India's craving for chocolate unwraps business opportunities for
manufacturers, reports Mintel
CHICAGO, Nov. 7, 2012 /PRNewswire/ -- While India celebrates Diwali, latest research by
Mintel into the Indian Chocolate confectionery market highlights
that India's love of chocolate is
booming. Indeed, when it comes to chocolate, India is the fastest growing market globally,
posting the largest increase in volume sales with 21% growth
between 2008 and 2011.
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Chocolate consumption in India
has almost doubled since 2008, with sales of chocolate increasing
from $418 million in 2008 to
$857 million in 2011. Volume has
grown strongly too in the past few years, to reach 88 thousand tons
in 2011, up from 50 thousand tons in 2008. This equates to a per
capita consumption of 70 grams in 2011, up from 40 grams in
2008.
While domestic consumption in India is currently low if compared with other
more mature markets, such as Germany at 8 kg per head, or the United Kingdom and France at 6 kg respectively, there is huge
potential for the Indian chocolate market to grow even further.
Deepa Dsouza, trend and
innovation consultant at Mintel, said:
"Chocolate consumption in India
has seen an incredible growth rate in the past few years,
especially in urban and semi-urban areas. Until few years ago,
chocolate confectionery was considered a premium in comparison to
sugar and gum confectionery, but major players in the market have
found channels to manufacture and distribute their products at more
affordable prices than before. This has given the Indian consumer
an array of choices whilst giving manufacturers a level game field
to compete, especially in the premium and affordable premium
segments. Local companies are much smaller in volume and operate at
more regional levels."
The chocolate confectionery industry has been quick to respond
to this untapped market opportunity. Looking at new product
launches in India, premiumization
as a claim has seen a 100% growth over the last three years, from
4% of launches in 2008 to 6% in 2011.
Also, seasonal launches have proven to be particularly dynamic
across the market, with a 300% increase between 2008 and
2011, accounting for 7% of total launches in 2011 vs. 2% in
2008.
"Consumers are trading up to luxury and premium chocolate, which
has given an opportunity to international brands to enter the
Indian market and increase their penetration by creating an
affordable premium space for the aspirers. 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," Deepa Dsouza
explains.
However, all is not as sweet as it appears. The chocolate
confectionery market in India is
facing challenges, such as keeping costs low for mass markets and
health issues.
"The key challenges that the chocolate market is facing in
India are inflationary pressures
on raw material prices, lack of government initiative, high entry
barriers due to duopolistic markets and price-sensitive consumers.
Rising sugar and cocoa prices are also putting pressure on
companies to innovate with ingredients and packaging to offer
better prices for the mass market," Deepa
Dsouza concludes.
Moreover, as the chocolate confectionery category suffers from
being associated with negative health, brands are working to manage
this perception and introduce elements of enhanced health
messaging. Indeed, according to Mintel's research, new product
development with antioxidant claims grew 400% in the past four
years (2008-2011) and low/no/reduced transfat, low/no/reduced
calorie and diabetic claims all posted 200% growth in the same
period, suggesting that the prospects for market growth in this
segment are very positive.
While the Indian chocolate confectionery industry is thriving,
more mature chocolate markets across Europe are experiencing a slowdown. For
example, in Germany volume
consumption declined from 770 thousand tons in 2008 to 700 thousand
tons in 2011, and in the UK it fell from 362 thousand tons in 2008
to 350 thousand tons in 2011.
Other key markets for the chocolate confectionery industry
posted steady but slow growth, as for example in Italy where the market grew from 98 thousand
tons in 2008 to 104 thousand tons in 2011.
Marcia Mogelonsky, director of
insight at Mintel Food and Drink, said:
"India is a major focus of
interest for chocolate confectionery manufacturers as the more
mature western markets begin to slow. Major players, including
Mondelez, Nestle, and Mars, are making efforts to establish a
strong presence in the Indian market."
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SOURCE Mintel