on margins.
Government policies in terms of licensing, duties, movement of agricultural commodities etc.
also affect the introduction of products, time lag for a product launches, taxes, excise, etc all
influence the business.
 Market growth driven by overall economic growth and urbanization also contributes. An
overall
booming economy will consume tonnes of chocolates because consumer spending increases.
Also, the absolute number of consumers in middle class & upper middle class increases.
Rupee depreciation improves export realizations, however it also makes import of raw
material
(esp. cocoa) expensive.
Growth Opportunities in Indian Chocolate Industry
Untapped Market & Limited Consumption:
The fact that chocolate is not a traditional food, high prices and domestic production problems
will
provide the main problems to market growth. As these markets develop, prices will fall making
these
products more accessible to the wider population. However the Indian market is still untapped
and
provides immense scope for growth, both geographically as well as product basket wise.
Chocolates right now reaches about 70mn to 75mn consumers. It is estimated that chocolates
have a potential market of about 116mn consumers.
Chocolate consumption in India is extremely low. Per capita consumption is around 160gms
in the urban areas, compared to 8-10kg in the developed countries. The per capita chocolate
consumption in India is still much below the East Asian standards. Hence per capita consumption
has
a immense scope for improvement.
In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not as a
snack
food. A strong volume growth was witnessed in the early 90's when Cadbury repositioned
chocolates
from children to adult consumption. The biggest opportunity is likely to stem from increasing the
consumer base. Leading players like Cadbury and Nestle have been attempting to do this by
value
for money offerings, which are affordable to the masses.
We also believe that the near term opportunity lies in increasing penetration rather than
increasing intensity of consumption.
In the past five years, the chocolate business grown by 14-15% on an average and is
expected to grow further for at least next five years.
Changing Attitudes & Consumption pattern:
In the past, chocolate consumption had been restricted by low purchasing power in the market.
Chocolates and other cocoa-based snack foods were looked upon as food suitable only for elitist
consumption till recently.
But with the launch of lower-priced, smaller bars of chocolate in the last two years and
positioning of chocolate as a substitute to traditional sweets during festivals, have boosted
consumption.
Chocolates which were considered to be an elitist food hit the fancy of masses looking for a
change in life style at affordable cost.
Rural expansion:
Rural market and small town markets are seen as the key to spurring double-digit growth.
Products such as liquid chocolate packs from the existing portfolio are expected to enable rapid
acceptance.
Leverage India for offshoring:
India is being leveraged for export of finished goods, as a superior destination for
manufacturing best practices, and for BPO opportunities.
All the above points bring us to a conclusion that there’s an immense scope for growth of
chocolate industry in India not only in its offering pattern but also for increment in its total
consumption value and size.
Strategies for Growth & Success in India
1. Revamp the product to keep the excitement alive.
2. Companies should look at new avenues, while expanding the reach of its products.
Distribution
will hold the key. Companies need to reach out to smaller towns, where three-fourths of the
population does not even know the product.
3. Merger & Acquisitions: Mergers & Acquisitions with companies that match the product
portfolio & overall growth strategy should be considered which will not only strengthen the
company to establish a stronger hold in the country but also ward off possible competition in the
select category. Such collaborations will also facilitate companies to use each other’s distribution
networks.
Chocolate Boutiques & Designer Chocolates
They call it 'choco fever'. Chocolate Boutiques are a complete chocoholic experience.
Surrounded
on all sides by scrumptious chocolates wrapped neatly in colourful foil and paper, any one will
be
gripped by this fever.
It’s a world of chocolates where the flavour of Jamaican rum truffle melts in your mouth even
as your hand reaches out greedily for a kiwi-flavoured concoction or where roasted almonds are
a
delight to eat while your mind flirts with hazelnut praline.
Manufacturers are finding an increasing number of curious customers who're pampering their
taste-buds to apricot and peach chocolate, strawberry chocolate or better still wild berry in
cognac
flavoured chocolate. Manufacturers are now luring their patrons with chocolates in geometric
shapes,
animal figurines coloured in metallic hues and glitter. For the more adventurous, there are also
chocolates with pan-supari, cardamom flavours and liqueur filling. Products like nut-based
praline
chocolates, some unique flavors like tamarind and chilli chocolates, and champagne and
Jamaican
rum truffles are also demanded in the market.
These manufacturers also cater to the older and the health-conscious choco-lovers, the high
fibre, low fat and sugar ones are quite popular. Apart from the festive season, weddings and baby
announcements also see heavy offtake of premium sweet delicacies. For those who are health
conscious there is also a special range of sugar-free and diet chocolates. These are usually bought
by
corporates or individuals who want to make a special statement.
Extensive range of Baby chocolates are available which are beautifully wrapped in pinks and
blues and embellished with decorations like baby bottles, satin ribbons, silk flowers, bibs and
bows
are also available and are getting very popular in elite classes.
Designer chocolates are tailored for customers who're looking at gifting chocolates with a
personalized touch. Embossing of names, logos of companies and personalized message on the
chocolates are fast becoming popular.
There are 1,000 varieties of designs to choose from -- ranging from good luck charms, X'mas
figurines and animals -- and nearly 50 kinds of gift packaging available to suit any particular
occasion.
From festive occasions to personal celebrations to corporate gifting, made-to-order
chocolates are most sought after. And we are not talking about the boring old rectangular slabs of
cocoa
These designer chocolates focus a lot of attention on packaging. The packaging of these products
includes materials like imported mesh, gold foils and brocade, lace and satin-draped boxes being
in
heavy demand.
With the rise in disposable incomes, people do not mind spending on designer chocolates,
most of which costs between Rs 500 and Rs 2,500 per kg. Few chocolate makers cater only to
corporate clients for festive occasions, product launches, new employee joinings and
management
training programmes. From logos to company names being embossed in chocolates of different
shapes and colours, these are all in demand.
CONCLUSION
The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes,
beliefs, income level and spending. At one hand, we have designer chocolates that are consumed
when priced at even Rs 2500/kg while there are places in India where people have never even
tasted
chocolates once.
Understanding the consumer demands and maintaining the quality will be essential.
Companies will have to keep themselves abreast with the developments in other parts of the
world.
PRICING is the key for companies to make their product reach consumers’ pockets. Right
pricing will make or break the product SUCCESS. Economical distribution of the products will
also be equally important.
The companies’ strategies should focus on driving sales through a right product mix,
efficient materials procurement, reduced wastages, increased factory efficiencies and
improved
supply chain management.
There’s an immense scope for growth of chocolate industry in India - geographically as well
as in the product offering.
The Indian Chocolate Industry is destined to grow and will do so in the future.
Bibliography
www.rediff.com
www.indiainfoline.com
www.business-standard.com
www.India-stats.com
www.Agencyfaqs.com
www.Equitymaster.com
www.indiantelevision.com
www.myiris.com
www.ibef.org
www.thehindubusinessline.com