A recent report by UK based global market research firm Mintel indicates that India is one of the fastest growing markets for chocolate. As per the research, India has posted the largest increase in volume sales with 21 per cent growth between 2008 and 2011. While sales of chocolate have doubled between 2008 and 2011, volume has also significantly increased from 50,000 tonnes in 2008 to 88,000 tonnes in 2011.
Providing insight on the consumer trend driving this boom, Deepa Dsouza, Trend and Innovation Consultant â€“India, Mintel, says, â€œConsumers are trading up to luxury and premium chocolate, which has given an opportunity to international brands to enter the Indian market and increase their penetration by creating an affordable premium space for the aspirers.â€ She further explains that many consumers in India view assortment boxes as premium, hygienic and long-lasting when compared to traditional Indian sweets.
Dsouza also adds that the chocolate confectionery market, which was considered premium, in comparison to sugar and gum confectionery, now has major players manufacturing and distributing their products at affordable prices. This has consequently facilitated choice for the consumer and also, a level game field for manufacturers to compete on.
The study also indicates that as far as new product launches are concerned, the premium category, as a claim, has seen a 100 per cent growth, from four per cent launches in 2008 to six per cent in 2011. Seasonal launches have accounted for seven per cent of the total launches in 2011 as compared a two per cent in 2008.
Dsouza also highlights some of the key challenges for chocolate confectionery market in India. She lists inflationary pressures on raw material prices, lack of government initiative, high entry barriers due to duopolistic market and price sensitive consumers, as the crucial ones. â€œThe rising sugar and cocoa prices are putting pressure on the companies to innovate with ingredients, packaging to offer better prices for the mass market,â€ she says. Simultaneously, brands are also working towards managing the perception of chocolate having a negative effect on health.
While this industry is thriving in India, mature chocolate markets, especially in Europe are experiencing a slowdown. Marcia Mogelonsky, Director of Insight, Mintel Food and Drink, feels that the strong foothold of this industry is great incentive for major players like Mondelez, Nestle and Mars to mark their presence in the Indian market.