Market Analysis for

Confectionery Industry –
Chocolate

Group – 8, BM – A
 Confectionery Industry in India
• The current sales of Indian confectionery market reached $4.7 billion retail value
• The market value is expected to grow by 13.5% CAGR between 2019-2024.
• The current market volume is 586.8 million kilograms
• The confectionery market is divided into the following three categories

Sugar Candy Chocolate Gums

Boiled Sweets| Lollipops| Boxed Chocolates| Molded Bars Chewing Gums| Medicated
Toffees| Nougat and Caramel| | Novelties | Gift Packs Lozenges | Mint Tablets|
Pastilles| Jellies| Marshmallows
 Macro Environmental Factors

P E S L E
• Growth in the • Revised forecast for • India is a land of • FSSAI modified the • Taking up the
industry is fueled by the year end festivals and the existing regulations petition filed by an
innovations and estimates all India culture of gifting for food standards in NGO, judiciary
entering into new FMCG growth in 9- premium the third quarter of issued an order to
segments 10% range and food confectionery has the year FSSAI to head up
• Incumbent category in 10-11% become a common • Food fortification a committee for
government’s return • Among CPI trend norms came into establishing
to power and focus components food • With the Raksha force from June 1, & further regulation
of ease of doing and beverages eased Bandhan festival in compliance of on plastic use in
business is providing to 2.33% and the month of labelling from July 1, lieu of its impact
a stable environment confectionery by August, 2019 on environment
• Government active 2.11%. confectionery • The regulations on and human health
intervention in the business boomed packaging, are in a
face of the economic and sales were *20- bid to encourage
downturn is a 25% higher than consumers make
positive signal for the the regular months healthier food
players in the market (*as per Retailers at XLRI) choices.
 Porter’s Five Force Analysis

Threat of Threat of Bargaining power Bargaining power Competitive

new entrants substitutes of customers of suppliers rivalry
• Industrial grade • Substitutes casual • In India, smaller • Sugar supplier’s power is • Major players in this
machinery and snacking include desserts convenience and kirana reasonably small when market have diverse and
production facilities savory snacks fruits etc.. stores are the major compared to the supplier varied product ranges
for mass market are • Savory items such as buyers and account for power of cocoa suppliers resulting in cross
capital intensive chips have lower value more than 75% of the • Transactions in the competition and
• Government stricter per square foot, hence value in 2018 commodity markets cannibalization
regulations and are less preferred by • Large retailers might increases the supplier power • Low switching costs make
standards raises retailers integrate backwards & • Suppliers in nations the market very price
operational costs • Sales are driven by offer privately labelled producing Cocoa beans of sensitive resulting in a
significantly consumer demand and confectionery in future. highest quality have fierce competition for
• Increase in the as they switch to • High competition & low significant power market share
premium product healthier alternativesnew switching costs in the • Climatic conditions are • Competition resulting in
segment with higher products might replace industry major factor influencing focus on expanding
margins is inviting new the product supplier power distribution networks
players in the segment
 Chocolate Confectionery-Introduction
• The current market is divided among several players with Cadbury
being the market leader with 53% share with nestle being in the
distant second position (follower).

• There exists a one on one product competition between

Cadbury and Nestle which shows that Nestle may have less
market share but in terms of product portfolio it is in no way
inferior to Cadbury.

Market Share
Company 2013 2014 2015 2016 2017 2018 2019
• The major reason for international brands having lion’s share Mondelez India Pvt Ltd 1.5 61.2 57.2 55.7 54.8 54 53.3
being the huge advantage of the global brand name that these Nestle India Pvt Ltd 16.4 14.1 11.1 10.6 10.9 11 10.4
Ferrero India Pvt Ltd 9.5 10.3 11.9 10.8 9.5 8.4 7.5
players have and deep pockets which they use to reap the Mars International Pvt Ltd 3.7 3.7 3.2 2.7 2.5 2.3 2.4
Gujarat Co-operative milk
benefits of economies of scale and retain their markets. marketing federation Ltd 1.2 1.1 1 0.9 0.9 0.9 0.9
 CONSUMER BEHAVIOUR
Based on survey of 74 respondents
Frequency of Purchase Preferred Brands

• Majority of the consumers (about 40%) buy chocolates only once a month • Cadbury (by Mondelez) preferred choice of most consumers (~57%)
• Bigger consumer base which buys chocolates more than once a week needs • Nestle, Hershey and Lindt other preferred choices
to be captured

Location of Purchase Size of Product

• Consumers buy chocolates almost equally from supermarkets (46.8%) • Half of the consumers buy smaller packs (10-20 grams)
and local kirana shops (49.4%)
• Online sale of chocolates could give a boost to the company’s revenue • Gift packs costing higher should be promoted more for special
occasions and festivals to increase company revenue
 Type of Chocolate Reason of Purchase

• Majority of the consumers (about 58%) prefer milk chocolates • Companies can try to increase their reach among consumers by
targeting sales during specials occasions and as gifts.
• Only about 16% of the consumers like white chocolates

Factors affecting consumers’ purchase Brand/Variant Loyalty

• Only 28% of the consumers chose to stay loyal

• Most important factors – TASTE, closely followed by BRAND
• Around 50% of the consumers are likely to try new brands
• PRICE and AVAILABILITY were the next two important influencing factors
• SUGAR CONTENT ranked last, followed by PACKAGING
 Segmentation
Demographic
• Higher consumption is observed amongst the younger consumers.
• Women have higher cravings for chocolate consumption compared to men
• Taste like bitterness/sweetness effects the choice of various age people

Economic
• India, an emerging economy with rising purchasing power and aspirations
• Growing Young population with higher disposable income
• Huge income disparity in the country
• viewed as a premium product and is used by the affluent to reward themselves

Geographical
Urban population: Rural population:
• Easily accessible • Poor Infrastructure
• Better Infrastructure •Low Income
 Segmentation
With international trade, exposure to international brands, and global travel, there are major lifestyle changes
taking place in emerging economies. All these findings support the necessity of exploring the possibility of
behavioural segments.

Abundant Conservative Global Seekers

• Frequency of purchase is • This cluster prefers to have

• These consumers buy
lower, buying chocolates foreign chocolates.
chocolates more than once a
between a fortnight and a • 76% of them buy chocolate
week.
month once or more than once a
week.
Advertisement Reach: Advertisement Reach:
Word of mouth followed by Advertisement Reach:
Television commercials
point of sale displays and Recommendations and point of
promotions. sale promotions and displays are
the major source of information.
Place of Purchase: The source Place of Purchase: mom-and-
pop stores as well as from Place of Purchase: They buy
or place of purchase varied from
supermarkets and department chocolate from duty-free shops as
a mom-and-pop store to a
stores. well as from foreign trips and
supermarket.
supermarkets
 Targeting

Modest
income groups
with varied
increased their size packing
Initially segment across all
Cadbury's target ages, sexes,
group in India is cultures,
the kids of the educational
age group of 5 backgrounds and
to 10. Gradually regions.
branded itself as
a symbol
celebration
kids love
chocolates more
than sugar-based
confectionery
 Positioning
High Price

Low Quality High Quality

Low Price
Determining Status in the Market
Cadbury (L) Nestle (C) Mars (N) Ferrero (N)
 Marketing Strategies
Nestle - Challenger
Cadbury / Mondelez - Market Leader
 Describes itself as a food, nutrition, health, and wellness company.
 Brand taps into the emotions of the consumers associated with
celebratory desserts  Campaigns centered around the energy giving aspects of chocolate &
taste provided by its products
 Campaigns such as “Kuch Meetha Hojaye”, “Choose Cadbury”, “Joy
Deliveries” have positioned the company as a symbol of good times &  Views the use of the wafer in their main products as a point of
special moments in life. differentiator.

 2 major source of distribution are through traditional grocery / kirana  Recently announced plans to move its chocolate to 0% sugar content
stores and modern grocery stores like supermarkets and convenience  The company has moved for expansion in rural market in direct
stores. competition to the Cadbury
 Mondelez had been dominating the market through its extensive
channels of distribution ITC – New Entrant
 Targets people from all age groups, income levels, religion, and social  Diversified conglomerate; ventured into chocolate confectionery for the
class through its diverse product portfolio first time in the year 2016 through a premium brand of chocolates
 With the expansion of the fleet of refrigerated trucks, database of retail named Fabelle after offering and experimenting with the same in their
stores in rural areas and supply of the display refrigerators, Mondelez premium hotels.
aims to double the number of villages it currently serves.  Aimed at high end consumers who enjoys premium chocolates, and as
 With the increase of the e-commerce in the country, Mondelez has presents during festivities.
established a strategic partnership with Amazon.in, to set up India’s first  Aims to obtain 10% of its food business revenue from the chocolate
virtual Chocolate & Sweet Store. business.
 Launched the chocolates at an affordable price with smaller packaging.
With existing strong distribution network, it is a serious contender in
the market.
 recommended-Strategy

Situational Product Target

Analysis Analysis Analysis
 30% of the population lie between 10- • • Fitness enthusiasts in the age group of
24 and with growing health  Protein bar with low calories and 15-32.
consciousness, consumers’ are focusing marketed as healthy snack. • People from the older generation who
more on health risks.  The present gap in the Cadbury’s
Mondelez is working towards products have diabetes and gastronomical problems
 product portfolio can be fulfilled.
with 30% less sugar content while nestle for whom high protein and high fiber
 Other players include Max protein, content diet is suggested.
aiming for the zero-sugar chocolate. Trekk-protein bar, whey protein, yoga
 A recent shift in the consumers choice bar, MB protein bar. • Individuals with fast-paced lifestyle who
to dark chocolate, milk bars and want a healthy snack to munch on in their
fortified energy bars with high protein busy schedule but also want to maintain
content are on demand. their physique.
 The Indian protein bar market was at • Individuals who wish to consume light
1.54 million USD in 2018, and is sweet products.
estimated to reach 3.05 million USD by
2024,(CAGR of 12.36%). • Individuals on a ketogenic diet.
 Marketing Mix
 Initially limited to Metros and Tier1  Initially price: 100 gm bar MRP 60/-
cities due to high purchasing power and based on response, expand into
and high growth of fitness different price segments.
enthusiasts.  Alternatively, start with a penetrative
 Focus on areas with gyms and health pricing and gradually increase the price
centers. after capturing a good part of market
 Graduate colleges’ cafeterias because share .
of their captive market.

 Offering samples in gyms and fitness  Product with high protein and fiber
centers to capture consumers. content, that still tastes good with no
 Garnering recommendations by added sugar and natural sweetness
Doctors, pediatricians, trainers,  Zero sugar content using Saccharine,
nutritionist, health ambassadors etc. to Aspartame, or Stevia.
promote it as an healthy alternative to
regular chocolates  Creamy color packaging with nuts,
 Campaigns involving advertisements cereals and clear nutritional content.
showcasing the healthiness of bar Focus on low/zero sugar on the
using celebrity. packaging.
 The product must be sold under a
completely different brand because of  Variants with nuts, fruits, dry fruits,
Cadbury’s association with high sugar pumpkin seeds and “super seeds”.
and high calorie product.
“
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B19008 – Anuja Rai
B19013 – D V S Sudhama Battula
B19023 – Kondapuram Vamsi Krishna
B19028 – Munugoti Anurag Sharma
B19036 – Ramapriyan S V
B19039 – Ritwick