Aiming to tease your taste buds, chocolate players raise India game

Mondelez, Hershey, Nestle, Mars and Ferrero eye the country's Rs 8,200-crore chocolate market, clocking double-digit growth annually

Last week, the world's fourth-largest confectioner, The Hershey Company, announced it would roll out some of its global brands in India. Known for its tear-drop-shaped candy Kisses and peanut-butter chocolate Reese's, besides flagship Hershey, the company made the announcement at an opportune time.

As the taste for chocolates, especially in urban markets, grows in India, the world's largest chocolate makers Mars Chocolate, Mondelez International, Inc, Nestlé, Hershey and Ferrero are all pushing pedal to the metal on innovation and investment here.

A study by global market research firm Mintel says that India's chocolate market, valued at Rs 8,200 crore, is growing in double digits, at 12-13 per cent annually. The market researcher also said India consumed 228,000 tonnes of chocolate in 2016, higher than Australia (95,000 tonnes) and Indonesia (94,000 tonnes) in the same period. It added that volume consumption of chocolates in India would rise as urban areas pivot away from traditional sweets to better alternatives.

In keeping with growth prospects in India, Hershey's local subsidiary chairman and managing director Praveen Jakate said the country was part of a four-market club including China, Brazil and Mexico that was being targeted by the company. 

The plan included ramping up investments in brand-building and manufacturing to scale up operations here, he said. Industry sources say Hershey could pump in at least Rs 50-100 crore in the next couple of years as it looks to double revenue from Rs 300 crore now. 

The world's largest chocolate maker, Mars, has also re-iterated its commitment to India, saying the country was among its top-10 focus markets. M&M's, a billion-dollar brand, for instance, was rolled out recently in the country, its sixth big launch after Snickers, Bounty, Twix, Galaxy and flagship Mars.

"India is a priority market for Mars Incorporated and we are committed to invest and bring our best-loved brands here," Andrew Leakey, general manager, India and Indian sub-continent, Mars Chocolate Ltd, said.

Mars has already set up its manufacturing plant at Pune, ploughing in Rs 1,000 crore. It is expected to continue investing here as it looks to expand its footprint.

The country's top two chocolate players, Mondelez and Nestlé, meanwhile, continue to raise the bar for product formats and innovations. Ranked number two and three chocolate makers globally, both remain aware of rival Mars's plans for India, which accounts for only five per cent of the latter's global revenue. 

Nestlé India, for instance, re-launched Milkybar recently, reducing its sugar by 10 per cent and increasing the milk content by eight per cent. This is the first time a chocolate manufacturer in India has opted to cut sugar levels by increasing the amount of more wholesome ingredients such as milk.

Nestlé is expected to introduce less-sweeter KitKat and Munch bars as its takes its health and wellness missions to chocolates, hoping to lure consumers. Industry estimates show Nestlé India's share in chocolates is 15-16 per cent, while leader Mondelez commands 65 per cent. 

Mondelez has also introduced a number of products combining biscuits and chocolates (Silk Oreo), aerated chocolates (Bubbly) and liquid centre-filled chocolates (Caramello). 

These have helped Mondelez grow share in premium chocolates, estimated at around 30 per cent of the overall chocolate market in India, and growing 20 per cent annually.

Mondelez has also pumped in nearly Rs 2,000 crore in seven plants in India so far, the largest in Sri City, at an investment of Rs 1,265 crore.

Ferrero, the country's third-largest chocolate maker, has said it will double investment in India to Rs 1,600 crore in the next few years as brand traction for Ferrero Rocher, Tic Tac and Kinder Joy grows.

SWEET TREAT

• India's chocolate market, valued at Rs 8,200 crore, is growing in double digits annually, spurring global players to increase investments
• The world's top five Mars, Mondelez, Nestlé, Hershey and Ferrero have all raised their commitment levels towards India as they seek to partake of this growth
• This also comes as volume consumption of chocolates show an uptick in India
• The trend is led by urban consumers opting for chocolates over traditional sweets for consumption and gifting