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 Cooperative (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 1415% 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

Low priced unit packs.. In the middle and higher income groups. however the CHOCOLATES continue to grow at the rate of 12. chocolate consumption had been restricted by low purchasing power in the market. Chocolate Consumption Structure .7 per cent. This is also because chocolate.2004 Children 55% Adults 12% Young Adults 33% Chocolate & Confectionery Market of India ..7 per cent and 11. Growth of other lifestyle foods such as malted beverages and milk food have actually declined by 3. 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. increased distribution reach and new product launches can be said to have fuelled this growth. 43 per cent of young adults and 16 per cent of adults consume chocolate. Till recently. being mainly consumed in urban areas. After economic liberalization in 1991. major changes have occurred in food habits. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for the well-off.‘chocolate-free’. have boosted consumption.” 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. which was considered to be an elitist food. . 70 per cent of children. Availability of chocolate products has also exploded.. “Average summertime temperatures reach 43 degrees Celsius in India. . But the fact is that three quarters of Indians live in Rural Areas. has caught the fancy of buyers looking for a lifestyle item at affordable cost.2004 Chocolate Counts Rs. smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals.. 10% Chocolate Bar . Per capita chocolate consumption continues to be low at about 200g per person. Awareness about chocolates is very high in urban areas at over 95%. Chocolate melts at body temperature of 36 degrees.6%. 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. 250 Cr. The launch of lower-priced.

1600 Cr. Truffle. dry place. It can pick up moisture and odors from other products. with more sugar for taste. Medium-fat cocoa has anywhere from ten to twenty-two percent cocoa butter in it. It is primarily an eating chocolate. This is the most popular form for chocolate. It has extra cocoa butter and sugar added. 14% Mints & Chew ing gums Rs. 350 Cr. It is used primarily as an ingredient in recipes. Cocoa is chocolate liquor with much of the cocoa butter removed. Sweet cooking chocolate is basically the same.000-crore (Rs 20 billion) Types of Chocolates Depending on what is added to (or removed from) the chocolate liquor. 3. Drinking or Breakfast cocoa has over twenty-two percent left in it. but a sort of chocolate flavored candy used for things such as covering strawberries. It typically has less than ten percent cocoa butter remaining. creating a fine powder. There are several kinds of cocoa Low-fat cocoa has the most fat removed. Unsweetened or Baking chocolate is simply cooled. or as a garnish. Panned Chocolates (Gems) 4. and . 325 Cr. Amul Milk Chocolate. Éclairs 5. Milk chocolate is chocolate liquor with extra cocoa butter. 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. tightly covered. but it isn't chocolate. sugar.Rs. hardened chocolate liquor. 13% Sugar Boiled Confectionery Rs. Assorted Chocolates Bars or moulded chocolates (like Dairy Milk. 2. different flavors and varieties of chocolate are produced. Semi-sweet chocolate is also used primarily in recipes. Counts 3. milk and vanilla added. It was created to melt easily and harden quickly. so you should keep cocoa in a cool. Nestle Premium. Bars or Moulded Chocolates 2. Each has a different chemical make-up. Decorator's chocolate or confectioner's chocolate isn't really chocolate at all. 63% AC Nielsen ORG Marg report estimates the Indian Chocolate Industry’ worth at Rs 2. the differences are not solely in the taste. It is slightly darker and has a much different taste than regular cocoa. Categories of Chocolates Commercial Chocolates are available in the following forms: 1. 1.

Wafer chocolates such as Kit-Kat and Perk also belong to this segment.. and is valued in excess of US$ 80 million. The Indian chocolate bazaar is estimated to be in the region of 22. . . Malted Beverages e. Wafer Biscuits & Baked Biscuits f. . grainy and really not suitable for eating. 6. Form of Consumption a. with India's metros proving to be the big draw clocking penetration in excess of 15 percent. different varieties of chocolate are produced. Market Size (by value & by volume) The Indian chocolate market is valued at Rs. 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. accounting for 37% of the total chocolate market in volume terms. 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.000-24. or pods open and scoop out the beans. Cakes & Pastries d. Next. Toffees c. Chocolates are a luxury in the rural segment..000 tonnes per annum. The longer chocolate is conched. These beans are allowed to ferment and then dry. Chocolate penetration in the country is a little over 4 percent. The market presently has close to 60mn consumers and they are mainly located in the urban areas. the more luxurious it will feel on your tongue.e. Once the shells have been removed they are called nibs. Major Players & their Market Share The major players in the Indian Chocolate Industry are: . Then they are cleaned..50 billion) a year. which explains the mere 2 percent penetration in villages. Chocolate Desserts Chocolate Manufacturing Process Workers cut the fruit of the cacao tree. Then they are ground up and the cocoa butter is released. Nibs are blended much like coffee beans.Nestle Milky Bar) comprise the largest segment. Panned chocolates accounts for 10% of the total chocolate market.. From there. What is conching? Raw unprocessed chocolate is gritty. 650 crores (i.. Wafer chocolates such as Kit-Kat and Perk also belong to this segment. The name 'conching' comes from the shell-like shape of the rollers used. roasted and hulled. to produce different colors and flavors. Rs. Pure Chocolates b. comes the relatively smaller cities/towns where consumption lags at about 8 percent.

1. Milk Treat Perk Gems. CADBURY’S INDIA LIMITED Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. expanded their family business of cocoa and chocolate. 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. This family was in the forefront of adult education movement in England. the name was changed to Hindustan Cocoa Products. Cadbury’s India Limited 2. Cocoa Manufactures and Processors Co-operative (CAMPCO) Bars Count Lines Wafer Panned Premium Cadbury’s Dairy Milk & Variants 5-Star. Turbo Treat Cadbury’s India Limited – A Study CADBURY’S INTERNATIONAL Cadbury is a very old trusted name. The company’s original name was Cadbury Fry (India) Ltd. Crunch Kit Kat. His two sons. The . The Gujarat Co-operative Milk Marketing Federation (GCMMF) – AMUL 4. The current name was restored in Dec ’89. Nestle India 3. Cream Krust. CSOL’s shareholding was increased to 51% in Jan ’83 through a preferential rights issue of Rs700mm. Tiffins Temptation & Celebrations Nestle Milky Bar Bar One. Richard and George. In 1978. Cadbury family is also known for their contribution in social reforms and considered as liberals. Cadbury Schweppes made an open offer to acquire the 49% public holding in the company. Bournville. In 2001. Munch Nutties Amul Milk Chocolate Fruit ‘n’ Nut FUNDOO Bindaaz Almond Bar Campco Campco Bar. In 1982. a town near Birmingham. was build by them as a part of expansion of their business. CSOL diluted its equity stake to 40% to comply with FERA guidelines.

The company today employs nearly 2000 people across India. 5 Star. Cadbury ia a fun and energising workplace.parent holds over 90% of the equity capital after the first open offer. 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. 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. With brands like Dairy Milk. VISION Life Full Of Cadbury Cadbury is an organisation which impacts and interacts with the consumers. Gems. Aligning our management rewards structure with the interests of our shareowners. there is a Cadbury offering to suit all occasions and moods. it has a . Business Cadbury dominates the Indian chocolate market with above 65 – 70 % market share. Cadbury is an expression of a consumer's life. Cadbury is robust and alive. It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent throughout the 1990’s. Cadbury Full Of Life Cadbury as a company is vibrant. the company reaches millions of loyal customers through a distribution network of 5. Cadbury is known for its exceptional capabilities in product innovation. Our brands excite our consumer. Cadbury is present in most happy occasions in the life of our consumer. Adopting Value Based Management for major strategic and operational decisions and business systems. Delite and Temptations. Bournvita. Chocki. distribution and marketing.5 lakhs outlets across the country and this number is increasing everyday. Besides. Celebrations. Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. Today. Perk. after which the company would operate as a 100% subsidiary of Cadbury Schweppes Plc Ever since the Cadbury is in India in 1947. Bytes. 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. A second open offer has been made to buyback the balance shareholding. Creating an outstanding leadership capability within our management. Sharpening our company culture to reflect accountability. aggressiveness and adaptability.

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 . 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. the company set up a new plant at Malanpur. The company. Cadbury also operates third party operations at Phalton. Raw Material Composition in 2004 Product Name Quantity (in Kgs) Cost (Rs) / Ut . Induri Farm at Talegaon. way back in 1964. Plant locations Cadbury’s manufacturing operations started in Mumbai in 1946. Perk etc. The parent company provided cocoa seeds and clonal materials free of cost for the first 8 years of operations. These factories churn out close to 8. Eclairs. near Pune was set up with a view to promote modern methods as well as improve milk yield. Frutus & Nice Cream Food Drinks Bournvita.5 per cent. a new chocolate manufacturing unit was set up at the same location in Talegaon. Wafer chocolates. Cocoa farming is done in Karnataka. the company also took steps to promote higher production of milk by setting up a subsidiary Induri Farms Ltd near Pune. In 1989. Cadbury expanded Malanpur plant in a major way. which was subsequently transferred to Thane. to derive benefits available to the backward area. Delite & Drinking Chocolate Cadbury's Indian operations are not just the largest in Asia but also the cheapest. Kerala and Tamil Nadu. In 1995. pioneered cocoa farming in India to reduce dependence on imported cocoa beans. In 1964.000 tonnes of chocolate annually. Mocka.4% market share in the organized sugar confectionery market and a 15% market share in milk/ malted foods segment. Gollum. In 1981-82. In 1977. MP. Assorted Chocolates & Gift Chocolates Sugar Confectionery Googly . Warana and Nashik in Maharashtra. The Malanpur plant has modernized facilities for Gems. Panned confectionery . In India. Count lines .

17 356394555.Sales Revenue .9 Dry Fruits 432340 162.121.04 4425758 4023276 35. Crores) Cocoa powder (Tin/Bags) 2% Confectionery- .79 414212911.6 70298484 Edible Oil 2167450 51.78 Total 99.Total Cost (in Rs.23 Confectionery. Cr.57 23810373 22064912 518..Hard Boiled 4.69 .95 932206677 Malt Extract 8679690 20.) Chocolates / Coated Wafer & Confectionery 58.1 Total 2062192021 Cadbury's India Limited Raw Material Composition in 2004 (in Rs.2004 (in Rs.28 Cadbury's India Limited Finished Products .72 112100514 Glucose-Liquid 27061090 13.99 31475696 29148671 885.3 Cocoa Beans / Butter/ Powder 8478460 109.) Milk Powder / Liquid Milk / Cream 26232610 15.39 176978879.67 33312 29904 14.) 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.02 3206253 3030579 194.97 Excise duty 13.51 Malt Foods (Jar/Refill/Tin) 22.79 Cocoa powder (Tin/Bags) 1.

Strawberry & Chocolate Premium/ Gift Chocolates Temptation Rum.Hard Boiled 4% Excise duty 14% Chocolates/ Coated Wafer/ Confectionery 58% Malt Foods (Jar/Refill/Tin) 22% Cadbury’s India Limited Sales in Rs. Almond & Orange Celebrations Various Gift Packs .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. Cashew. Million PRODUCT MIX . 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.

Moving from a predominantly adult positioning in the days of the legendary dancing girl ad. . This gifting option combines the pleasure of giving away dry fruits — which Indians traditionally consider a premium. to the teens and the tweens. touching an astounding 19 per cent in the second half of that calendar year. Perk had been under fire from Nestle’s deadly duo of KitKat and Munch. If it staged a smart recovery to nearly 10 per cent in 2002. but commands nearly 26 per cent in volume terms and close to 30 per cent of Cadbury’s annual turnover.Cadbury’s Dairy Milk (CDM): Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but world wide. 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. when the Cyrus Broacha ads hit the airwaves. Cadbury’s temptation is priced at Rs. Cashew & Orange. CDM has made a long sweet journey. 40 Cadbury’s Celebration Cadbury India launched its premium Celebrations range. Cadbury’s Temptation: Cadbury’s Temptation is premium chocolate brand aimed for high value consumption. the growth rate was declining after that. its star brand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate market. CDM not only accounts for 30 per cent of the total chocolate market in value. Rum. and people complained of it sticking to their teeth. which contains traditional Indian dry fruits wrapped in Dairy Milk chocolate. CDM is the single largest selling unit in India. Various variants available are Almond. It has annual sales to the tune of Rs 200 crore. The growth went down from 19 per cent in 1999 to 12 per cent in 2000 to single-digits. In spite of the new categories being explored by Cadbury. HEROES: Packaging innovation has played a vital role in revamping of various Cadbury’s brands. so genuine re-launches of the products were made. And. the five-year-old brand is now almost as big as the decades-old 5 Star in size. its marketshare is two per cent more than KitKat’s. 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. with seven per cent in 2001. However. PRODUCT REVAMPING & INNOVATIONS Cadbury’s chocolate brands registered double-digit growth in 2002. but after the relaunch. Cadbury now has 90 per cent market share in this profitable segment. healthy gift — with chocolate. both in the region of Rs 50-55 crore. Getting the power brands right was the first priority.

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. now a roaring success (and the largest selling product at that price point). especially with the consumers whose current choice of sweets range from home made delicacies to fruits to meethai. The rich tastes of CDM combined with the unique crème center in exotic flavors provide a special chocolate experience. Chocki has been the single biggest growth driver for Cadbury as well as the entire chocolate category. Cadbury's Creative Launch A new ‘after dinner' segment Cadbury Desserts “for sweet moments after dinner” “Khaane Ke baad Kuch Meetha Ho Jaye”. in exotic & traditional flavors of Tiramisu and Kalakand. Perk. with its launch of Munch. The novelty of the . NEW PRODUCT LAUNCHES Rich Dry Fruit Collection For Gifting Festive Season Cadbury Celebrations’ Rich Dry Fruit Collection – a range of premium chocolate gift boxes. PRICING After the roaring success of Nestle’s Munch and Chocostick. Nestle kicked off one of the biggest success — the liquid chocolate category with its brand Chocostick priced at Rs. “This is a potent price point in India. Rs. Cadbury did react with Chocki. Nestle had seized the initiative at this price point. Cadbury has four products at this price point: CDM.2 — three months ahead of competition.Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single outer case. Available in attractive packs. because the average purchasing power is abysmally low.” is what industry analyst have to say. Today. after meal that adds special ‘Meetha' moments to the family. priced at Rs 2.per packet of 44 gms Cadbury Dairy Milk (CDM) Desserts – with rich indulgent crème center. 20/. Cadbury’s empire struck back hard. expanding the concept of sachetisation to new frontiers. CDM Desserts add delight to the after-meal moments. CDM Desserts offer the perfect rounding off taste. The Rs 5 price point accounts for more than half of all chocolate sales. 5 star and Gems — and the five-rupee CDM bar is its single largest-selling SKU. the Collection caters to a premium gifting consumer and is an ideal festive gift.

Eclairs et al — all products priced below Rs 3.format endeared itself to the existing customer.e. wholesalers and retailers. selling at a potent price point of Rs 2. they should not have even heard of the product. especially since it did not need refrigeration. Volume led growth strategy Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller unit packs at lower price points. split equally between Cadbury and Nestle. it constituted nearly 10 per cent of the total chocolate market. which can be sold through a wholesale network. when sales usually dip due to the fact that the heat affects product quality and thereby offtake. Distribution Chocolate needs to be distributed directly. The other will cater to the mass market brands namely Chocki. Halls. The strategy has driven volumes in the last two years and we expect the volume growth to continue in the next two years. But Chocki started to cannibalise other higher-priced chocolates in larger markets. total reaching12 lakh outlets). To address the issues of product stability.000 retailers. Simultaneously. 90% of chocolate products are sold directly to retailers. The students of Bombay Scottish (an upmarket school in Mumbai) are not supposed to eat Chocki. PRICE WOES Chocki. with different stockists. Cadbury's distribution network used to encompasses 2100 distributors and 450. To avoid cannibalization of its higher priced products from lower priced ones. In less than one year. was ideal for smaller towns. Cadbury is setting up two separate distribution channels – one for CORE business & other for MASS markets. Promotion . unlike other FMCG products like soaps and detergents. Besides use of IT to improve distribution logistics. One set will be dedicated to Cadbury’s highend products and traditional chocolates. Distribution. But today. This helps in maintaining consumption in summer. in the case of chocolates. The company has a total consumer base of over 65 million. Cadbury's distribution network reaches out to six lakh outlets each for its chocolate & confectionery brands (i. 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. it has installed VISI coolers at several outlets. the company seems to have astutely juggled with the larger pack sizes and raised prices to a degree higher than what appears at face. Cadbury is also attempting to improve distribution quality.

PERK’S sale surged Cadbury’s advertising has. Cadbury Dairy Milk Chocolate is the most advertised brand (with 22%). (The commercial showed a beautiful young lady overcoming all obstacles on the cricket ground. This was a significant departure from CIL's strategy of appealing to adults in India. RE-INVENTING CABDURY “Kya Swad Hai Zindagi Mein” redefined the way Indians looked at Cadbury Chocolates. when they are sad. securities and embracing her lover who won the game by hitting a six).when people are anxious. And this is something advertising has always portrayed.a special friend. Someone who is with you through the ups and downs of life. crossing boundary. But it is found chocolates are eaten under diverse conditions and moods . It featured Cyrus Broacha interviewing college students and asking why they liked to eat CDM. After this campaign. who sought a rational justification for indulging in chocolate consumption. This theme introduced in around mid 90’s bought instant growth to Cadbury’s Dairy Milk. Cadbury's Dairy Milk (CDM). helping you bounce back. And that's what Cadbury's Dairy Milk (CDM) positioned itself as . Preity Zinta’s angelic dimples laid the foundation for what would become the Indian teenager’s favorite snack. Just as the commercial seems all set to end with the students and Cyrus singing the famous CDM theme. The campaign featured a television (TV) commercial that was significantly different from the company's earlier commercials for the brand. when happy .Typically it is said that chocolates are being eaten when everyone is happy. watchman. rest of the 9 brands advertised by Cadbury comprise 15% of the advertising. whereas. over the past few years. will find excuses). In March 2002. the 6 Cadbury brands shown in the graph comprise 85% of the advertising pie. The Ad campaign ran successful for about four years and immersed deeper inside hearts of Indians. a student comes up and questions Cyrus. CADBURY ADVERTISEMENTS . This was followed by college students 'singing' their excuses for eating CDM. aptly reflected India’s passion for chocolates.a whole range of emotions. % Share of various Brands Ad spending of Cadbury Here. it can be said chocolate is a true soul mate. Cadbury roped in Preity Zinta for its PERK brand. Cadbury launched its next advertisement campaign for its flagship chocolate brand. 'Khane Walon Ko Khane Ka Bahaana Chaahiye' (those who want to eat. The advertisement aimed at conveying the idea that no specific occasion is required for consuming CDM. Condensing these views & thoughts.

it inched up to 71 per cent.6 crore (Rs 456 million) as compared with a 21 per cent increase in the previous year. 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. several months back.000 tonnes of chocolates during Diwali. However.". however.. Aaj dil ne socha yun. Mr.Dil ko jab kushi choo jaye. Bachchan thinks.. In that year." CABDBURY’S FIGHT-BACK .. For the year ended December 2003.Khaane waalon ko khaane ka bahaana.the next few months were the peak season of Diwali. set back its plan of outsourcing model which would have resulted in significant revenue generation. Cadbury sells almost 1. he recollects the photo-shoot when he had thrown the cap off his friend's head." Cadbury’s Dairy Milk…. The controversy." Akhir barvi pass ho hi gaya... . The "worms’ controversy" came at the worst time…. kissi apne ko kya doon? Jo usse kahe tum apne ho.jo apne aap mein khaas ho. CDM sales volumes declined from 68 per cent in October ’03 to 64 per cent in January 2004 Clearly.. Cadbury’s reiterated that all through the 55 years of leadership in India.kuch meetha jo jaye. the sales during festival season dropped by 30 per cent. In May. and the adverse publicity received in several countries.4 per cent in January 2004. Log Cadbury Kyon Khate Hai…." kuch meetha jo jaye. Eid & Christmas. jo sirf taufa nahin ehsaas ho Jisme rishto ki mithas ho…. its net profit fell 37 per cent to Rs 45. the worm controversy took a toll on Cadbury's bottom-line.. but at the same time allowing the competitors to establish their foothold and taking maximum advantage of Cadbury’s misfortune. The controversy created an deep adverse impact on the company with their sales not only drastically dipping down.Asli swad zindagi ka CADBURY DESERTS “khaane ke baad kuch meetha ho jaaye.” CADBURY CELEBRATIONS Looking wistfully at a photograph. The company saw its value share melt from 73 per cent in October 2003 to 69. that it has remained synonymous with chocolates and have remained committed to high quality and consumer satisfaction.

Cadbury appointed Amitabh Bachchan as its brand ambassador for a period of two years. he takes a look at their complete manufacturing process and continues. 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. which was built over a period of 50 years.. man ki shaanti nahin mil sakti.'Project Vishwas' “Steps to ensure quality & regain the confidence” Following the controversy over infestation in its chocolates.. The packaging is in response to foreign bodies.. Also. Yet. Some of which were: 1. The company's team of quality control managers. to jawaab mein voh mujhe apni factory le gaye. The Big ‘B’ FACTOR The big factor that has pushed up CDM sales is the Amitabh Bachchan campaign. 2. Cadbury India Ltd unveiled 'Project Vishwas'.Maine unse ek sawaal poocha. Responded to consumers concern over the issue rapidly. the communication campaign worked effectively in giving out the central message. a plan involving distribution and retail channels to ensure the quality of its products. Bachchan says. Cadbury Dairy Milk.. The packaging was changed to include a sealed plastic wrapper inside the outside foil. notably worms. provide assistance in improving storage conditions and strengthen packaging of the company's range of products. The company believed that the reputation he has built up over the last three decades complements their own. 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. These helped stockists display and sell the products "safely and hygienically" 190.ki kya iske baad main chain ki neend so paoonga ya nahin.. the entire credit of recovery could not be attributed to the brand mascot. uss kaam ko karne se usse sab kuch mil sakta hai. In early January. . Cadbury’s launched a new 'purity-sealed' packaging for its flagship product. Addressing his audience. to pachpan saalon se Cadbury khaane wala main bhi thoda sa hitchkichaya.000 retailers in key states were covered under this awareness programme. 3.. Isliye jab Cadbury walon ne mujhe kaha ki unki baat main aap tak pahunchaoon. . Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60 bars. It helped restore consumers' faith in the quality of the product." Walking into the Cadbury factory. jis kaam mein manushya ki antar aatma uske saath na ho. Mr. "Mujhe aapse kuch kehna hai. checked over 50. along with around 300 sales staff. The Vishwas programme was intended to build awareness among retailers on storage requirements for chocolates.000 retail outlets in Maharashtra and replaced all questionable stocks with immediate effect. Incisive action taken by the company also helped..

. The survey conducted by the company says that consumers have long forgotten the controversy and are back to their merry chocolate-chomping ways."Aur mujhe apni international technology." "Ab aapki favourite Cadbury Dairy Milk naye purity seal pack mein. Among other things. including sourcing of raw materials and packaging. And for Cadbury’s India.cocoa have significant impact on margins. or packs). Consumer confidence in the product was back and there was a steady progression in sales .. Changes in custom duties and foreign exchange fluctuation: As 20% of raw material is imported." CADBURY’S SINGING SWEETLY AGAIN All is well that ends well.The company posted a high double digit sales growth in that year end. Cadbury’s regained its market share. The recovery began in May 2004 when Cadbury's value share went up to 71 per cent... Sales were back to the precontroversy levels.apne kade quality controls aur double protection. Thanks to quick action taken to recover the damage done by the worm controversy like Operaion Vishwas. Amitabh Bachchan as their brand ambassador.packaging dikhayi. nothing can be sweeter than Regaining Back the Consumer Confidence. it changed the wrappers for its Cadbury Dairy Milk brand and introduced better coolers. In other words.. The aim is to improve efficiencies.. Finally giving his personal assurance and approval he says. Other costs (indirect expenses) like travel costs and hotels were also being studied. changes in custom duties & foreign exchange fluctuations have significant impact on the final cost of . Excise duties : Changes in excise levied on malt and chocolate influences end product prices and thereby volume growth as well as margins. adopting new packaging & massive advertising with Mr. Cadbury is trying to reduce the cost per stock keeping unit (SKUs. "Aaj kal mein badi chain ki neend so raha hoon. . 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." Saying which he takes a bite of the chocolate.. Earnings sensitivity factors Cocoa bean prices: Domestic as well as international prices of key raw material . 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. This was partly an outcome of the worms’ controversy more than a year ago.

But with that. But stagnancy in growth rates made the companies re-think their strategies. 4. It appears that they have subtly altered its recipe by using less of costlier cocoa and more of milk and sugar. For example. MARKETING . However on the positive side. is around 1 per cent of the turnover. it helps in expanding the market. new products and so on.94mn (1. Consequently. Besides Dairy Milk. Success factors of Cadbury’s India Limited 1. . understanding that asset utilization may be lower and returns slower to arrive.PROMOTION of CHOCOLATES in INDIA Traditionally. thus lowering its exposure to volatile raw material prices as well as cutting costs.the product. They can also introduce new products from the parent. if it is suitable for Indian market. Royalty Structure: Royalty to Cadbury Schweppes Plc. 5. as opposed to children. Competition from MNCs like Nestle as well as imported brands. the entire Cadbury product portfolio in India has been developed locally to suit Indian consumer tastes. 2. Global management processes: India occupies a high profile position in the global organization. Cadbury India is known as a key product innovator. the company tailored the chocolate formula in India to prevent melting in the country’s open-air high frequency store environment. Cadbury saved about Rs. 3. with advocates in regional and global headquarters. chocolates were always targeted at children.8 percent of net sales) in FY1999.. Increasing competition puts pressure on advertisement budget and margins. but expecting volume share to compensate for lower margins in the long run. Cadbury was the first chocolate company that took the market by storm by repositioning brands at adults. Packaging. marketing and distribution have all been tailored to local market conditions. 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. the company gets unlimited access to latest technology. 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. Subtle reengineering of raw material mix led to cost savings: Cadbury has reduced its dependence on cocoa. Cadbury's launch of Perk has also contributed significantly in reducing the proportion of cocoa in the overall raw material mix. Local management processes: The Cadbury India team is all-Indian and has a deep understanding of local market dynamics. Global management has allowed the local operation a high degree of flexibility in growing the business.

Almost 75% chocolates are impulse purchases. 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 . Ideally the shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. Gift stores. Sweet Shops etc. Pan-Bidi stores. In some of the cases the chocolates are stocked depending on the manufacturer’s provision. It's all about giving the consumer a choice and taste which they enjoy. The chocolates are kept there. canteens.g. In a few of the cases the chocolates were kept separately (as per equipment provided by the manufacturer – e. various brands of chocolates are kept together. The chocolates category thrives on excitement. Of the space allocated for chocolates. Also the companies can devise there marketing strategies that are catering to specific segments and are thus more effective. But in most of the cases chocolates are stocked near the counter. II NATURE OF RETAIL OUTLET Chocolates are primarily sold through Kirana Stores.I BUYING BEHAVIOUR Chocolates are consumed as indulgence and not as snack food. as prevalent in western countries.. Medium size retailers sell chocolates of about Rs. The chocolates are kept in Glass Jars and boxes – These are provided by the respective companies along with the product. This is true for chocolates also. Also the wholesaler usually deals in all kinds of FMCG goods. Bakeries. The items like chocolates are placed near the counter. This is to facilitate visibility of the chocolates for the customer who is visiting the store. Chocolates are kept in cardboard boxes and are also delivered in the same. The space allocated for the chocolates was less when compared to the total area of the shop.2004 Company-wise Ad Spending The graph shows that Cadbury's India Ltd. Medical Stores. In addition to marketing promotions companies have been focusing extensively on the promotions by the sales staff. On an average the wholesalers sells Rs50000/month of Chocolates (all brands included). Chocolates are bought predominantly by adults and gifted to children. Foodstuff in addition to the chocolates. Chocolates are kept at or below the eye level. VISI Coolers). tops with 52% share of the advertising pie on . III STOCKING OF THE PRODUCTS In most of the cases. .. Cadbury brands occupied more than Nestle brands. 400 – Rs.

3. Nestle Rich Dark. Chocolates & confectionery and other processed food products. The company introduced two new brands. Beverages (Coffee. eight channels account for 40 per cent of chocolate advertising.500 employees and almost $500 million in sales in 2002. Nestle is the fastest growing company in chocolates in India. Cadburys and Nestle took major initiatives to bring in grown-ups into this market. Star Plus. the chocolate majors. It has a total number of 509 factories out of which 220 are located in Europe. MAX. Discovery and Channel [V] proves the changing profile of the potential consumer for the advertisers. with a presence of over a century Nestle has a presence in 83 countries worldwide. which is obvious. Bahama Islands. a wholly owned subsidiary of Nestle Holdings Ltd. But heavy advertising on channels like MTV. Zee Cinema. Nestle is one of the oldest food MNC operating in India. Nestle achieved roaring success by . This is reflected in the changing advertising patterns across different channels. from children to teenagers/young adults as well as adults. with six manufacturing plants. Zee.Baby Food. Munch etc. 153 in America and 136 in Africa. It has expanded its products range to all segments of the market. Out of 100 channels. Kit Kat is selling 'ritualistic' break to teenagers/ young adults. Nestle India Limited grabs the 2nd position with 34% share. as it did not add value to the its portfolio. The Kitkat brand is the largest selling chocolate brand in the world. New launches such as Nestle Choco Stick and Milky Bar Choo were made at attractive price points to woo new consumers. NESTLE INDIA Background Nestle India was promoted by Nestle Alimentana. While Cadbury is trying to sell indulgence to adults. Asia and Oceania The Swiss food giant has been in India for 90 years. Chocolates & Confectionery Nestle forayed into chocolates & confectionery in 1990 and has cornered a fourth share of the chocolate market in the country. since the main buyers of this product category are children. malted beverage). Other brands include Milky Bar. Milk products. in 1998.. Charge and Crunch. The company has discontinued products Chocostick. in this category. Nassau. Business Nestle has a presence in the following categories . This pack of eight is headed by Cartoon Network. Crunch. In fact. Chocolate Ads shift focus from KIDS to YOUTH Indian chocolate market is almost totally depended on purchases of kids. Chocolates contributes 14% to Nestle’s turnover. whereas.television. Switzerland. Parle Products gets the 3rd position with 8% of the advertising share. Bar-One. In recent times. Marbles.

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 Mumbai. Nestle chocolates witnessed a growth of 14. However. the company launched three new chocolates in Mumbai under the brands Fundoo. Bindaas and Almond Bar. NESTLE CHOTU MUNCH. Amul chocolates used to come in not so attractive packages and very little marketing effort was seen. Nestle introduced an innovative LIQUID CHOCOLATE – CHOCO STICK at a price tag of Rs. which is the largest selling unit in the wafer segment and the most widely distributed. Hence. The direct impact of Cadbury’s loss was Amul’s GAIN. Amul is now an important player in this growing chocolate industry. But things have changed and for good.price point. . 2/which was in instant hit.grabbing the Rs 5 price point.748-crore GCMMF is in chocolate segment since quite some time. It has firmed up its measures with marketing and new product launches and revamping its packaging. NESTLE Chocolate Eclairs. NESTLE Coffee Eclairs and various flavours for CHOCOSTICK. Amul just recently launched new chocolate brands in the market . 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. which accounts for almost 10 per cent of the Rs 650 crore (Rs 6. NESTLE MILKYBAR STARZ. NESTLE CHOO. continued to gain in volumes. High temperatures are a typical characteristic of Indian subcontinent.Rejoice. The company sold nearly 20 tonnes in Oct 2003 in Mumbai. Chocolate starts melting at such high temperatures thus making chocolate unfit for consumption. A range of other innovative and renovated products were launched which included NESTLE Milk Chocolate. was well received. Cadbury’s Worm Controversy & AMUL The breakup of Cadbury’s worms’ controversy accelerated & facilitated Amul’s marketing efforts.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. NESTLE Fruit & Nut. In an attempt to boost sales. NESTLE CHOCOLATE PRODUCT PORTFOLIO NESTLE MAHAMUNCH A ROARING SUCCESS NESTLE MAHA MUNCH Ruk Na Paye…… Ruk Na Paye Nestle MAHA Munch…only Rs. 2/. From Jan – Sep ’05. NESTLE Krunchy. 5 Amul (GCMMF) The Rs 2. which was launched at Rs. NESTLE MUNCH. Kite Bite and Nuts `bout You.50 billion) a year chocolate market in India. its market share is just 5% and the company did not look aggressive till recently.

the CAMPCO to enter on the scene to rescue the farmers . has over 2. making it the first ever branded cooking chocolate to be made available in the Indian market. while the Kite Bite brand was unveiled during the kite-flying festival in Ahmedabad. GCMMF has also drawn up plans to make its chocolate business a separate division of the company. The Gujarat Co-operative Milk Marketing Federation (GCMMF). The market size of cooking chocolate in Mumbai and Delhi alone is estimated at 50 tonnes per month. Amul also aimed to capture a market share of 20 per cent in the first two months in Delhi and Mumbai. caterers. it is offered only as a commodity. which reaches out to over five lakh retail outlets. which is an international agency. Amul also revamped its packaging with the help of TMA.600 distributors under its fold. Karnataka and Kerala Governments enthused. as well as having brands catering to different occasions. owner of the brand Amul. 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. 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. biscuit manufacturers.While the first two were been priced at Rs 10 for a 30 gm stick. ice-cream parlours. Brand New Products & Packaging to push Chocolate Business Amul revived its chocolate business with new products and renewed packaging. bakeries. The company launched Chocozoo brand of chocolates in December 2004. Amul has decided to segment the market with brands catering to the `impulse’ and `teen’ segments. and confectioners. Its Nuts ‘bout U brand was launched on the eve of Valentine’s Day. restaurants. Amul. at this stage. Amul targeted various segments with its new product. Amul also launched occasion-related sub-brands. cooking chocolate is available in the market. Launch of Cooking Chocolate Though. Besides introducing new products in the chocolate segment. 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. Almond Bar carried a price tag of Rs 10 for a 35 gm chocolate. to target the age group of four to 14 years. not as a branded product. including housewives from SEC A and B households.

The Factory was set up in 1986 at an initial investment of Rs. After entering into the Cocoa market. CAMPCO CHOCOLATES CURRENT STATUS of CAMPCO However. the Co-operative has been able to increase local consumption of cocoa based products and to export value added semi-finished products. CAMPCO willingly took up the responsibility to enter the cocoa market and performed a savior's role.from distress. which hitherto had not been achieved. Home-made Chocolates Another area of chocolate industry in India is HOME-MADE CHOCOLATES. 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. Housewives from elite class usually indulge in this kind of business. since yearly production was hardly 5 to 6 thousand tonnes which is not even 0. Campco. This segment is highly fragmented and operates independently. Brazil and other cocoa cultivation nations. But. adopting foreign technical advancement in chocolate making. As a strategy for survival in the International scene the CAMPCO played a major role in establishing a name for Indian Cocoa. CAMPCO established a Chocolate Manufacturing Factory at Kemminje village in Puttur Taluk in Dakshina Kannada district. the company does not have much visibility in the Indian market. Through sustained efforts CAMPCO has been able to ensure reasonable prices to Cocoa growers. With the setting up of the chocolate manufacturing factory at Puttur. They are more pronounced for manufacturing distinct flavors and varieties of chocolates in various shapes and size. They usually operate in local area and through their contact network. the Co-operative was able to export Cocoa Beans worth Rs 40 million to European countries in the initial phase of operations. It procured cocoa pods from growers and adopting scientific processing methods to market standards. The company seems to have restricted its marketing efforts in south India only. India was not known as a Cocoa producer in the international Trading Community. With a view to creating a permanent demand and a steady market for the beans.7 Millions. Some home-made chocolate manufacturers manufacture really . The Co-operative had to face the problem of a limited internal market and unremunerative export market. released dry cocoa beans matching in quality in the world market equal to that of Ghana. 50KM from Mangalore.3% of the total world consumption. these chocolates are usually priced at a higher price than that available for branded products for the same quantity. No advertising are seen being aired on TV…at least not on the prime channels.116.

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.8 billion to heat damage.5 percent of annual sales of Rs.' This means white spots emerge on the surface of the chocolate. 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). whereas chocolate starts melting at body temperature (about 37-38 degrees) . TEMPERATURE: A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to melt under even moderate heat. an antioxidant which helps the body by neutralising potentially cell-damaging substances known as oxygen-free radicals. The industry majors are liaising with the government authorities to enable manufacture of such chocolates in India. and scientific research suggests they do good things to blood vessels. Dark chocolate contains flavanoids. Problems & Challenges in Indian Chocolate Industry 1. Air-condition supermarkets are rare. Cadbury loses 1.attractive GIFT CHOCOLATES. a normal byproduct of metabolism. as the government regulations do not permit manufacture of such 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. though. This phenomenon is called 'fat bloom'. Chocolates for diabetics. UNAVAILABILITY OF CONTROLLED REFRIGERATION: India does not have controlled refrigerated distribution. 2. 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. the fat expression happens on the surface of the chocolate.Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer. and so Indian chocolates are more resilient to heat than . are available in certain parts of the world. The temperatures can reach as high as 48 degrees in summers. Therefore the milk fat content in Indian chocolates is lesser than that of European chocolates and hence they taste different. Chocolate: the new solution for blood pressure? Cocoa beans have antioxidant compounds called flavanols. white spots appear on Chocolates sometimes. 6. Companies revise ingredients to make chocolate withstand heat.

Nepal. prefer these imported chocolates. THREAT FROM IMPORTED BRANDS: Free availability of imported brands bought through illegal routes pose a threat to the domestic chocolate industry. Electricity costs money and is not provided in a uniform way. movement of agricultural commodities etc. Cocoa prices are at a near 20-year high at $2358 per ton. Nestle and Cadbury have tried to provide loans for retailers to buy fridges. 4. Government policies in terms of licensing. the premium brands. these imported chocolates taste better than domestic chocolate due to recipe difference. 90% of our products are sold directly to retailers. India does not produce cocoa to any noteworthy extent but is a large consumer of chocolates. so on and off the electricity goes and the product may suffer sometimes 3. duties. as these cater to a small niche market. do not pose a threat to the market. but was appalled to see its chocolates sandwiched between dead chicken. TRANSPORTATION: Chocolate needs to be distributed directly. . When the cooling is switched on in the morning. As a result the cocoa fat melts and migrates to the main body of the chocolate bar. External Factors affecting Growth of Chocolate Industry in INDIA Good monsoon ensures adequate availability of raw materials. the cocoa fat solidifies and turns white. un-sellable white on black form. However. unlike other FMCG products. Small coolers were provided to retailers to keep the chocolate from melting. These are not only of low quality. 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 tried to provide fridges with see-through doors. butter and vegetables. Usually. 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. but are brought very near to their expiry dates. but that didn't quite do the trick. which are mainly agricultural nature.Eurupean chocolates by a factor of 2 degrees. etc of inferior brand of imported chocolates. Most of the cheap chocolate brands that are available do not meet Indian Food Regulations. Building such a direct network in rural areas is a daunting task since the infrastructure is poor in India in rural areas. Hence consumers who are willing to spend a little more. up from $900 a year back. especially among the middle class. Raw material prices have significant influence on margins. but to hold down power costs the shopkeepers switch off the fridges at night. 5. Ironically. has been growing. which come through official channels. However there is a lot of dumping from neighboring countries like Dubai. Consumption of chocolates and other cocoa-based products. presenting a bizarre.

Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings. The biggest opportunity is likely to stem from increasing the consumer base. In rural areas. it is even lower. . the chocolate business grown by 14-15% on an average and is expected to grow further for at least next five years. However the Indian market is still untapped and provides immense scope for growth. smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals. taxes. which are affordable to the masses. We also believe that the near term opportunity lies in increasing penetration rather than increasing intensity of consumption. have boosted consumption. A strong volume growth was witnessed in the early 90's when Cadbury repositioned chocolates from children to adult consumption. Changing Attitudes & Consumption pattern: In the past. time lag for a product launches. Also. Chocolates right now reaches about 70mn to 75mn consumers. It is estimated that chocolates have a potential market of about 116mn consumers.also affect the introduction of products. both geographically as well as product basket wise. cocoa) expensive. An overall booming economy will consume tonnes of chocolates because consumer spending increases. chocolate consumption had been restricted by low purchasing power in the market. In the past five years. Per capita consumption is around 160gms in the urban areas. etc all influence the business. prices will fall making these products more accessible to the wider population. high prices and domestic production problems will provide the main problems to market growth. Rupee depreciation improves export realizations. But with the launch of lower-priced. As these markets develop. Chocolates which were considered to be an elitist food hit the fancy of masses looking for a change in life style at affordable cost. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for elitist consumption till recently. Hence per capita consumption has a immense scope for improvement. the absolute number of consumers in middle class & upper middle class increases. excise. however it also makes import of raw material (esp. compared to 8-10kg in the developed countries. The per capita chocolate consumption in India is still much below the East Asian standards. Market growth driven by overall economic growth and urbanization also contributes. Growth Opportunities in Indian Chocolate Industry Untapped Market & Limited Consumption: The fact that chocolate is not a traditional food. Chocolates in India are consumed as indulgence and not as a snack food. Chocolate consumption in India is extremely low.

Apart from the festive season. 3. Leverage India for offshoring: India is being leveraged for export of finished goods. Chocolate Boutiques & Designer Chocolates They call it 'choco fever'. Strategies for Growth & Success in India 1. Companies should look at new avenues. strawberry chocolate or better still wild berry in cognac flavoured chocolate. weddings and baby announcements also see heavy offtake of premium sweet delicacies. there are also chocolates with pan-supari. animal figurines coloured in metallic hues and glitter. and champagne and Jamaican rum truffles are also demanded in the market.Rural expansion: Rural market and small town markets are seen as the key to spurring double-digit growth. the high fibre. low fat and sugar ones are quite popular. 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. Manufacturers are now luring their patrons with chocolates in geometric shapes. For those who are health . Revamp the product to keep the excitement alive. Companies need to reach out to smaller towns. Distribution will hold the key. where three-fourths of the population does not even know the product. Products such as liquid chocolate packs from the existing portfolio are expected to enable rapid acceptance. Such collaborations will also facilitate companies to use each other’s distribution networks. Products like nut-based praline chocolates. Chocolate Boutiques are a complete chocoholic experience. cardamom flavours and liqueur filling. some unique flavors like tamarind and chilli chocolates. any one will be gripped by this fever. and for BPO opportunities. For the more adventurous. These manufacturers also cater to the older and the health-conscious choco-lovers. 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. as a superior destination for manufacturing best practices. 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. 2. Manufacturers are finding an increasing number of curious customers who're pampering their taste-buds to apricot and peach chocolate. while expanding the reach of its products. Surrounded on all sides by scrumptious chocolates wrapped neatly in colourful foil and paper.

income level and spending.500 per kg.conscious there is also a special range of sugar-free and diet chocolates. beliefs. PRICING is the key for companies to make their product reach consumers’ pockets. Understanding the consumer demands and maintaining the quality will be essential. These are usually bought by corporates or individuals who want to make a special statement. The companies’ strategies should focus on driving sales through a right product mix. From festive occasions to personal celebrations to corporate gifting. From logos to company names being embossed in chocolates of different shapes and colours. attitudes. silk flowers. gold foils and brocade. The Indian Chocolate Industry is destined to grow and will do so in the future. people do not mind spending on designer chocolates. X'mas figurines and animals -. Companies will have to keep themselves abreast with the developments in other parts of the world. bibs and bows are also available and are getting very popular in elite classes. new employee joinings and management training programmes. these are all in demand. Right pricing will make or break the product SUCCESS. The packaging of these products includes materials like imported mesh. satin ribbons. With the rise in disposable incomes. reduced wastages. At one hand. Economical distribution of the products will also be equally important. There are 1. logos of companies and personalized message on the chocolates are fast becoming popular. efficient materials procurement. Designer chocolates are tailored for customers who're looking at gifting chocolates with a personalized touch.and nearly 50 kinds of gift packaging available to suit any particular occasion.ranging from good luck charms. Few chocolate makers cater only to corporate clients for festive occasions.000 varieties of designs to choose from -.geographically as well as in the product offering. Extensive range of Baby chocolates are available which are beautifully wrapped in pinks and blues and embellished with decorations like baby bottles. product launches. increased factory efficiencies and improved supply chain management. most of which costs between Rs 500 and Rs 2. Embossing of names. lace and satin-draped boxes being in heavy demand. And we are not talking about the boring old rectangular slabs of cocoa These designer chocolates focus a lot of attention on packaging. CONCLUSION The Indian Chocolate Industry is a unique mix with extreme consumption patterns. . made-to-order chocolates are most sought after. There’s an immense scope for growth of chocolate industry in India . 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.

myiris.Bibliography www.com www.com www.rediff.org www.com .India-stats.Agencyfaqs.com www.Equitymaster.ibef.business-standard.indiainfoline.com www.indiantelevision.com www.com www.thehindubusinessline.com www.com www.

Sign up to vote on this title
UsefulNot useful