International bussiness

Exporting chocolates to India

Presented to Prof. C.S.Balasubramaniam BGIMS MMS- Finance

Group Members
Name Farid Charania Roll no 62

Seema Kalro
Tanaya Mengle Shyam Palan

69
72 82

Ritesh Shirshat
Pranal Waghule

102
120

Assumptions
We are considering only the organized market in this presentation. Financial aspects are not taken into consideration. All the rules, regulations, policies and law related aspects are taken into consideration.

Italy

We Italy comes to You India

India

PROFILE of Company
Established in 1878 Atelier of confectionary art Current export share: 15% Exporting Countries China, Japan, U.S.A and Germany

Penetration
WORLD Market share - 12% Market value - 15 million Product line 250 (no.)

Overview of the company

Manufacturing process 1. Fermentation 2. Drying 3. Toasting 4. Screening/ventilation Current products
Original chocolates
Tartufi Fruttati Cuba rhum

Prestige chocolates
Praline Gift boxes Spiced blend

Classic chocolates
Jars Nougat Bars

Classical boxes
cubarillo

Marrons glaces
Dubledo & dragees

Unico
Chunks

Sales and marketing operations : Our stores are established in more than 25 countries

Indian demographics
Second largest population in the world Sectoral employment Agriculture-60%, Industry-17%, Services-23% Majority of population falls under Upper middle class and Lower middle class. Rural-Urban divide 72:28 Age composition : Up to 14 years 32% 15-59 years 60% 60 years and above 08%

Chocolate Market in India

Facts & Figures
Chocolate market is around 1500 crores and growing at 18-20% per annum - by AC Nielson The per capita consumption of chocolate in India is 300 gram compared with 1.9 kilograms in developed markets such as the United Kingdom. Over 70 per cent of the consumption takes place in the urban markets. Chocolate sales have risen by 15% in 2007 to reach 36000 tones according to one estimate. Another estimate puts the figure at 25000 tones.

Contd..

 The chocolate wafer market (Ulta Perk etc) is around 35 % of the total chocolate market and has been growing at around 13% annually. As per Euro monitor study, Indian candy market is currently valued at around USD 664 million, with about 70%, or USD 461 million, in sugar confectionery and the remaining 30%, or USD 203 million, in chocolate confectionery. Entire Celebrations range market share is 6.5%. The global chocolate market is worth $75 billion annually.

Chocolate Market in India

Market Size (by value & by volume)
The Indian chocolate market is valued at Rs. 650 crores (i.e. Rs. 6.50 billion) a year. The Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tones per annum, and is valued in excess of US$ 80 million.

Contd..

 Chocolate penetration in the country is a little over 4 percent, with India's metros proving to be the big draw clocking penetration in excess of 15 percent. Next, comes the relatively smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in the rural segment, which explains the mere 2 percent penetration in villages. The market presently has close to 60mn consumers and they are mainly located in the urban areas.

 Major players: (organized market)

Cadbury-Market share :75% Nestle India : 14 % Amul : 5% Others : 6%
14%

Market Share
6% 5%

Cadbury
Nestle Amul Others 75%

Forms of consumption
1. Moulded Chocolate Segment comprising slab chocolates 2. Count line Segment comprising bars. 3. Choc-Panned Segment comprising chocolate forms

4. Sugar-Panned Segment comprising chocolate forms

Consumer trends in India

Replacement of traditional Indian sweets

Impulsive purchase
Status symbol Value for money All year round gifting options Wide range of options

Inclination towards dark chocolate

PESTel Analysis

Political Analysis

The three basic principles are: 1. Non-discrimination - each member country must treat the trade of all other member countries equally 2. Open markets which are encouraged by GATT through a prohibition of all forms of protection except customs tariffs, and 3. Fair trade which prohibits export subsidies on manufactured products and limits the use of export subsidies on primary products.

Economic analysis
Changes in living standards and its affect consumptions patters. Increase in raw material costs by more than 20 % it will force the manufacturers to consider a price hike. Chocolate Industry's margin range is between 10 and 20%, depending on the price point at which the product is placed. The input costs in India are under check owing to the 24% decline in the prices of sugar. The relatively small Indian chocolate market with volumes of about 55,000 metric tonnes of chocolate and expected to grow by around 17.8% between 2008 and 2012.

Social analysis
Social factors that need to be considered include changing patterns of consumption.
Today many consumers like to eat 'on the go', so bite sized chocolate treats are in great demand to top up consumers energy supplies. Lifestyle, attitudes and needs of consumers are undergoing a change.

Technological analysis
Technological change is particularly important today, for example, the development of new technologies that have enabled variations on chocolate bars to be produced in an ice cream format.

Legal analysis
F.D.I allowed in Confectionery market. Taxation Policies. Law regarding Joint venture with Indian Co.

Environment analysis
The process whereby businesses examine the external environment to identify key structural changes in the world around them which affect demand and supply conditions for their products. The prices of cocoa and milk, the chief ingredients used in chocolates, have gone up by 50 per cent, while the price of sugar, another important raw material, has come down. The overall input costs have gone up by 20 per cent. India imports most of its cocoa requirements. The prices of cocoa have risen globally due to unavailability of the commodity. US-based chocolate-maker Hershey is mulling a foray into the Indian chocolate market through its joint venture with Godrej.

Objective to enter Indian Market

Objective
Objective is to cater Indian mass-market
Factor influencing to the objective: - Large and untapped Population - Potential customer base - Increasing demand - Change in lifestyle and buying pattern - Increment in Per capita income - Brand awareness

Product with Features

1. 2. 3. 4.

Mister o brown- Dark cocoa chocolate Blend- Mix fruit chocolate Diva- Rich silky chocolate Amano- sugar free chocolate

Price
All chocolate will cost between 35 to 50

pricing strategy
Perceived Value Strategy Value for Money

Segmentation and Targeting

Segmentation Youth and chocolate lovers Age 12 to 55 Years with different variants
Target Market

Metropolitan Cities
Competing with Nestle Cadbury

Distribution and Marketing Strategy

Venchi Plant

Amul Distributor

Prime Retail Outlet & malls

Location & Market

Primary Market Mumbai, Delhi, Kolkata, Bangalore Plant Location Koparkherane, Okhla, Hugli, Banshankari
Launching Date 15 days prior to Diwali

Promotion Mix

Promotion Mix
Advertising
Print media
Local Newspaper : TOI (Bombay Times, Delhi Times, Bangalore Times, Kolkata Times), Deccan Herald, Calcutta Post. As a half jacket. Magazines: Lifestyle, Vogue, FHM, Loaded etc. Outdoor advertizing like placing signs or paint logos on public transports such as Trains or Private Buses in 4 cities.

Electronic Media
Broadcasting adds on TV Radios

Others
Open Truck Rally

Promotion Mix
Sales promotion
Sponsorships for special events e.g. College events, Car Rally, Cricket matches, Mumbai Marathon. Give- away (T-shirts with the Vinchi logo) Placing a sidewalk sign, Hoardings, banners Providing Free Gifts on Christmas Eve and New Year celebration in 5 star Hotel

Trade Promotion (Push Strategy)

Dealer discounts Credit terms Attractive Incentives

Marketing Strategy
Diwali Sweet Marketing Strategy Teaser advertisement before 15 days of Launching the Product Italian chocolate Pure Cocoa

SWOT ANALYSIS
S
Variety of chocolates

W
New entrant Not familiar with the Indian Market

Quality of chocolates
Brand image Amul-distribution strategy

SWOT
O
Indias population Festive season

T
Competitors (Cadbury)

Demand of premium chocolate

Michael Porters 5 force model

Threat of new entrants- Musketeers, New variants like Cadbury Silk. Threat of competitors - Lindt, cadbury-kraft food, Home made chocolates, foreign chocolates sold in the unorganized market. Threat of substitutes- Sweets Bargaining power of suppliers-High Bargaining power of customers-High

Future prospects
Currently we are expecting a market share of 1% by the end of 2011. Increase in Market share by 5% by 2015. Promotional strategy by assigning brand ambassadors. Increasing Market capitalization by at least 10% y-o-y basis Tapping new market segments.