India’s Confectionery Market Shows Promise

The love of Indians for sweets is well-known. This inclination to savour sweets in the country is not dependent on barriers of class, caste, gender or age groups, and is perhaps one of the few market facets that is almost universal to India. This love for sweets is one of the reasons for the Indian confectionaries market to progress impressively; a market which has seen a spate of innovative products during the recent times. Ashok Malkani explores the confectionery market in India. 

Mention confectioneries and you are expected to attract everyone’s attention. More specifically, mention chocolate and you will have not only children, but even adults, drooling. If you are wondering what makes chocolate so delicious that it makes a person an addict, it may be mentioned that scientists have come up with various theories.  A recent study by the psychologist David Lewis says that letting a chocolate dissolve slowly in your mouth produces as big an increase in brain activity and heart rate as a passionate kiss—but the effects of the chocolate last four times longer! 

As one is about to give in to this irresistible urge for consuming chocolate, one remembers the words of caution by one’s dentist. “Don’t eat too much chocolate,” is the dentist’s constant warning. However, dentists agree that chocolate itself is harmless to your teeth; the problem comes from the sugar which makes it produce a sticky substance called plaque. This feed the bacteria that causes tooth decay and gum diseases.

Chocolates Flowing Fast 

Though traditionally, Indians have had a liking for mithais, the popularity of chocolates in the Indian society, especially in the urban Indian society, is gaining currency.  According to the market research firm Mintel, during 2016 India consumed 2,28,000 tonnes worth of chocolate, up 50 percent from 1,52,000 tonnes in 2011.                       

According to Mintel, the sales of chocolate confectionery in retail markets grew by 13 percent between 2015 and 2016 in India, followed by Poland which saw sales growth of 2 percent. In comparison to the rest of the world, Poland and India were the only two markets to see sales of chocolate grow in 2016, with sales in the United States (US), United Kingdom (UK), Germany and France were flat over this period, while sales fell in Russia (-2percent), Brazil (-6 percent), and China (-6 percent).

Data from Mintel also reveals India’s chocolate confectionery market has had a strong CAGR (compound annual growth rate) of 19.9 percent in retail market value, between 2011 and 2015, and is expected to grow at a CAGR of 20.6 percent from 2016 to 2020.

According to Mintel, seemingly the key reasons behind the growth of India’s chocolate confectionery market both in value and volume is because the consumers in India believe chocolate to be beneficial and convenient. 

Mintel forecasts that India’s chocolate market will hit Rs. 32,000 crore by 2020, up from Rs.12,000 crore in 2015. India’s current chocolate consumption still trails that of western countries, notably the US, which devoured 1.3 million tonnes in 2016. And that means there is a lot of room to growth as far as India’s chocolate consumption is concerned.

It may be mentioned that nearly 70 percent of demand for chocolates in India comes from urban places including Mumbai, Hyderabad, Delhi, Kolkata, Chennai, Bengaluru, and Chandigarh. Chocolates are not so popular in rural India as yet as many villages still lack proper cold storage facilities. Their prices are also not within reach of most of the rural population of the country. Moreover, demand for traditional sweets is relatively higher in rural India, than in urban India.

According to TechSci Research’s report titled ‘India Chocolate Market Forecast & Opportunities, 2020,’ chocolate market in India was projected to surpass 17 billion USD by 2020. The report was published in September 2015. “Product innovations, strong marketing strategies and increase in variety of products are driving consumer chocolate sales in India. Over the last few years, apart from children, adult population has emerged as the key consumer segment for chocolate companies in the country. Consequently, manufacturers have been launching new and innovative chocolate products such as sugar-free and organic chocolates to lure adult consumers,” the report observed.

The General Scenario

But chocolate products are only a part of the sweet success of the Indian confectionery industry.  According to one study, India’s confectionery market is projected to reach 2.2 billon USD by 2018. It was slightly more than 1 billion USD in 2013. Apart from a significant segment of Indians’ innate sweet tooth, increase in disposable incomes in select but significant pockets of urban Indian society during the last two decades, and shift in consumer behaviour pattern fostered by mall culture during the same time period are other reasons behind the growth of the Indian confectionery industry.

Some of the major players in India in the confectionery industry are Mondelez India Foods Pvt.Ltd., Nestle India Ltd., Perfetti Van Melle India Pvt. Ltd., Mars, Parle Products Pvt. Ltd. among others. 

In this connection it may be mentioned that global sugar confectionery market was valued at 44,481 million USD in 2015, and is expected to reach 55,594 million USD by 2022, registering a CAGR of 3.2 percent during 2016-2022. So the growing demand for confectionaries seems to be a global trend.

The confectioneries market, comprising of hard-boiled sweets, caramel & toffees, gums & jellies, chocolates, mints, etc. is on a steady growth path on account of the high demand from middle-class consumers in India.

It may be mentioned that the confectionery market of India is divided into three segments: chocolate, sugar confectionery and gum market, which is further divided into sub-segments. In this context, it may be mentioned that due to the country’s hot climate, consumers prefer gum and jellies over chocolate, particularly in the summer months. Gum is the most consumed confectionery in the country.

Evolution in Market Positioning

As the confectionery market in India matures, we can expect to see not only more innovative products in this segment, but also new ways of marketing a given product. Take the case of chocolate products in India, whose consumer profile has undergone marked shift over the last two decades.

Over the decades, the market positioning and consumer profile of chocolate products have undergone significant changes in India. In its initial days in India, chocolate products were occasional indulgences for children. This bland market positioning addressed the market for chocolate products for several decades.

From there chocolate products graduated to occasional luxuries for urban Indians of all age groups. This transition took place about two decades ago. A Cadbury Dairy Milk advertisement of the 90s titled Kuch Khas Hai Zindagi Mein must be mentioned in this context. The advertisement addressed to bridge the generation barrier in chocolate consumption in India. This advertisement was run under the ‘Real Taste of Life’ campaign by Cadbury India, which helped position Cadbury Dairy Milk as the chocolate that awakened the little child in every grown up.

In the next phase, chocolate products in urban India began to make their presence felt in as gift items. This trend began developing during 2004-05 onwards. Nowadays, using chocolates as gift items during festivities is fast graduating from a happening trend to a mainstream convention among upper and upper middle class urban India, and given the present socio-economic dynamics, this fast approaching convention is only expected to percolate to middle-middle class urban India too, in the near future.

Cadbury has played an important role in positioning chocolates as gift items during festivities. Cadbury Celebrations debuted on the Indian festival stage in 1997, serving up a tantalizing mix of chocolates in all shapes, sizes, flavours and packages, and facilitated to position chocolate as a replacement to the traditional mithai. Cadbury Celebrations also came up with a new format for chocolate — chocolate laddoos. Chocolate products are now also being used as corporate gift items.

The role of chocolate products in India is expected to go through another transformation during the recent years. At least one chocolate brand is now also being positioned as energy booster, and another as a means of satiating hunger. An advertisement of Perk projects the product as an energy booster while Mars’s Snickers is being projected as a snack that can satiate pangs of hunger. Another of the emerging trends in the country includes a growing interest towards dark and sugarless chocolates, which is influenced by the growing health consciousness in urban India.

New Products, New Trends

The Indian confectionery industry is witnessing product innovations too. For instance, the Central Arecanut and Cocoa Marketing & Processing Cooperative (Campco) Ltd. has introduced a diabetic-friendly chocolate containing sugar made from sap of coconut palm, also known as Neera (in India) or palm nectar. The neera-based chocolates have low glycaemic index making them suitable for consumption by even those who have high levels of sugar. The chocolate is developed using a technology conceived by the Central Plantation Crops Research Institute (CPCRI). Cost-wise, however, they are twice as expensive as the normal chocolates.

One of the major changes that have been witnessed in the Indian confectionery industry is the trend towards sugar-free, healthy products and manufacturers are launching innovative products in this segment. The market is seeing cereal bars being introduced, which are currently amongst the fastest growing category in the Indian confectionery market.

With young consumers looking for innovative formats and flavours in confectionery, manufacturers operating  in India in the field of confectionery business are encouraged to diversify their product range. Dabur, for instance, extended its popular digestive brand Hajmola (a popular digestive in tablet and candy format), and reinstated its presence in the pure confectionery segment with the launch of the Natkhat Amrud variant and Hajmola Chuzkara (a semi-liquid sweet and sour candy).

Some years ago, Perfetti Van Melle, one of the leading confectionery players in the country, did enhance its Alpenliebe’s brand basket with the launch of Alpenliebe Spicey 1, (spicy chilli and sweet mango in one tangy candy). Nestle India Ltd. has also recently re-launched its white chocolate brand Milkybar, first introduced in 1992, with lower sugar and higher milk content. It has also launched chocolate brand Alpino, targeted at older consumers in metro cities.

Cadbury introduced 5Star Chomp in mid 2014, offering consumers a combination of chocolate, caramel and nougat along with the crunchiness of peanuts. Siddhartha Mukherjee, then the Category Director – Chocolate and Media, Cadbury India, claimed that the company saw this as a marketing opportunity for expanding the repertoire of Cadbury 5Star.

Apart from additions by existing players, the category has seen new entrees like Schogetten, a leading German chocolate brand from Ludwig Schokolade GmbH & Co. KG.  Schogetten comes in portioned chocolate bar format in 14 flavours.

Recently, the Food Safety and Standards Authority of India on May 2017 allowed addition of vegetable fats to a maximum 5 percent of the finished chocolate products. Vegetable fat is extensively used by chocolate makers in Europe, and this step is expected to give an impetus to chocolate production in India and also encourage the introduction of more foreign players in the Indian chocolate market, in the near future.

The Sweet Future

Overall, the Indian confectionery market is going through fast changes, and the industry is benefitting from higher consumer spending which is being fostered by the increased disposable incomes and changing lifestyles of middle class urban India. Introduction of new products with innovative flavours & healthy ingredients, increase in gifting trend, and growth in retail market are further expected to drive the demand for confectioneries in India, in the near future.

We can say that the present day confectionery market in India is not only sweet, it is also hot and happening. And the market is ready for innovations. It is the opportune time for existing and new entrepreneurs to infuse more investments and initiatives in the industry.      

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