Mondelez to Hershey, MNCs take a big bite of India's chocolate market

The world's top five chocolate companies - Mondelez, Mars, Ferrero, Nestle and now Hershey - are vying for a bigger slice of the domestic market

US-based The Hershey Company’s launch of its flagship chocolate brand Kisses in India last week has consolidated the hold of global players here. Hershey’s move, signalling its intent to deepen its presence here, comes at a time when the Rs 85-billion organised chocolate market in India is growing in double digits. 

After soft drinks, chocolate is the only organised category in food & beverages dominated by global majors, say experts. The world’s top five chocolate companies — Mondelez, Mars, Ferrero, Nestlé and now Hershey — are vying for a bigger slice of the domestic market. Mondelez, which manufactures the Cadbury brand of chocolates, is the leader in India with a 65 per cent share of the overall chocolate market, followed by Nestlé at 14 per cent and Ferrero at 9 per cent, according to industry estimates. Mars, Amul, and others share the balance. 

While Amul is moving aggressively in the dark chocolate segment — it launched a plant in Anand earlier this month — Indian players are barely visible in the category. 

ITC, which launched its Fabelle brand of luxury chocolates two years ago, is likely to step into mass-market chocolates by next year only, which means global majors will still have time to consolidate their presence, said experts.

“Traditionally, chocolates in India have been dominated largely by foreign players, thanks to Cadbury and Nestlé,” said Abneesh Roy, senior vice-president, research, institutional equities, Edelweiss. “Foreign players have also been quicker to introduce products, innovations and technology, capitalising on emerging consumer trends,” he said. 

 

On a per capita basis, Indians consume 110-120 gm of chocolates a year, the lowest among key markets of the world including the US, the UK, China, Japan, and Indonesia. But the potential of the market, led by higher disposable incomes, the desire to trade up from traditional sweets as well as the need to try out newer food formats, is significant. On average, the chocolate market has been growing at 11-12 per cent per annum, with the premium chocolate market in particular growing at a faster clip at 20-25 per cent per annum, said sector experts.

Hershey has targeted the premium end of the market with its Kisses brand, which are bite-sized chocolates. 

“India is an important international market,” Michele Buck, president and chief executive officer, The Hershey Company, said last week during the launch. “We are building our chocolate presence in India, which will play an important role in our overall growth here,” she said. Besides chocolates, Hershey has a presence in syrups, spreads, milkshakes and cocoa powder in India. Hershey has committed an investment of $50 million over the next five years. Its investment commitment comes as other rivals push the pedal in the Indian market.

In 2017, Mars, also a US company, launched in India its bite-sized chocolate called M&M, beefing up its domestic portfolio, which includes Snickers, Galaxy, Bounty, and Twix. The company has set up a chocolate plant in Pune at Rs 10 billion.

Ferrero, an Italian firm, will invest Rs 20 billion in the next three to four years in India, making it a regional hub. The company sells Nutella chocolate spread, Ferrero Rocher, and Kinder chocolates as well as Tic Tac gum. It may also begin selling ice-creams in India in a joint venture with Unilever.