Godrej to take a bite of the chocolate market with Hershey's

Till now, it was an unequal fight between two players, Cadbury and Nestle, for a pie of the Rs 3,000-crore branded chocolate market in the country. With Godrej Group developing a taste for chocolates, through its joint venture with US chocolate maker Hershey’s, it has queered the pitch.

The branded chocolate market is growing at about 15 per cent per annum. That is decent enough, say analysts, to attract a player like Godrej.

Though Godrej Group Chairman Adi Godrej has not given a timeline for the introduction of Hershey’s chocolates in India, analysts and market observers say the launch is not far away.

“I don’t think it will be beyond September,” says an FMCG analyst on condition of anonymity. “You have Kraft through its acquisition of Cadbury, which is also looking at an India debut soon,” he says.

“I don’t think Godrej Group can delay the formal entry of Hershey’s for long, when there is consolidation happening in the marketplace.”

“The group has a strong brand in Hershey’s,” acknowledges Shirish Pardeshi, senior analyst, FMCG, Anand Rathi. “It is worth exploiting.”

Hershey’s products are currently imported. “So, people are not unfamiliar with the Hershey name,” says Pardeshi. “Limited availability also increases likeability for the product...Godrej would want to tap into this by formally launching the product in India.”

Cadbury has the lion’s share of the chocolate business at about 70 per cent, followed by Nestle at about 28-29 per cent and others, including Amul, constituting the balance. “It’s a square fight therefore between Cadbury and Nestle for now,” says Pardeshi. “It will be interesting to see how Hershey’s grabs marketshare from the two.”

The key challenge with chocolates, say observers, is having the right taste, at the right price point, available at the right outlets. “It’s an impulse product. So, you have to be where the consumer is,” says an observer. “Otherwise, you have simply lost the consumption opportunity.”

Cadbury, for instance, has tackled this issue with a variety of products that straddle different price points and need gaps. The company has Cadbury Eclairs, Gems, Five Star, Perk, Cadbury Dairy Milk, Celebrations, Bournville, etc. — all of them appealing to a different set of people — say observers. Cadbury’s distribution is strong, which ensures that it maintains leadership position, despite competition from small regional players growing in the segment.