Presented By: Tanay Samanta PGDM 2011-2013 UWSB(Ahmedabad)

The size of the market for chocolates in India was estimated at 3,200 crore in 2012. Cadbury Kraft Foods has a 70% share. 20% is held by Nestle. The others operate in the remaining 10%, which forms around Rs 310-320 crore. Cadbury Kraft Foods has been a market leader in the chocolate category since the last 64 years in India. The chocolate market in India has a production volume of 30,800 tonnes.

 Cadbury India Ltd. Nestle India Ltd. Lotte India Co. Ltd. Candico India Ltd. Lotus Chocolate Company Ltd. Campco Ltd.

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In 1914 Parrys started manufacturing sweets. In the backdrop of India joining the WTO, the company needed to strengthen itself & broaden its base to delight customers across the country & abroad. With the vision of strengthen & broaden, Murugappa Group promoters of Parrys Confectionery Limited entered in to an agreement with Lotte Confectionery Limited, South Korea, by which the, entire shares which Murugappa Group, the founders of Parrys Confectionery Limited, held was divested to Lotte Confectionery Limited -A South Korean Multinational giant. Lotte Confectionery is the first Company of the Lotte family of Companies founded by Mr. Shin Kyuk-ho. The Lotte Confectionery Co. Ltd. is the Lotte Groups flagship Company in Foods and Beverages category.

2500 2000 1500 1000 500 0 -500 -1000 -1500 Lotte India Nestle Galxo Britannia Hatsun smith con Agro Net Current Asset Total Assets

Figure: in crores

Net Profit
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Hatsun Agro

Britannia
Glaxo smith con Nestle Lotte India 0 200 400 600 800 1000 Net Profit

Strength: It has the advantage that it is totally focused on chocolate, candy, chewing gum and thus has a unique understanding of consumers in these segments. Parent company is South Koreas No. 1 confectioner. A wide variety of products on offer. Parry confectionary Ltd. (now sold to Lotte corporation)was the first to introduce sweets in India. It has a strong distribution network.

Weakness: The company is dependent on the confectionery and beverage market, whereas other competitors e.g. Nestle have a more diverse product portfolio. Other competitors like Cadbury. Nestle etc have greater international experience and have gained a foothold in India.

Opportunity: Because of changes in consumer tastes and preferences healthier snacks with lower calories need to be developed. R&D and product launches have led to sugar-free variants. The confectionery market is characterized by a high degree of merger and acquisition activity in recent years. Opportunities exist to increase share through targeted acquisitions. Significant opportunities exist to expand into the emerging markets of China and Russia where populations are growing, consumer wealth is increasing and demand for confectionery products is increasing.

Threats: Competitive pressures from other branded suppliers (national and global). Aggressive price and promotion activity by competitors. Social changes-Rising obesity and consumers obsession with calories counting. Nutrition and healthier lifestyles affecting demand. Increasingly demanding cost environment, particularly for energy, transport, packaging and sugar.

Political: Political stability. Tax exemption in sales and excise duty for small scale industries. Transportation and infrastructure development in rural areas helps in distribution network. Restrictions in import policies. Help for agricultural sector. Economical: The GDP rate of Indian economy is increasing every year. It is expected in future it would be better in comparison with other countries. Inflation rate is increasing across the world and India is also no exception. The government and Reserve Bank of India both are trying to control the inflation rate with the help of different measures. Increase in disposable income has taken place due to higher GDP rate. The per capital income is increasing so the customers are having more income to spent for various reasons. Indian FMCG sector recorded 16% sales growth in last fiscal year and it is expected it would further improve in the forthcoming years. The FMCG sector is a 4th largest sector of Indian economy with market size of more than 60,000 crore. The Indian Territory is very large and number of customers is also very high.

Social: The Indian culture, social & life styles are changing drastically. The total population is nearly 115 crore and population includes rich, poor, middle class, male, female, located in rural, urban and sub urban areas. Increase level of education etc. Increase awareness among rural market. Technology: Technology has been simplified and available in the industry. Where technology is not available then it is brought from foreign countries to meet FMCG sector requirements. Foreign players help in high technological development. With research and development facilities the new technologies are developed alone or with the help of foreign players.

THE Chennai-based Murugappa group on Friday Jan.16,2004 said that it was selling its 60.39 per cent stake in a group company, Parrys Confectionery Ltd (PCL), to Lotte Confectionery Co Ltd of Korea for Rs 64.47 crores. This works out to a price of Rs 283.12 per share. Lotte said it would make an open offer to acquire another 20 per cent at Rs 283.25 per share. Addressing a press conference, Mr. M.V.Subbiah, Chairman, PCL, said the group had been consolidating its portfolio for some time and had decided to sell its stake in the company as part of this effort. In the last 10 years, the group had not been able to invest enough money to meet the competition from multi-national companies, he said. PCL had also slipped from its leadership position.

India is the fastest growing market globally with 21% growth between 2008 and 2011. Chocolate consumption in India has almost doubled since 2008, with sales of chocolate increasing from $418 million in 2008 to $857 million in 2011. Chocolate consumption in India has seen an incredible growth rate in the past few years, especially in urban and semi-urban areas. Major players in the market have found channels to manufacture and distribute their products at more affordable prices than before. Many Indian consumers consider chocolate assortment boxes to be premium and to be more hygienic and longer-lasting than traditional Indian sweets. This mindset has contributed to increased sales as the popularity of seasonal gifting of chocolate, particularly during Diwali, has grown in recent years.

Lotte India clocked top line growth of 7.9% in First Quarter 2009-10 Net sales for the quarter ended 30th June 2009 was Rs.4217 lakh as against Rs.3909 lakh in the corresponding quarter of the previous year. During the quarter ended 30th June, 2009, the Company has made a Net Profit of Rs.74 lakh as against a Net Loss of Rs.50 lakh in the previous year. The Company continues to make strategic thrust in improving its distribution network in order to achieve its aggressive growth plans and is focusing on modern trade business.