1. The Sweet Tooth
Analysis of the Chocolate & confectionery industry in India
VarunDeshpande 13177
KarthikeyanDakshinamurthy13080

2. Introduction
Indians like to celebrate with sweets and they start relishing it at a pretty young age. While the West may be more calorie conscious, the Indian kids start off by indulging in all sorts of sugar boiled candies. No wonder, the confectionery industry is one of the largest and well developed among the food processing sectors in the country. The confectionery industry in India is mostly divided into chocolates, hard boiled candies, eclairs & toffees, chewing & bubble gums, lollipops, and mints & lozenges.
3. Market Overview
The confectionery market in India was estimated to be worth $1.27bn in 2009, growing at a compound annual growth rate (CAGR) of 10.5% during 2004-09. The market is expected to grow to a value of $2.28bn by 2014 and is estimated to grow at a CAGR of 12.4% during 2009-14.
Increasing health consciousness, a fast evolving indulgence seeking attitude of the Indian consumers along with snacking/eating on-the-go are a few of the key trends shaping the Indian confectionery market.
In 2010, new product launches were dominated by sugar confectionery and chocolate category which together accounted for around 80% of the launches.
4. Manufacturers and key players
The organized confectionery segment in India segment is dominated by the multinational companies; however, domestic players are increasingly finding a prominent position in the market. The key players in the confectionery sector in India today are:
Cadbury India Ltd is the largest manufacturer of chocolate, confectionery and malted food products.
Nestle India Ltd is a manufacturer and marketer of coffee, tea, malted beverages, instant baby cereals & foods, milk products, chocolates and confectionery, instant foods and culinary products.
Lotte India Corporation Ltd is primarily a manufacturer and marketer of sugar boiled confectionery, cocoa and milk based toffees, candies and mints.
Nutrine Confectionery Co Pvt Ltd is a manufacture and marketer of sugar boiled confectionery, cocoa & milk based toffees, candies, clairs and fruit bars.
5. Manufacturers and key players
Candico India Ltd is a manufacturer and marketer of sugar boiled confectionery, candies, gums, mints and toffees. They are also the largest contract manufacturer for various Indian and overseas confectionery companies.
Perfetti Van Melle India Ltd is a manufacturer and marketer of sugar based confectionery and is a leader in the candy and gum segments of the confectionery market.
Parle Products Pvt Ltd is a manufacturer and marketer of cookies, sugar boiled confectionery, and cocoa and milk based toffees.
Wrigley India Pvt Ltd is a manufacturer and marketer of chewing gum (Wrigley brands) and sugar based confectionery, bubble gum, chewing gum and candy (Joyco brands).
Gujarat Cooperative Milk Marketing Federation is India's largest food products marketing organization and manufacturer of milk and milk products, ice creams, chocolate and confectionery, and ready to eat products.
6. Manufacturers and key players
ITC Foods, a division of ITC Ltd made a foray in the confectionery market in year 2002.
Hindustan Lever Ltd, Indias leading FMGC company, has a presence in the confectionery market since 2001.
The CAMPCO Ltd is a leading processor of cocoa and cocoa based industrial products and has a small presence in the branded chocolate sector.
Lotus Chocolates Co. Ltd is another processor of cocoa and cocoa based industrial products with a small presence in the branded chocolate sector.
7. Market Specifics

8. Market Characteristics
India is primarily a mono-pack market while the market worldwide is a multi-pack market.
While the trade and distribution in western countries is mostly organized, in India, retail outlets like paan shops and kirana outlets account for the bulk of the sales and organized trade still has only an insignificant share in overall confectionery sales.
Functional products and sugar free confectionery dominate the worldwide market while this trend is yet to pick up in India.
Sugar confectionery will remain the largest confectionery type.
As younger children are traditionally the key consumer group for confectionery, pricing strategies play a significant role in shaping purchasing decisions.
50 paise is the most popular price-point and around 85% of confectionery sales occur at this price point - but there are some products in the rural markets that are available at 25 paise. The Re 1 price-point is not very popular.
9. Market Characteristics
Gum confectionery will be the fastest growing category, albeit from a smaller retail base.
Instead of chewing on paan (betel nut leaf) to freshen ones breath or using spices such as fennel to aid digestion, the local population is increasingly turning to branded confectionery products such as chewing gum and mints. Consuming products such as mint and medicated confectionery conveys a sophisticated image, which appeals to young people.
Manufacturers are increasingly looking to create a shift from manufacturing low-margin products like toffees and boiled sweets to higher-margin products such as gum and chocolates confectionery.
There is strong growth potential for chocolate; sales of chocolate confectionery are expected to continue to grow by more than 8% per year in value terms. This is due to the low penetration of chocolate confectionery in rural areas as well as the general low consumption of such products among adults.
10. Consumption
Almost all confectionery purchases in India are believed to be impulse driven.
Experts indicate that sugar confectionery and gum products consumption are driven almost entirely by impulse purchasing.
The figure is lower for chocolates (about 70%), because of its increasing popularity as a gift for various occasions and during the festival season.
In their effort to increase consumption and product penetration, marketers have started to promote some products as appropriate snacks, not just an indulgence.
11. Consumption
The country is poised to climb the rankings of worlds largest confectionery markets by value from its current 25th position to 19th position by 2014, according to a new report by Datamonitor, a London-based market research firm.
The countrys $1.2bn confectionery market is expected to grow at a compounded annual growth rate of 12 per cent from 2009 to 2014.
India is theworlds largest consumer of sugar.
The growth rate in the market for sugary snacks and sweets was the second highest in the world in 2008-9, making it a lucrative proposition for the worlds largest confectioners looking to off-set dwindling sales in the west.
12. Consumption
Once an indulgence, sweets are becoming part of everyday life, consumed on-the-go. And westernconfectionery arereplacing traditional Indian sweets as they have longer shelf-life and are more aggressively marketed.
Sugar confectionery, by contrast, is the slowest growing segment of the market forecasted to grow at a compounded annual growth rate of 5.5 per cent until 2014.
But the average Indian persons propensity for sweetness which has given India the dubious reputation of being the diabetes capital of the world has meant that the sales of low-sugar products and dark chocolates remain low. This trend is changing, however, especially in the urban areas.
13. Consumption
Sales of cereal bars, marketed as healthy snacks, are set to grow at an averaged annual rate of 37.3 per cent in 2009-14, but they account for a mere 0.2 per cent share of the total sales by value.
Health conscious consumers, particularly working women, are often the target market for these products, which are generally more expensive and are often only available at larger organised retailers.
14. Conclusion

The share of imported confectionery will continue to increase over the next several years, although overall sales will remain modest. Indians taste will continue to become more westernized and more quality conscious.
Indian confectioners are increasing their efforts in product development and promotional activities, and exporters will face stiffer competition from the domestic sector. On the other hand, the very low penetration and consumption levels provide ample opportunities for growth and make competition less of a constraint.
The popularity of chocolate products, particularly boxed assortments for gifts, will continue to increase.
The sugar confectionery will remain the largest confectionery segment. We expect to see growth of new and novelty products, such as mint and gum.
Health consciousness is one trend that has certainly caught the attention of the manufacturers. As a result, cereal bars are currently the fastest growing category in the Indian confectionery market.
15. Conclusion
The Indian market is very price sensitive. There is a clear distinction between the larger mass market where price pressure is significant and the upscale niche market, where although important, price is secondary to quality and brand image.
16. Recommendations
Potential exporters should carefully select trading partners from among the Indian importers and distributors, as they will be critical to ensuring presence of their products on retail shelves.
India remains a very price sensitive market and appropriate pricing is key to the success of new products.
Over 30% of the Indian population is in the 014 age group, which is the primary target segment for confectionery manufacturers. These will be the prime movers for growth in the confectionery market in India.
17. Recommendations
Attractive packaging is very important for the brand image. Indians associate quality with good packaging. Imported brands are presented much better than Indian ones.
The Indian food distribution system is characterized by a large number of intermediaries and relatively poor infrastructure, such as transportation, storage, and refrigeration facilities. It has low levels of efficiency, with the costs of distribution being rather high. Manufacturers and importers will have to carefully look at this issue and devise solutions.
18. The Sweet Tooth
key advertisements which changed the category in India
VarunDeshpande 13177
KarthikeyanDakshinamurthy 13080
19. Advertising in Confectionery Industy
The only way to create brand salience is through innovative advertising.
Large confectioners spend 12 to 13 per cent of their sale revenue on advertising and brand promotion.
Advertisements need to appeal to all consumers across age brackets and socio-economic groups.
20. Historic Advertisements
The advertisements for confectionaries started with pure ecstasy ads which showed the joy of eating chocolates.
It intended to create a desire for chocolates amongst its target audience.
Link : http://www.youtube.com/watch?v=jgsg_-ZXqrQ&feature=results_main&playnext=1&list=PL5A5AB678BD44D4E5
21. Taglines and Change in Tactics
When Perfetti Van Melle(PVM) came to India, they promoted their flagship products by coining taglines. It allowed them to create a difference in the consumers mind and these expressions were borrowed from everyday usage of the youth.
Some of their taglines include Zubaan par rakhelagaam for Center Fresh, Dobara mat puchna for Chlor-Mint and Dimagkibattijala de for Mentos.
22. Perfetti also used humour (Mentos and Center Fresh), emotion (Alpenliebe), bizarreness (Happydent and Chlor-Mint) and fun in liberal measures in all its commercials and shifted the communication from pure ecstasy of chocolate to a theme.
Perfetti has been able to stick to various themes over the years. Alepnlibe, for instance, has played on the irresistible factor in all its campaigns, Mentos has played around with fresh ideas that can get you out of a fix
23. Their ideas proved to be a raging success and its competitors had to copy the ideas thereby setting a new industry standard.
Links :
http://www.youtube.com/watch?v=ezr1UP50BXk
http://www.youtube.com/watch?v=rPnoND1nR_4&feature=related
http://www.youtube.com/watch?v=mZE9LqtU-C0&feature=related
http://www.youtube.com/watch?v=6DafkaZLfKc&feature=related
http://www.youtube.com/watch?v=yW9xpSgb-mc&feature=related
http://www.youtube.com/watch?v=gx0b_QSrZGY&feature=related
http://www.youtube.com/watch?v=0sZCUwcRn28&feature=related
24. Targeting adults
Traditionally , the confectionary companies considered only children as their target market and confectionaries advertisements were always targeted at children.
But stagnancy in growth rates made the companies re-think their strategies.
Cadbury was the first company that repositioned its brands for adults.
Link : http://www.youtube.com/watch?v=pKvSyz7Phug
http://www.youtube.com/watch?v=Ny5_Qhcud9M&feature=related
25. Animations
In 2008, PVM and its ad agency evolved the advertising campaign for Mentos further by adopting an animated format for the first time.
The ad was in line with PVMs theme for mentos containing a humorous twist and also contained its tagline.
The advertisement was a huge hit and increaesd PVMs market share to be the market leader in India.
Link : http://www.youtube.com/watch?v=1TrHjwCWHN0&feature=related
26. Replacing Sweets
Despite the confectioneries market growing substantially in India, it was still considered an indulgence product and not a product with a specific or necessity consumption.
Cadbury is trying to position itself as the new sweets. It shows how it is not only considered better but also superior to carry Cadbury instead of the normal sweets.
27. Cadbury promoted this through its line of Cadbury Celebrations advertisements and by selling in bulk during festive seasons such as diwali and rakhi.
Cadbury also marketed itself as an after dinner sweet. Indians are fond of having dessert after their dinner andCadbury aimed at replacing the traditional desserts.
28. This foray by the confectionary industry could give it more stable and reliable sales and could prove to be the next game changer in the industry.
Links:
http://www.youtube.com/watch?v=5XIGxxUDN9g
http://www.youtube.com/watch?v=G2wBnjtmmg8&feature=related
http://www.youtube.com/watch?v=0kXQ-EBSkKM&feature=related
http://www.youtube.com/watch?v=C44vihlOixk&feature=relmfu
http://www.youtube.com/watch?v=3jd_DJMlWSc&feature=related
http://www.youtube.com/watch?v=rf0X0ycQz3I&feature=relmfu
http://www.youtube.com/watch?v=BaPh9kGS0v0&feature=related
29. Thank You