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Product analysis:

Chocolate
Group 7
An overview: Indian Market

India to be the market with highest growth in period 2015-2020


Market Trends 2015
sales grew by 24%
Chocolate with toys registered the fastest growth
The average unit price increased by 8%
Increase in brand launches and extension of product portfolios
Increased rural India penetration
Mondelez stays the market leader

70% of chocolate is consumed in urban India


Consumer Growing demand for Dark chocolates
Trends Growth of premium chocolates.
Chocolate Boutiques Fabelle
Per capita chocolate consumption increased by 200% from 2008
to 2012

Source: Euromonitor
Chocolate Segmentation
- By Cocoa content

Unswee
tened
Chocola
te
White Sweet
Chocol Chocol
ate ate

Dark
Chocola
te

Milk
Chocola
te
Chocolate Segmentation
- By Forms

% Sales of Chocolate Confectionery by Category: Value Sales of Chocolate Confectionery by Category: Value
140000.00
2010-2015 2010-2015 (INR miilion)

50 120000.00
45

40 100000.00
35
Other Chocolate
30 80000.00 Tablets
25 Countlines
20 60000.00 Chocolate with Toys

15
Boxed Assortments
Bagged Selflines
10 40000.00
5

0 20000.00
2010 2011 2012 2013 2014 2015

Bagged Selflines Boxed Assortments Chocolate with Toys 0.00


Countlines Tablets Other Chocolate 2010 2011 2012 2013 2014 2015

Source: Euromonitor
Other segmentation criteria

% Consumption- Region wise


% Consumption- Consumer behaviour
35
23% North
40% East 30
Sout
15% h 25
West % CONSUMPTION - Consumer market
22%
20

15
30% Urban
Rural
70% 10

% consumption - Age
5

13-19
0
29% 29%
20-25
26-30
30-40

19% 23%
Any snack Bar Chocolate
Any chocolate Small individual chocolates

Source: Economic Times


Major drivers and Challenges

Rising Intl exposure


Changing lifestyle
Disposal Income Drivers
Nuclear families
Premium chocolate demand rise
Home-made chocolates

Traditional sweets
Storage and transportation
Challenge Packaging
s High excise and import duty
Rise in cocoa price
Affordability

Meeting the
Adaptations demands for
to Diabetics
Consumers chocolate,
taste Premium
chocolates

Critical
Succes
Replacing
s Packaging

Factors
Traditional and
sweets Advertising

Increasing
Maximising
penetration
Distribution
of rural
network
marlets
Market share of companies

2014 2015
Mondelez Nestl Ferrero Mondelez Nestl Ferrero
Mars AMUL Others Mars AMUL Others

23%
24%

1% 1% 1% 1%
5% 55% 55%
5%

15%
14%

Source: Euromonitor
Competitive Landscape
Mondelez maintained the lead with 55% share in 2015
5 Star and Cadbury Dairy Milk have strong recall value when compared to
other brands in chocolate confectionery
Ferrero recorded the biggest share increase in terms of value
Chocolate is dominated by intl brands with 70% retail value share in 2015
In Feb. 2015, Nestl introduced two new variants: Senses plain milk and dark
In Nov. 2014, Rajhans Nutriments introduced its flagship premium brand
Schmitten
Premium brands continue to become more popular amongst urban consumers
but captured much lower retail value share

Source: Euromonitor
Modelez (Cadbury)

Formerly known as Kraft Foods; Mondelez came into existence in 2012


An American MNC operates in 80 countries
The companys operations managed across 5 geographic zones, 165 countries:
North America, Latin America, Europe, EEMEA and Asia pacific
The company has very strong investment in the BRIC nations with over 40% of their
sales coming from high growth emerging markets that includes the BRICs
It has over 60 brands classified under 5 product categories such as Biscuits,
Chocolate, Gum & Candy, Beverage and Cheese & Grocery.
The company occupies the No.1 position in Biscuits, Chocolate & Candies, and also
the No.2 position Gums globally.
Some of their key brands are Oreo, Cadburys Dairy Milk, Nabisco, Tang, Trident gum,
etc.
It acquired Cadbury in 2010 as a strategic move to gain a foothold in emerging
markets

Source:
Source: Mondelez
Cadbury was market leader
Mondelez acquired Cadbury to strength its hold on Indian market
Brand strategy
Kept the Cadbury brand as it is, while introducing new products like Cadbury Bubbly
Launched a new range of Cadbury Bournvita Biscuits in India
This is done so that Mondelez can leverage the brand equity of Cadbury India
First to introduce the concept of small SKU and penetrate the rural and BOP market

In 2013, Mondelez (Cadbury) changed its packaging for Cadbury Crackle, Roasted
Packaging Almond, Fruit&Nut
to create and maintain consumer excitement

Source: Economic
Children
Advertisements In the 1960-70s, Cadbury DairyMilk was positioned to target the children
The logo one and half glass of milk was emphasized to be nutritional
Adult
In 1990s, Series of campaigns, starting with the Real taste of life'
campaign, to encourage people to bring out the child in them
Social acceptance theme with the line- 'Those who want to eat, will find a
reason for it'
Was able to gain an acceptance for chocolates among the adult audiences for
consumption
Traditional Indian sweets and desserts
Cadbury ran various campaigns under 'Kuch meetha ho jaye' including two
campaigns parallelly - 'Shubh Aarambh' and 'Meethe mein kuch meetha
ho jaye'
All the advertising campaigns was that they focused on the Indian customs
and traditions and yet they gave it a modern and contemporary look to
connect with all the people
Won awards for its campaigns
Nestle

Founded in Switzerland, 1866; Started its operation in India in 1912


Nestl SA is involved in the development and production of nutrition, health,
and wellness products globally
The company offers arrange of food and beverage categories and eating
occasions
The companys Food and Beverages business is managed through three
geographic zones: Europe, Americas and Asia, Oceania and Africa and
globally for Nestle Waters, Nestle Nutrition and Other Food and Beverages
Products are diversified into seven groups: Powdered and Liquid Beverages; Water;
Milk products and Ice Cream; Nutrition and HealthCare; Prepared dishes and cooking
aids; Confectionery and Pet Care
The companys key brands include Cerelac, Gerber, Perrier, Chocapic, Cookie
Crisp, Nesquik Cereal, Crunch, Kit Kat, Orion, Nescaf, Nespresso, Hot Pockets,
Maggi, etc.

Source:
Source: Nestle India
Nestle is a highly-diversified company operating in many
Brand strategy
different markets and sectors of those markets
It has well-established relationships with other powerful
brands, including Coca-Cola, Colgate Palmolive and General
Mills
Nestle has strong relationships with retailers

Innovation driven
Culture
Extensive centralised research and development facilities

Nestle started operating in India from 1912


Why it is not
Though it came before Cadbury, it failed to establish a first mover advantage
market leader?
Reasons could be its diversified business
Nestle is into grocery items as well and hence it did not follow a focus
strategy
Also, Nestle has limited number of forms extensions
Mondelez: Why It succeeded?
Huge spending on marketing its key products, campaigns are catchy, target
specific with a strong brand promoter
Milk chocolate products with focus on good quality raw materials to develop the
best taste
Trademark purple wrapper of Dairy milk that made it a huge success
Extensive distribution network reaching out to the rural shops, small SKUs for rural
India
New innovations in product, DairyMilk Shots for tropical India

Nestle: Recommendation
The company should create a new market for its niche products
It should spend more on advertising and brand recognition, give a more personal
touch to its products
Expand its portfolio of chocolates by investing more in R&D, move to a more
localized taste preference
Venture into Boxed assortments for festive occasions
Affordable small SKU
Home-made Chocolates
This segment is highly fragmented and operates independently
They are more pronounced for manufacturing distinct flavors and varieties of
chocolates in various shapes and size
But, these chocolates are usually priced at a higher price than that available
for branded products for the same quantity
House-wives from elite class usually indulge in this kind of business
They usually operate in local area and through their contact network
Some home-made chocolate manufacturers manufacture really attractive GIFT
CHOCOLATES for corporate gifting

Source: Internet
Boutiques
Chocolate Boutiques are a complete chocoholic experience
Manufacturers are finding an increasing number of curious customers
Cater to the older and the health-conscious choco-lovers; special range of
sugar-free and diet chocolates
Designer chocolates are tailored for customers who're looking at gifting
chocolates with a personalized touch
These designer chocolates focus a lot of attention on packaging
Eg.: ITCs Fabelle

Source: ITC Fabelle


Prospects

Presence of international brands such as Schmitten and Luvit in chocolate will fuel the
forecast growth. The smaller SKUs entering rural India and expanding infrastructure
facilities across rural India will also support the growth
Chocolate with toys is expected to record the fastest value CAGR of 14% at constant 2015
prices. The increasing marketing and point-of-sale activities from Ferrero for its brand
Kinder Joy and also other manufacturers launching chocolate with toys products will help
growth
The average unit price is expected to decrease slightly due to increasing numbers of new
brands with lesser unit price and also smaller SKUs priced lower to attract rural consumers
The competition from snacks, crisps and other products will have a smaller impact on
chocolate confectionery. The increasing number of brands under chocolate will reduce the
impact
Ferrero is expected to increase its market shares if they continue their strategy
Good marketing and advertising campaigns are helping brands establish

Source: Euromonitor
References

http://www.foodnavigator-asia.com/Markets/Analysts-predict-lightning-growth-for-Indian-
confectionery-market
http://www.confectionerynews.com/Markets/Rural-India-chocolate-market-set-for-growth
http://articles.economictimes.indiatimes.com/2013-08-01/news/40963259_1_chocolate-
consumption-chocolate-market-indian-consumers
http://www.icmrindia.org/casestudies/catalogue/Marketing/MKTG287.htm
http://www.packaging-gateway.com/news/news-cadbury-india-designs-new-packaging-for-
chocolate-products-4219046
http://in.mondelezinternational.com/brand-family
http://www.businesstoday.in/magazine/features/confectionary-firm-ferrero-in-india-premium-
chocolate-market/story/204086.html
Euromonitor report: Chocolate confectionery in India
SmartResearchInsights report: 1. Assessment of the Indian chocolate market
2. Indian chocolate market- Competitive landscape