chocolate industry in india

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SummaryldquoAn Analytical Study of Chocolate Industry in India with Special Reference to CadburyrsquosIndiardquo is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA whichenlightens us about the size amp status of chocolate industry in India The project gives informationabout the competitors their market share and their product basket and highlights success featuresThe project also presents data on types amp categories of chocolates a brief study of chocolatemanufacturing processThe project also covers a brief study of Cadburyrsquos India Limited ndash the biggest player in theIndian Chocolate Industry with reference to its presence market share product offerings marketingstrategies strengths amp weaknesses success factors and Worm Controversy Management Also theimplication of pricing distribution strategies and impact of external environment has been recordedThe project throws light on problems and challenges of the Indian Chocolate Industry growthopportunities and strategies to be adopted for growth in this industryFinally the project gives information about home-made chocolates and Chocolate Boutiquesand the ways in which Indian consumers and Chocolate players are experimenting and innovatingchocolates and giving the Indian Chocolate Industry a new sweetness

Table of contentsSr No Topic PageNo1 Project Objective 62 An Overview of Chocolate Industry in India 83 Types of Chocolates 124 Categories of Chocolates amp Form of Consumption 145 Chocolate Manufacturing Process 156 Market Size (by value amp by volume) 167 Major Players amp their Market Share 178 Cadburyrsquos India Limited ndash A Study 189 Cadbury amp The Worm Controversy 3710 MARKETING - PROMOTION of CHOCOLATES in INDIA 4611 Nestle India 5012 Amul (GCMMF) 5313 CAMPCO 5914 Home-made Chocolates 6215 Interesting Chocolate Facts 6316 Problems amp Challenges in Indian Chocolate Industry 6417 External Factors affecting Growth of Chocolate Industry in INDIA 6618 Growth Opportunities in Indian Chocolate Industry 6719 Strategies for Growth amp Success in India 6920 Chocolate Boutiques amp Designer Chocolates 7021 Conclusion 7222 Bibliography 73Project ObjectiveThis project aims at understanding the overall Chocolate Industry in India the productportfolios of different players in the market various factors affecting the growth and success ofchocolate industry in India the challenges and opportunities which the market offers and thechanging trends in the Indian Chocolate Industry The project also covers a brief study of CadburyrsquosIndia with reference to above pointsAn Overview of Chocolate Industry in IndiaThe chocolate industry in India as it stands today is dominated by two companies both

multinationals The market leader is Cadbury with a lions share of 70 percent The companysbrands (Five Star Gems Eclairs Perk Dairy Milk) are leaders their segments Till the early 90sCadbury had a market share of over 80 percent but its party was spoiled when Nestle appeared onthe scene The latter has introduced its international brands in the country (Kit Kat Lions) and nowcommands approximately 15 percent market share The Gujarat Co-operative Milk MarketingFederation (GCMMF) and Central Arecanut and Cocoa Manufactures and Processors Co-operative(CAMPCO) are the other companies operating in this segment Competition in the segment will getkeener as overseas chocolate giants Hersheys and Mars consolidate to grab a bite of the Indianchocolate piePer Capita Chocolate Consumption (in lb) of first 15 countries of the worldRank Countries Per CapitaConsumption (in lb)1 Switzerland 22362 Austria 20133 Ireland 19474 Germany 18045 Norway 17936 Denmark 17667 United Kingdom 17498 Belgium 13169 Australia 129910 Sweden 129011 United States 116412 France 113813 Netherlands 105614 Finland 104515 Italy 613INDIA stands nowhere even near to these countries when compared in terms of Per CapitaChocolate Consumption The Indian chocolate industry is extremely fragmented with a range ofproducts catering to a variety of consumers We have the barsslabs jellies lollipops toffees andsugar candiesGiven Indias mammoth population it comes as a surprise that per capita chocolate consumption inthe country is dismally low - a mere 20 gms per Indian Compare this to over 7 kgs in mostdeveloped nationsHowever Indians swallowed 22000 tonnes of chocolate last year and consumption is growingat 10-12 percent annuallyThe market size of chocolates was estimated to be around 16000 tonnes valued around Rs

416 billion in 1998 Volume growth which was over 20 pa in the 3 years preceding 1998 sloweddown thereafterBoth chocolate and sugar confectioneries have abysmally low penetration levels in fact evenlower than biscuits which reach 56 per cent of the households Market growth in the chocolatesegment has hovered between 10 to 20 In the last five years the category has grown by 14-15on an average and will expect it to continue growing at a similar rate in the next five yearsThe market presently has close to 60mn consumers and they are mainly located in theurban areas Growth will mainly come through an increase in penetration as income levels improveHowever almost all of this consumption is in the cities and rural India is nearlylsquochocolate-freersquo But the fact is that three quarters of Indians live in Rural Areas ldquoAveragesummertime temperatures reach 43 degrees Celsius in India Chocolate melts at body temperature of36 degreesrdquoPer capita consumption of chocolates in India is minuscule at 20gms in India as comparedto around 5-8 kgs and 8-10 kgs respectively in most European countries Awareness aboutchocolates is very high in urban areas at over 95 Growth of other lifestyle foods such as malted beverages and milk food have actuallydeclined by 37 per cent and 117 per cent however the CHOCOLATES continue to grow atthe rate of 126Low priced unit packs increased distribution reach and new product launches can besaid to have fuelled this growthThe launch of lower-priced smaller bars of chocolate in the last two years andpositioning of chocolate as a substitute to traditional sweets during festivals have boostedconsumption This is also because chocolate which was considered to be an elitist food has caughtthe fancy of buyers looking for a lifestyle item at affordable costTill recently chocolate consumption had been restricted by low purchasing power in themarket Chocolates and other cocoa-based snack foods were looked upon as food suitable only forthe well-offAfter economic liberalization in 1991 major changes have occurred in food habits partly onaccount of rise in gross domestic product (GDP) growth and higher purchasing power in the hands ofthe middle-class representing a third of the total population Availability of chocolate products hasalso explodedA study had projected that sales of the Indian chocolate industry would rise from $125$130million in 1998 to $175$180 million by the year 2000 and to $450 million by the year 2005 whichACTUALLY happened irrespective of various negative factorsPer capita chocolate consumption continues to be low at about 200g per person being

mainly consumed in urban areas In the middle and higher income groups 70 per cent of children 43per cent of young adults and 16 per cent of adults consume chocolateChocolate Consumption Structure - 2004Children55Adults12Young Adults33Chocolate amp Confectionery Market of India - 2004Chocolate CountsRs 250 Cr10Chocolate BarRs 350 Cr14Mints amp Chew inggumsRs 325 Cr13Sugar BoiledConfectioneryRs 1600 Cr63

AC Nielsen ORG Marg report estimates the Indian Chocolate Industryrsquo worth at Rs2000-crore (Rs 20 billion)Types of ChocolatesDepending on what is added to (or removed from) the chocolate liquor different flavors andvarieties of chocolate are produced Each has a different chemical make-up the differences are notsolely in the taste1 Unsweetened or Baking chocolate is simply cooled hardened chocolate liquor It is usedprimarily as an ingredient in recipes or as a garnish2 Semi-sweet chocolate is also used primarily in recipes It has extra cocoa butter and sugaradded Sweet cooking chocolate is basically the same with more sugar for taste3 Milk chocolate is chocolate liquor with extra cocoa butter sugar milk and vanilla addedThis is the most popular form for chocolate It is primarily an eating chocolateCocoa is chocolate liquor with much of the cocoa butter removed creating a fine powder It canpick up moisture and odors from other products so you should keep cocoa in a cool dry placetightly coveredThere are several kinds of cocoa1048707 Low-fat cocoa has the most fat removed It typically has less than ten percent cocoa butterremaining1048707 Medium-fat cocoa has anywhere from ten to twenty-two percent cocoa butter in it1048707 Drinking or Breakfast cocoa has over twenty-two percent left in it This is the cocoa used inchocolate milk powders like Nestles Quik1048707 Dutch process cocoa is cocoa which has been specially processed to neutralize the naturalacids in the chocolate It is slightly darker and has a much different taste than regular cocoaDecorators chocolate or confectioners chocolate isnt really chocolate at all but a sort of chocolate

flavored candy used for things such as covering strawberries It was created to melt easily and hardenquickly but it isnt chocolateCategories of ChocolatesCommercial Chocolates are available in the following forms1 Bars or Moulded Chocolates2 Counts3 Panned Chocolates (Gems)4 Eacuteclairs5 Assorted ChocolatesBars or moulded chocolates (like Dairy Milk Truffle Amul Milk Chocolate Nestle Premium andNestle Milky Bar) comprise the largest segment accounting for 37 of the total chocolate market involume terms Wafer chocolates such as Kit-Kat and Perk also belong to this segment Pannedchocolates accounts for 10 of the total chocolate market Wafer chocolates such as Kit-Kat andPerk also belong to this segment Form of Consumptiona Pure Chocolatesb Toffeesc Cakes amp Pastriesd Malted Beveragese Wafer Biscuits amp Baked Biscuitsf Chocolate DessertsChocolate Manufacturing ProcessWorkers cut the fruit of the cacao tree or pods open and scoop out the beans These beans areallowed to ferment and then dry Then they are cleaned roasted and hulled Once the shells havebeen removed they are called nibs Nibs are blended much like coffee beans to produce differentcolors and flavors Then they are ground up and the cocoa butter is released The heat from thegrinding process causes this mixture of cocoa butter and finely ground nibs to melt and form a freeflowingsubstance known as chocolate liquor From there different varieties of chocolate areproducedWhat is conchingRaw unprocessed chocolate is gritty grainy and really not suitable for eating Swisschocolate manufacturer Rudolph Lindt discovered a process of rolling and kneading chocolate thatgives it the smoother and richer quality that eating chocolate is known for today The nameconching comes from the shell-like shape of the rollers used The longer chocolate is conched themore luxurious it will feel on your tongueMarket Size (by value amp by volume)The Indian chocolate market is valued at Rs 650 crores (ie Rs 650 billion) a year The

Indian chocolate bazaar is estimated to be in the region of 22000-24000 tonnes per annum and isvalued in excess of US$ 80 millionChocolate penetration in the country is a little over 4 percent with Indias metros proving tobe the big draw clocking penetration in excess of 15 percent Next comes the relatively smallercitiestowns where consumption lags at about 8 percent Chocolates are a luxury in the rural segmentwhich explains the mere 2 percent penetration in villagesThe market presently has close to 60mn consumers and they are mainly located in the urbanareasMajor Players amp their Market ShareThe major players in the Indian Chocolate Industry are1 Cadburyrsquos India Limited2 Nestle India3 The Gujarat Co-operative Milk Marketing Federation (GCMMF) ndash AMUL4 Cocoa Manufactures and Processors Co-operative (CAMPCO)Bars CountLines Wafer Panned PremiumCadburyrsquos Dairy Milk ampVariants5-Star MilkTreat Perk GemsTiffinsTemptation ampCelebrationsNestle Milky Bar Bar OneCrunchKit KatMunch NuttiesAmulMilk ChocolateFruit lsquonrsquo NutFUNDOOBindaazAlmond BarCampco Campco BarCreamKrustTurbo TreatCadburyrsquos India Limited ndash A StudyCADBURYrsquoS INTERNATIONALCadbury is a very old trusted name It all started in Birmingham in England when JohnCadbury started his family grocery shop with side business of cocoa and chocolate products inaround 1824 His two sons Richard and George expanded their family business of cocoa and

chocolate Bournville a town near Birmingham was build by them as a part of expansion of theirbusinessCadbury family is also known for their contribution in social reforms and considered as liberalsThis family was in the forefront of adult education movement in EnglandCADBURYrsquoS INDIA LIMITEDCadbury was originally incorporated as a wholly owned subsidiary of Cadbury SchweppesOverseas Ltd (CSOL) in 1948 The companyrsquos original name was Cadbury Fry (India) Ltd In 1978CSOL diluted its equity stake to 40 to comply with FERA guidelines In 1982 the name waschanged to Hindustan Cocoa Products CSOLrsquos shareholding was increased to 51 in Jan rsquo83through a preferential rights issue of Rs700mm The current name was restored in Dec rsquo89 In 2001Cadbury Schweppes made an open offer to acquire the 49 public holding in the company Theparent holds over 90 of the equity capital after the first open offer A second open offer has beenmade to buyback the balance shareholding after which the company would operate as a 100subsidiary of Cadbury Schweppes PlcEver since the Cadbury is in India in 1947 Cadbury chocolates have ruled the hearts ofIndians with their fabulous taste The company today employs nearly 2000 people across IndiaIts one of the oldest and strongest players in the Indian confectionary industry with anestimated 68 per cent value share and 62 per cent volume share of the total chocolate market It hasexhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per centthroughout the 1990rsquos Cadbury is known for its exceptional capabilities in product innovationdistribution and marketingWith brands like Dairy Milk Gems 5 Star Bournvita Perk Celebrations Bytes ChockiDelite and Temptations there is a Cadbury offering to suit all occasions and moodsToday the company reaches millions of loyal customers through a distribution networkof 55 lakhs outlets across the country and this number is increasing everydayOBJECTIVES AND VALUESOur objective is toGrow shareholder valuehellipover the long termCadbury in every pocketOur marketing strategy is aimed at achieving this vision by growing the market by appropriatepricing strategy that will create a mass market and to have offerings in every category to widen themarketOur Managing For Value Process incorporatesSetting stretched financial objectivesAdopting Value Based Management for major strategic and operational decisions and businesssystemsCreating an outstanding leadership capability within our managementSharpening our company culture to reflect accountability aggressiveness and adaptabilityAligning our management rewards structure with the interests of our shareowners

VISIONLife Full Of CadburyCadbury is an organisation which impacts and interacts with the consumersCadbury is present in most happy occasions in the life of our consumerOur brands excite our consumerCadbury is an expression of a consumers lifeCadbury Full Of LifeCadbury as a company is vibrantCadbury ia a fun and energising workplaceCadbury is robust and aliveBusinessCadbury dominates the Indian chocolate market with above 65 ndash 70 market share Besides it has a4 market share in the organized sugar confectionery market and a 15 market share in milkmalted foods segmentChanging product mixContribution to turnover1994Contribution to turnover2001Chocolate 59 65Sugar Confectionery 9 10Food Drinks 32 24Categories BrandsChocolate Bars Count lines Panned confectionery Wafer chocolates Assorted Chocolates amp Gift ChocolatesSugar Confectionery Googly Mocka Gollum Frutus amp Nice CreamFood Drinks Bournvita Delite amp Drinking ChocolateCadburys Indian operations are not just the largest in Asia but also the cheapest In IndiaCadbury has the largest market share anywhere in the world and has been the fastest growingFMCG Company in the last three years with a compound annual growth rate of 125 per centPlant locationsCadburyrsquos manufacturing operations started in Mumbai in 1946 which was subsequentlytransferred to Thane In 1964 Induri Farm at Talegaon near Pune was set up with a view to promotemodern methods as well as improve milk yield In 1981-82 a new chocolate manufacturing unit wasset up at the same location in Talegaon The company way back in 1964 pioneered cocoa farming inIndia to reduce dependence on imported cocoa beans The parent company provided cocoa seeds andclonal materials free of cost for the first 8 years of operations Cocoa farming is done in Karnataka

Kerala and Tamil Nadu In 1977 the company also took steps to promote higher production of milkby setting up a subsidiary Induri Farms Ltd near Pune In 1989 the company set up a new plant atMalanpur MP to derive benefits available to the backward area In 1995 Cadbury expandedMalanpur plant in a major way The Malanpur plant has modernized facilities for Gems EclairsPerk etc Cadbury also operates third party operations at Phalton Warana and Nashik inMaharashtraThese factories churn out close to 8000 tonnes of chocolate annuallyRaw Material Composition in 2004Product Name Quantity(in Kgs)Cost(Rs) UtTotal Cost(in Rs)Milk Powder Liquid Milk Cream 26232610 1579 4142129119Dry Fruits 432340 1626 70298484Edible Oil 2167450 5172 112100514Glucose-Liquid 27061090 1317 3563945553Cocoa Beans Butter Powder 8478460 10995 932206677Malt Extract 8679690 2039 1769788791Total 2062192021Cadburys India LimitedRaw Material Composition in 2004(in Rs)Malt Extract9Cocoa BeansButterPowder46Edible Oil5Dry Fruits3Milk PowderLiquid MilkCream 20Glucose-Liquid17FINISHED PRODUCTS DETAILS (as on 2004)Product Name Stock()Production(units)Sales Qnty

(units)Sales(Rs Cr)Chocolates Coated Wafer amp Confectionery 5857 23810373 22064912 51851Malt Foods (JarRefillTin) 2202 3206253 3030579 19497Excise duty 1369 - - 12123Confectionery- Hard Boiled 404 4425758 4023276 3579Cocoa powder (TinBags) 167 33312 29904 1478Total 9999 31475696 29148671 88528Cadburys India LimitedFinished Products - Sales Revenue - 2004(in Rs Crores)Cocoa powder(TinBags)2Confectionery-Hard Boiled4Excise duty14ChocolatesCoated WaferConfectionery58Malt Foods(JarRefillTin)22Cadburyrsquos India LimitedSales in Rs MillionYears 1998 1999 2000 2001Sales 3354 3892 4324 4716Sales335438924324471601000200030004000500098 99 00 01YearsRs MillionPRODUCT MIX - CHOCOLATESPRODUCT BASKETCategory Brand VariantsBars Dairy MilkPlain

Fruit n NutsDouble DeckerRoasted AlmondChunky5-Star5 StarCount Lines 5 Star ChrunchieMilk Treat ChocolateOrangeWafer Chocolate Perk PerkPerk XLOther Chocki Mint Strawberry amp ChocolatePremium Gift Chocolates Temptation Rum Cashew Almond amp OrangeCelebrations Various Gift PacksCadburyrsquos Dairy Milk (CDM)Cadburyrsquos Dairy Milk is the flagship brand of Cadburyrsquos not only in India but world wide CDM isthe single largest selling unit in India It has annual sales to the tune of Rs 200 crore CDM not onlyaccounts for 30 per cent of the total chocolate market in value but commands nearly 26 per cent involume terms and close to 30 per cent of Cadburyrsquos annual turnoverMoving from a predominantly adult positioning in the days of the legendary dancing girl ad tothe teens and the tweens when the Cyrus Broacha ads hit the airwaves CDM has made a long sweetjourney In spite of the new categories being explored by Cadbury its star brand remains CadburyDairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate marketCadburyrsquos TemptationCadburyrsquos Temptation is premium chocolate brand aimed for high value consumption Variousvariants available are Almond Rum Cashew amp Orange Cadburyrsquos temptation is priced at Rs 40Cadburyrsquos CelebrationCadbury India launched its premium Celebrations range which contains traditional Indian dryfruits wrapped in Dairy Milk chocolate This gifting option combines the pleasure of giving away dryfruits mdash which Indians traditionally consider a premium healthy gift mdash with chocolate Cadburynow has 90 per cent market share in this profitable segmentPRODUCT REVAMPING amp INNOVATIONSCadburyrsquos chocolate brands registered double-digit growth in 2002 touching an astounding19 per cent in the second half of that calendar year Getting the power brands right was the firstpriority so genuine re-launches of the products were madeHowever the growth rate was declining after that The growth went down from 19 per centin 1999 to 12 per cent in 2000 to single-digits with seven per cent in 2001 If it staged a smart

recovery to nearly 10 per cent in 2002 it was largely on the back of Chocki and the revamped powerbrandsPRODUCT INNOVATIONS1048707 5 STARConsumer feedback suggested that the old 5 Star was too chewy and people complained of itsticking to their teeth It was made softer and melted easily in the mouth amp introduced as 5 StarCrunchy1048707 PERKPerk was made much lighter and the size of the bar increased to match Nestlersquos Munch Perkhad been under fire from Nestlersquos deadly duo of KitKat and Munch but after the relaunch itsmarketshare is two per cent more than KitKatrsquos And the five-year-old brand is now almost asbig as the decades-old 5 Star in size both in the region of Rs 50-55 crore1048707 HEROESPackaging innovation has played a vital role in revamping of various Cadburyrsquos brandsHeroes brand is simply a multi-pack with miniatures of all its most popular brands in a singleouter caseNEW PRODUCT LAUNCHESRich Dry Fruit CollectionFor Gifting Festive SeasonCadbury Celebrationsrsquo Rich Dry FruitCollection ndash a range of premiumchocolate gift boxesAvailable in attractive packs the Collection caters to a premium gifting consumer and is an idealfestive gift It is a unique combination of the best Cadbury chocolate and premium dry fruits andcomes in four different formats each of which is a mix of select premium dry fruits enrobed in richCadbury Dairy Milk chocolateCadburys Creative LaunchA new lsquoafter dinner segmentCadbury Dessertsldquofor sweet moments after dinnerrdquoldquoKhaane Ke baad Kuch Meetha Ho JayerdquoRs 20- per packet of 44 gmsCadbury Dairy Milk (CDM) Desserts ndash with rich indulgent cregraveme center in exotic amp traditionalflavors of Tiramisu and Kalakand CDM Desserts offer the perfect rounding off taste after meal thatadds special lsquoMeetha moments to the family The rich tastes of CDM combined with the uniquecregraveme center in exotic flavors provide a special chocolate experience CDM Desserts add delight tothe after-meal moments especially with the consumers whose current choice of sweets range fromhome made delicacies to fruits to meethaiPRICINGAfter the roaring success of Nestlersquos Munch and Chocostick Cadburyrsquos empire struck back hard

The Rs 5 price point accounts for more than half of all chocolate sales Nestle had seized theinitiative at this price point with its launch of Munch now a roaring success (and the largest sellingproduct at that price point) Today Cadbury has four products at this price point CDM Perk 5 starand Gems mdash and the five-rupee CDM bar is its single largest-selling SKUldquoThis is a potent price point in India because the average purchasing power is abysmallylowrdquo is what industry analyst have to sayNestle kicked off one of the biggest success mdash the liquid chocolate category with its brandChocostick priced at Rs2 mdash three months ahead of competition Cadbury did react with Chockipriced at Rs 2 expanding the concept of sachetisation to new frontiers Chocki has been the singlebiggest growth driver for Cadbury as well as the entire chocolate category The novelty of theformat endeared itself to the existing customer In less than one year it constituted nearly 10 per centof the total chocolate market split equally between Cadbury and NestleVolume led growth strategyCadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller unitpacks at lower price points Simultaneously the company seems to have astutely juggled with thelarger pack sizes and raised prices to a degree higher than what appears at face The strategy hasdriven volumes in the last two years and we expect the volume growth to continue in the next twoyearsPRICE WOESChocki selling at a potent price point of Rs 2 was ideal for smaller towns especially since it did notneed refrigeration But Chocki started to cannibalise other higher-priced chocolates in larger marketsThe students of Bombay Scottish (an upmarket school in Mumbai) are not supposed to eatChocki they should not have even heard of the productDistributionChocolate needs to be distributed directly unlike other FMCG products like soaps anddetergents which can be sold through a wholesale network 90 of chocolate products are solddirectly to retailersDistribution in the case of chocolates is a major deterrent to new entrants as the product hasto be kept cool in summer and also has to be adapted to suit local tropical conditionsCadburys distribution network used to encompasses 2100 distributors and 450000 retailersThe company has a total consumer base of over 65 million Besides use of IT to improve distributionlogistics Cadbury is also attempting to improve distribution quality To address the issues of product

stability it has installed VISI coolers at several outlets This helps in maintaining consumption insummer when sales usually dip due to the fact that the heat affects product quality and therebyofftakeTo avoid cannibalization of its higher priced products from lower priced ones Cadbury issetting up two separate distribution channels ndash one for CORE business amp other for MASS marketswith different stockists wholesalers and retailers One set will be dedicated to Cadburyrsquos high-endproducts and traditional chocolates The other will cater to the mass market brands namely ChockiHalls Eclairs et al mdash all products priced below Rs 3But today Cadburys distribution network reaches out to six lakh outlets each for itschocolate amp confectionery brands (ie total reaching12 lakh outlets)PromotionTypically it is said that chocolates are being eaten when everyone is happy And this issomething advertising has always portrayed But it is found chocolates are eaten under diverseconditions and moods - when people are anxious when they are sad when happy - a whole range ofemotions Condensing these views amp thoughts it can be said chocolate is a true soul mate Someonewho is with you through the ups and downs of life helping you bounce back And thats whatCadburys Dairy Milk (CDM) positioned itself as - a special friend Share of various Brands Ad spending of CadburyHere the 6 Cadbury brands shown in the graph comprise 85 of the advertising pie whereas rest ofthe 9 brands advertised by Cadbury comprise 15 of the advertising Cadbury Dairy Milk Chocolateis the most advertised brand (with 22)RE-INVENTING CABDURYldquoKya Swad Hai Zindagi Meinrdquo redefined the way Indians looked at CadburyChocolates (The commercial showed a beautiful young lady overcoming all obstacles on the cricketground crossing boundary watchman securities and embracing her lover who won the game byhitting a six) This theme introduced in around mid 90rsquos bought instant growth to Cadburyrsquos DairyMilk The Ad campaign ran successful for about four years and immersed deeper inside hearts ofIndiansIn March 2002 Cadbury launched its next advertisement campaign for its flagship chocolatebrand Cadburys Dairy Milk (CDM) The campaign featured a television (TV) commercial that wassignificantly different from the companys earlier commercials for the brand It featured CyrusBroacha interviewing college students and asking why they liked to eat CDM This was followed by

college students singing their excuses for eating CDM Just as the commercial seems all set to endwith the students and Cyrus singing the famous CDM theme Khane Walon Ko Khane KaBahaana Chaahiye (those who want to eat will find excuses) a student comes up and questionsCyrusThe advertisement aimed at conveying the idea that no specific occasion is required forconsuming CDM This was a significant departure from CILs strategy of appealing to adultsin India who sought a rational justification for indulging in chocolate consumptionCadbury roped in Preity Zinta for its PERK brand Preity Zintarsquos angelic dimples laid thefoundation for what would become the Indian teenagerrsquos favorite snack After this campaignPERKrsquoS sale surgedCadburyrsquos advertising has over the past few years aptly reflected Indiarsquos passion forchocolatesCADBURY ADVERTISEMENTSDil ko jab kushi choo jayekuch meetha jo jayeAkhir barvi pass ho hi gaya kuch meetha jo jayeLog Cadbury Kyon Khate HaihellipKhaane waalon ko khaane ka bahaanaCadburyrsquos Dairy MilkhellipAsli swad zindagi kaCADBURY DESERTSldquokhaane ke baad kuch meetha ho jaayerdquoCADBURY CELEBRATIONSLooking wistfully at a photograph Mr Bachchanthinks he recollects the photo-shoot when he hadthrown the cap off his friends headAaj dil ne socha yun kissi apne ko kya doonJo usse kahe tum apne hojo apne aap mein khaas hojo sirf taufa nahin ehsaas hoJisme rishto ki mithas hohellipCadburyrsquos CelebrationsRishto ki MithasCadbury And The Worm ControversyThe discovery of worms in some samples of Cadburyrsquos Chocolate in early October 2003created one of the biggest controversies in India against a Multi National reputed for being abenchmark of QUALITYThe controversy created an deep adverse impact on the company with their sales not onlydrastically dipping down but at the same time allowing the competitors to establish their footholdand taking maximum advantage of Cadburyrsquos misfortuneThe controversy and the adverse publicity received in several countries set back its plan ofoutsourcing model which would have resulted in significant revenue generation several monthsbackThe wormsrsquo controversy came at the worst timehellipthe next few months were the peak

season of Diwali Eid amp Christmas Cadbury sells almost 1000 tonnes of chocolates duringDiwali In that year the sales during festival season dropped by 30 per cent The company sawits value share melt from 73 per cent in October 2003 to 694 per cent in January 2004 In Mayhowever it inched up to 71 per cent CDM sales volumes declined from 68 per cent in Octoberrsquo03 to 64 per cent in January 2004Clearly the worm controversy took a toll on Cadburys bottom-line For the year endedDecember 2003 its net profit fell 37 per cent to Rs 456 crore (Rs 456 million) as comparedwith a 21 per cent increase in the previous yearHowever Cadburyrsquos reiterated that all through the 55 years of leadership in India that it hasremained synonymous with chocolates and have remained committed to high quality and consumersatisfactionCABDBURYrsquoS FIGHT-BACKProject VishwasldquoSteps to ensure quality amp regain the confidencerdquoFollowing the controversy over infestation in its chocolates Cadbury India Ltd unveiledProject Vishwas a plan involving distribution and retail channels to ensure the quality of itsproductsThe companys team of quality control managers along with around 300 sales staff checkedover 50000 retail outlets in Maharashtra and replaced all questionable stocks with immediate effectThe Vishwas programme was intended to build awareness among retailers on storagerequirements for chocolates provide assistance in improving storage conditions and strengthenpackaging of the companys range of productsCadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60bars These helped stockists display and sell the products safely and hygienically 190000 retailersin key states were covered under this awareness programme

The Big lsquoBrsquo FACTORThe big factor that has pushed up CDM sales is the Amitabh Bachchan campaign It helpedrestore consumers faith in the quality of the product In early January Cadbury appointed AmitabhBachchan as its brand ambassador for a period of two yearsThe company believed that the reputation he has built up over the last three decadescomplements their own which was built over a period of 50 yearsYet the entire credit of recovery could not be attributed to the brand mascotIncisive action taken by the company also helped Some of which were1 Responded to consumers concern over the issue rapidly Also the communication campaignworked effectively in giving out the central message2 The packaging was changed to include a sealed plastic wrapper inside the outside foilCadburyrsquos launched a new purity-sealed packaging for its flagship product Cadbury DairyMilk The packaging is in response to foreign bodies notably worms being found in its

products Over the next few weeks Cadbury will work towards introducing either a heatsealedor a flow-pack packaging that offers a high level of resistance to infestation fromimproper storage3 New advertising amp promotion campaigns were in place which accounted for an Ad spend ofnearly Rs 40 crore (Rs 400 million)Cadbury invested nearly Rs 25 crore (Rs 250 million) this year on new machinery for theimproved packagingAddressing his audience Mr Bachchan says Mujhe aapse kuch kehna hai jis kaammein manushya ki antar aatma uske saath na ho uss kaam ko karne se usse sab kuchmil sakta hai man ki shaanti nahin mil sakti Isliye jab Cadbury walon ne mujhe kahaki unki baat main aap tak pahunchaoon to pachpan saalon se Cadbury khaane walamain bhi thoda sa hitchkichaya Maine unse ek sawaal poochaki kya iske baad mainchain ki neend so paoonga ya nahin to jawaab mein voh mujhe apni factory le gayeWalking into the Cadbury factoryhe takes a look at their completemanufacturing process and continuesAur mujhe apni internationaltechnologyapne kade quality controlsaur double protection packagingdikhayiSaying which he takes a bite of thechocolateFinally giving his personal assurance andapproval he saysAaj kal mein badichain ki neend so raha hoonAb aapki favourite Cadbury Dairy Milknaye purity seal pack meinCADBURYrsquoS SINGING SWEETLY AGAINAll is well that ends well And for Cadburyrsquos India nothing can be sweeter thanRegaining Back the Consumer ConfidenceThanks to quick action taken to recover the damage done by the worm controversy likeOperaion Vishwas adopting new packaging amp massive advertising with Mr Amitabh Bachchan astheir brand ambassador Cadburyrsquos regained its market shareThe survey conducted by the company says that consumers have long forgotten thecontroversy and are back to their merry chocolate-chomping ways Sales were back to the precontroversylevels Consumer confidence in the product was back and there was a steady progressionin sales The company posted a high double digit sales growth in that year endThe recovery began in May 2004 when Cadburys value share went up to 71 per centHires AT Kearney to curb costsCadbury India appointed management consultancy firm AT Kearney to draw up a strategy to controlcosts in several areas including sourcing of raw materials and packaging This was partly anoutcome of the wormsrsquo controversy more than a year ago Among other things it changed thewrappers for its Cadbury Dairy Milk brand and introduced better coolersThe consultancy firm will also look at the sourcing of direct and indirect materials like

renegotiating with suppliers for longer term contracts and vendor management Other costs (indirectexpenses) like travel costs and hotels were also being studiedIn other words Cadbury is trying to reduce the cost per stock keeping unit (SKUs or packs)The aim is to improve efficienciesEarnings sensitivity factorsCocoa bean prices Domestic as well as international prices of key raw material - cocoa havesignificant impact on marginsExcise duties Changes in excise levied on malt and chocolate influences end product prices andthereby volume growth as well as marginsChanges in custom duties and foreign exchange fluctuation As 20 of raw material is importedchanges in custom duties amp foreign exchange fluctuations have significant impact on the final cost ofthe productCompetition from MNCs like Nestle as well as imported brands Increasing competition putspressure on advertisement budget and margins However on the positive side it helps in expandingthe marketSuccess factors of Cadburyrsquos India Limited1 Global management processesIndia occupies a high profile position in the global organization with advocates in regional andglobal headquarters Global management has allowed the local operation a high degree of flexibilityin growing the business understanding that asset utilization may be lower and returns slower toarrive but expecting volume share to compensate for lower margins in the long run2 Local management processesThe Cadbury India team is all-Indian and has a deep understanding of local market dynamicsThe business is set in a way that highlights localization across all facets ndash driving the belief that theonly way to succeed in India is by developing localized business models For example the companytailored the chocolate formula in India to prevent melting in the countryrsquos open-air high frequencystore environment3 Customized business modelsLocal management has set up systems to test and develop products from the ground up withspecialized interlinked cells that execute innovation and market testing hand-in-hand Cadbury Indiais known as a key product innovator Besides Dairy Milk the entire Cadbury product portfolio inIndia has been developed locally to suit Indian consumer tastes Packaging marketing anddistribution have all been tailored to local market conditions4 Royalty StructureRoyalty to Cadbury Schweppes Plc is around 1 per cent of the turnover But with that the

company gets unlimited access to latest technology new products and so on They can also introducenew products from the parent if it is suitable for Indian market5 Subtle reengineering of raw material mix led to cost savingsCadbury has reduced its dependence on cocoa thus lowering its exposure to volatile raw materialprices as well as cutting costsIt appears that they have subtly altered its recipe by using less of costlier cocoa and more ofmilk and sugar Cadburys launch of Perk has also contributed significantly in reducing theproportion of cocoa in the overall raw material mix Consequently Cadbury saved aboutRs94mn (18 percent of net sales) in FY1999MARKETING - PROMOTION of CHOCOLATES in INDIATraditionally chocolates were always targeted at children But stagnancy in growth ratesmade the companies re-think their strategies Cadbury was the first chocolate company that took themarket by storm by repositioning brands at adults as opposed to childrenIBUYING BEHAVIOURChocolates are consumed as indulgence and not as snack food as prevalent in westerncountries Almost 75 chocolates are impulse purchases Chocolates are bought predominantly byadults and gifted to children On an average the wholesalers sells Rs50000month of Chocolates(all brands included) Also the wholesaler usually deals in all kinds of FMCG goods Foodstuff inaddition to the chocolates The items like chocolates are placed near the counterChocolates are kept in cardboard boxes and are also delivered in the same In a few of thecases the chocolates were kept separately (as per equipment provided by the manufacturer ndash egVISI Coolers) In addition to marketing promotions companies have been focusing extensively onthe promotions by the sales staff Also the companies can devise there marketing strategies that arecatering to specific segments and are thus more effectiveIINATURE OF RETAIL OUTLETChocolates are primarily sold through Kirana Stores Gift stores Medical Stores canteensPan-Bidi stores Bakeries Sweet Shops etc This is true for chocolates also The space allocated forthe chocolates was less when compared to the total area of the shop Of the space allocated forchocolates Cadbury brands occupied more than Nestle brandsThe chocolates category thrives on excitement Its all about giving the consumer achoice and taste which they enjoyIIISTOCKING OF THE PRODUCTS

In most of the cases various brands of chocolates are kept together In some of the cases thechocolates are stocked depending on the manufacturerrsquos provision The chocolates are kept in GlassJars and boxes ndash These are provided by the respective companies along with the product Thechocolates are kept there But in most of the cases chocolates are stocked near the counter Ideallythe shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distanceChocolates are kept at or below the eye level This is to facilitate visibility of the chocolates for thecustomer who is visiting the storeMedium size retailers sell chocolates of about Rs 400 ndash Rs 800 per week while bigretailers sell chocolate worth Rs1000 or more per weekCHOCOLATE ADVERTISING IN INDIAGrowth of Chocolate Advertising on Television Year 2003 - 2004Company-wise Ad SpendingThe graph shows that Cadburys India Ltd tops with 52 share of the advertising pie ontelevision Nestle India Limited grabs the 2nd position with 34 share whereas ParleProducts gets the 3rd position with 8 of the advertising shareChocolate Ads shift focus from KIDS to YOUTHIndian chocolate market is almost totally depended on purchases of kids In recent times thechocolate majors Cadburys and Nestle took major initiatives to bring in grown-ups into this marketWhile Cadbury is trying to sell indulgence to adults Kit Kat is selling ritualistic break toteenagers young adults This is reflected in the changing advertising patterns across differentchannelsOut of 100 channels eight channels account for 40 per cent of chocolate advertisingThis pack of eight is headed by Cartoon Network which is obvious since the main buyers ofthis product category are childrenBut heavy advertising on channels like MTV MAX Star Plus Zee Zee Cinema Discoveryand Channel [V] proves the changing profile of the potential consumer for the advertisers in thiscategory from children to teenagersyoung adults as well as adults

NESTLE INDIABackgroundNestle India was promoted by Nestle Alimentana Switzerland a wholly owned subsidiary ofNestle Holdings Ltd Nassau Bahama Islands Nestle is one of the oldest food MNC operating inIndia with a presence of over a centuryNestle has a presence in 83 countries worldwide It has a total number of 509 factories out ofwhich 220 are located in Europe 153 in America and 136 in Africa Asia and OceaniaThe Swiss food giant has been in India for 90 years with six manufacturing plants3500 employees and almost $500 million in sales in 2002Business

Nestle has a presence in the following categories - Baby Food Milk products Beverages (Coffeemalted beverage) Chocolates amp confectionery and other processed food productsChocolates amp ConfectioneryNestle forayed into chocolates amp confectionery in 1990 and has cornered a fourth share of thechocolate market in the country Chocolates contributes 14 to Nestlersquos turnover It hasexpanded its products range to all segments of the market In fact Nestle is the fastest growingcompany in chocolates in IndiaThe Kitkat brand is the largest selling chocolate brand in the world Other brands includeMilky Bar Marbles Crunch Nestle Rich Dark Bar-One Munch etc New launches such as NestleChoco Stick and Milky Bar Choo were made at attractive price points to woo new consumers Thecompany introduced two new brands Charge and Crunch in 1998 The company has discontinuedproducts Chocostick as it did not add value to the its portfolio Nestle achieved roaring success bygrabbing the Rs 5 price point From Jan ndash Sep rsquo05 Nestle chocolates witnessed a growth of 148per centNew Product Introduction amp InnovationsThe Company sustained momentum during the year by driving distribution through innovativeconsumer promotions and trade offerings and supporting key price pointsHigh temperatures are a typical characteristic of Indian subcontinent Chocolate startsmelting at such high temperatures thus making chocolate unfit for consumption Hence Nestleintroduced an innovative LIQUID CHOCOLATE ndash CHOCO STICK at a price tag of Rs 2-which was in instant hitNESTLE MUNCH which is the largest selling unit in the wafer segment and the mostwidely distributed continued to gain in volumes NESTLE CHOTU MUNCH which waslaunched at Rs 2- price point was well receivedA range of other innovative and renovated products were launched which included NESTLEMilk Chocolate NESTLE Fruit amp Nut NESTLE Krunchy NESTLE MILKYBAR STARZNESTLE CHOO NESTLE Chocolate Eclairs NESTLE Coffee Eclairs and various flavours forCHOCOSTICKNESTLE CHOCOLATE PRODUCT PORTFOLIONESTLE MAHAMUNCHA ROARING SUCCESSNESTLE MAHA MUNCHRuk Na Payehelliphellip Ruk Na PayeNestle MAHA Munchhelliponly Rs 5

Amul (GCMMF)The Rs 2748-crore GCMMF is in chocolate segment since quite some time However its marketshare is just 5 and the company did not look aggressive till recently Amul chocolates used to comein not so attractive packages and very little marketing effort was seen

But things have changed and for good Amul is now an important player in this growingchocolate industry It has firmed up its measures with marketing and new product launches andrevamping its packagingAmul just recently launched new chocolate brands in the market - Rejoice Kite Bite andNuts `bout YouCadburyrsquos Worm Controversy amp AMULThe breakup of Cadburyrsquos wormsrsquo controversy accelerated amp facilitated Amulrsquos marketingefforts The direct impact of Cadburyrsquos loss was Amulrsquos GAINIn Mumbai which accounts for almost 10 per cent of the Rs 650 crore (Rs 650 billion) a yearchocolate market in India the company raised its market share from 2 per cent in the beginning ofOctober 2003 (time when worm controversy broke) to 15 per cent by the end of the month Thecompany sold nearly 20 tonnes in Oct 2003 in Mumbai against only 2 tonnes in Oct 200220 overall growth of Amulrsquos chocolate share can be purely contributed to the Cadburyrsquosworm controversyIn an attempt to boost sales the company launched three new chocolates in Mumbaiunder the brands Fundoo Bindaas and Almond BarWhile the first two were been priced at Rs 10 for a 30 gm stick Almond Bar carried a price tag of Rs10 for a 35 gm chocolateLaunch of Cooking ChocolateThough cooking chocolate is available in the market it is offered only as a commodity notas a branded product The Gujarat Co-operative Milk Marketing Federation (GCMMF) owner of thebrand Amul is strategized to capture a lions share in the chocolate segment by tapping the hithertountouched sub-segments with the launch of its new brand Amul Chef in July 2003 making it the firstever branded cooking chocolate to be made available in the Indian marketThe `premium variant of the cooking chocolate was priced at Rs 110 for 500 grams and the`classic variant was priced at Rs 100 for 500 gramsAmul targeted various segments with its new product including housewives from SECA and B households caterers bakeries restaurants biscuit manufacturers ice-creamparlours and confectioners Amul also aimed to capture a market share of 20 per cent in the firsttwo months in Delhi and MumbaiThe market size of cooking chocolate in Mumbai and Delhi alone is estimated at 50tonnes per monthBrand New Products amp Packaging to push Chocolate BusinessAmul revived its chocolate business with new products and renewed packagingThe company launched Chocozoo brand of chocolates in December 2004 to target the age group offour to 14 yearsBesides introducing new products in the chocolate segment Amul also revamped itspackaging with the help of TMA which is an international agencyAmul also launched occasion-related sub-brands Its Nuts lsquobout U brand was launched

on the eve of Valentinersquos Day while the Kite Bite brand was unveiled during the kite-flyingfestival in AhmedabadAmul has decided to segment the market with brands catering to the `impulsersquo and `teenrsquosegments as well as having brands catering to different occasionsAmul which reaches out to over five lakh retail outlets has over 2600 distributors underits foldGCMMF has also drawn up plans to make its chocolate business a separate division of thecompany

CAMPCOCentral Arecanut and Cocoa Manufactures and Processors Co-operativeA sudden withdrawal by the buyers of cocoa from the procurement operationsdue to crash in the international market came as a shock to cocoa cultivators in India Karnataka andKerala Governments enthused at this stage the CAMPCO to enter on the scene to rescue the farmersfrom distress CAMPCO willingly took up the responsibility to enter the cocoa market andperformed a saviors roleAs a strategy for survival in the International scene the CAMPCO played a major role inestablishing a name for Indian Cocoa which hitherto had not been achieved It procured cocoa podsfrom growers and adopting scientific processing methods to market standards released dry cocoabeans matching in quality in the world market equal to that of Ghana Brazil and other cocoacultivation nationsAfter entering into the Cocoa market the Co-operative was able to export Cocoa Beans worthRs 40 million to European countries in the initial phase of operations India was not known as aCocoa producer in the international Trading Community since yearly production was hardly 5 to 6thousand tonnes which is not even 03 of the total world consumptionThrough sustained efforts CAMPCO has been able to ensure reasonable prices to Cocoagrowers The Co-operative had to face the problem of a limited internal market and un-remunerativeexport market With the setting up of the chocolate manufacturing factory at Puttur 50KM fromMangalore the Co-operative has been able to increase local consumption of cocoa based productsand to export value added semi-finished products With a view to creating a permanent demandand a steady market for thebeans CAMPCO established a Chocolate Manufacturing Factory at Kemminje village inPuttur Taluk in Dakshina Kannada district adopting foreign technical advancement inchocolate making The Factory was set up in 1986 at an initial investment of Rs1167 MillionsCAMPCO CHOCOLATES

CURRENT STATUS of CAMPCO

However the company does not have much visibility in the Indian market No advertising are seenbeing aired on TVhellipat least not on the prime channels The company seems to have restricted itsmarketing efforts in south India onlyCampco being a co-operative is functioning under pressures from various political parties and issurrounded by various controversies all of which arising out of internal disputesHome-made ChocolatesAnother area of chocolate industry in India is HOME-MADE CHOCOLATES This segment ishighly fragmented and operates independently They are more pronounced for manufacturing distinctflavors and varieties of chocolates in various shapes and size But these chocolates are usuallypriced at a higher price than that available for branded products for the same quantity House-wivesfrom elite class usually indulge in this kind of business They usually operate in local area andthrough their contact network Some home-made chocolate manufacturers manufacture reallyattractive GIFT CHOCOLATESInteresting Chocolate FactsWhy is Chocolate in India different than most European chocolatesThe temperatures in India are much higher than that of the European countries To preventthe chocolate from melting and to enable shape retention under such high temperatures the recipe ofthe chocolate is adapted to the Indian climate Therefore the milk fat content in Indian chocolates islesser than that of European chocolates and hence they taste differentSometimes white spots appear on Chocolates sometimes Is that safeWhen a chocolate gets exposed to temperature variances from a hot day to a cold night(which is very common all across India) the fat expression happens on the surface of the chocolateThis means white spots emerge on the surface of the chocolate This phenomenon is called fatbloom It is entirely safe to consume chocolates however the feel and the taste of the chocolate maynot be the same as is originally intended toAre chocolates available for diabeticsCurrently in India no manufacturer produces chocolates for diabetics as the governmentregulations do not permit manufacture of such chocolates The industry majors are liaising with thegovernment authorities to enable manufacture of such chocolates in India Chocolates for diabeticsthough are available in certain parts of the worldChocolate the new solution for blood pressureCocoa beans have antioxidant compounds called flavanols and scientific research suggeststhey do good things to blood vessels Dark chocolate contains flavanoids an antioxidant whichhelps the body by neutralising potentially cell-damaging substances known as oxygen-free

radicals a normal byproduct of metabolismProblems amp Challenges in Indian Chocolate Industry1 TEMPERATUREA peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to meltunder even moderate heat The temperatures can reach as high as 48 degrees in summers whereaschocolate starts melting at body temperature (about 37-38 degrees) Manufacturers have to takeprecautionary measures to ensure the preservation of chocolates especially in summer2 UNAVAILABILITY OF CONTROLLED REFRIGERATIONIndia does not have controlled refrigerated distribution Air-condition supermarkets are rareCadbury loses 15 percent of annual sales of Rs 68 billion to heat damage Companies reviseingredients to make chocolate withstand heat and so Indian chocolates are more resilient to heat thanEurupean chocolates by a factor of 2 degrees Ironically the chocolate market has grown recentlybecause smaller retailers have stuffed fridges and coolers supplied by the cola companies Coke andPepsi with chocolatesNestle and Cadbury have tried to provide loans for retailers to buy fridges but to hold downpower costs the shopkeepers switch off the fridges at night As a result the cocoa fat melts andmigrates to the main body of the chocolate bar When the cooling is switched on in the morning thecocoa fat solidifies and turns white presenting a bizarre un-sellable white on black form Nestletried to provide fridges with see-through doors but was appalled to see its chocolatessandwiched between dead chicken butter and vegetablesSmall coolers were provided to retailers to keep the chocolate from melting but that didnt quite dothe trick Electricity costs money and is not provided in a uniform way so on and off theelectricity goes and the product may suffer sometimes3 RAW MATERIALSCocoa is the key raw material and accounts for around 35 of the total material cost(including packaging) of chocolates The price of cocoa has been hitting a new high of late Cocoaprices are at a near 20-year high at $2358 per ton up from $900 a year back India does not producecocoa to any noteworthy extent but is a large consumer of chocolates Consumption of chocolatesand other cocoa-based products especially among the middle class has been growing4 TRANSPORTATIONChocolate needs to be distributed directly unlike other FMCG products 90 of our products aresold directly to retailers Building such a direct network in rural areas is a daunting task since theinfrastructure is poor in India in rural areas5 THREAT FROM IMPORTED BRANDS

Free availability of imported brands bought through illegal routes pose a threat to the domesticchocolate industry Usually these imported chocolates taste better than domestic chocolate due torecipe difference Hence consumers who are willing to spend a little more prefer these importedchocolatesHowever the premium brands which come through official channels do not pose a threat tothe market as these cater to a small niche market However there is a lot of dumping fromneighboring countries like Dubai Nepal etc of inferior brand of imported chocolates These are notonly of low quality but are brought very near to their expiry dates Most of the cheap chocolatebrands that are available do not meet Indian Food RegulationsExternal Factors affecting Growth ofChocolate Industry in INDIA1048707 Good monsoon ensures adequate availability of raw materials which are mainly agricultural innature Raw material prices have significant influence on margins1048707 Government policies in terms of licensing duties movement of agricultural commodities etcalso affect the introduction of products time lag for a product launches taxes excise etc allinfluence the business1048707 Market growth driven by overall economic growth and urbanization also contributes An overallbooming economy will consume tonnes of chocolates because consumer spending increasesAlso the absolute number of consumers in middle class amp upper middle class increases1048707 Rupee depreciation improves export realizations however it also makes import of raw material(esp cocoa) expensiveGrowth Opportunities in Indian Chocolate IndustryUntapped Market amp Limited ConsumptionThe fact that chocolate is not a traditional food high prices and domestic production problems willprovide the main problems to market growth As these markets develop prices will fall making theseproducts more accessible to the wider population However the Indian market is still untapped andprovides immense scope for growth both geographically as well as product basket wiseChocolates right now reaches about 70mn to 75mn consumers It is estimated that chocolateshave a potential market of about 116mn consumersChocolate consumption in India is extremely low Per capita consumption is around 160gmsin the urban areas compared to 8-10kg in the developed countries The per capita chocolateconsumption in India is still much below the East Asian standards Hence per capita consumption hasa immense scope for improvementIn rural areas it is even lower Chocolates in India are consumed as indulgence and not as a snack

food A strong volume growth was witnessed in the early 90s when Cadbury repositioned chocolatesfrom children to adult consumption The biggest opportunity is likely to stem from increasing theconsumer base Leading players like Cadbury and Nestle have been attempting to do this by valuefor money offerings which are affordable to the massesWe also believe that the near term opportunity lies in increasing penetration rather thanincreasing intensity of consumptionIn the past five years the chocolate business grown by 14-15 on an average and isexpected to grow further for at least next five yearsChanging Attitudes amp Consumption patternIn the past chocolate consumption had been restricted by low purchasing power in the marketChocolates and other cocoa-based snack foods were looked upon as food suitable only for elitistconsumption till recentlyBut with the launch of lower-priced smaller bars of chocolate in the last two years andpositioning of chocolate as a substitute to traditional sweets during festivals have boostedconsumptionChocolates which were considered to be an elitist food hit the fancy of masses looking for achange in life style at affordable costRural expansionRural market and small town markets are seen as the key to spurring double-digit growthProducts such as liquid chocolate packs from the existing portfolio are expected to enable rapidacceptanceLeverage India for offshoringIndia is being leveraged for export of finished goods as a superior destination formanufacturing best practices and for BPO opportunitiesAll the above points bring us to a conclusion that therersquos an immense scope for growth ofchocolate industry in India not only in its offering pattern but also for increment in its totalconsumption value and sizeStrategies for Growth amp Success in India1 Revamp the product to keep the excitement alive2 Companies should look at new avenues while expanding the reach of its products Distributionwill hold the key Companies need to reach out to smaller towns where three-fourths of thepopulation does not even know the product3 Merger amp Acquisitions Mergers amp Acquisitions with companies that match the productportfolio amp overall growth strategy should be considered which will not only strengthen thecompany to establish a stronger hold in the country but also ward off possible competition in theselect category Such collaborations will also facilitate companies to use each otherrsquos distributionnetworksChocolate Boutiques amp Designer ChocolatesThey call it choco fever Chocolate Boutiques are a complete chocoholic experience Surroundedon all sides by scrumptious chocolates wrapped neatly in colourful foil and paper any one will be

gripped by this feverItrsquos a world of chocolates where the flavour of Jamaican rum truffle melts in your mouth evenas your hand reaches out greedily for a kiwi-flavoured concoction or where roasted almonds are adelight to eat while your mind flirts with hazelnut pralineManufacturers are finding an increasing number of curious customers whore pampering theirtaste-buds to apricot and peach chocolate strawberry chocolate or better still wild berry in cognacflavoured chocolate Manufacturers are now luring their patrons with chocolates in geometric shapesanimal figurines coloured in metallic hues and glitter For the more adventurous there are alsochocolates with pan-supari cardamom flavours and liqueur filling Products like nut-based pralinechocolates some unique flavors like tamarind and chilli chocolates and champagne and Jamaicanrum truffles are also demanded in the marketThese manufacturers also cater to the older and the health-conscious choco-lovers the highfibre low fat and sugar ones are quite popular Apart from the festive season weddings and babyannouncements also see heavy offtake of premium sweet delicacies For those who are healthconscious there is also a special range of sugar-free and diet chocolates These are usually bought bycorporates or individuals who want to make a special statementExtensive range of Baby chocolates are available which are beautifully wrapped in pinks andblues and embellished with decorations like baby bottles satin ribbons silk flowers bibs and bowsare also available and are getting very popular in elite classesDesigner chocolates are tailored for customers whore looking at gifting chocolates with apersonalized touch Embossing of names logos of companies and personalized message on thechocolates are fast becoming popularThere are 1000 varieties of designs to choose from -- ranging from good luck charms Xmasfigurines and animals -- and nearly 50 kinds of gift packaging available to suit any particularoccasionFrom festive occasions to personal celebrations to corporate gifting made-to-orderchocolates are most sought after And we are not talking about the boring old rectangular slabs ofcocoaThese designer chocolates focus a lot of attention on packaging The packaging of these productsincludes materials like imported mesh gold foils and brocade lace and satin-draped boxes being inheavy demandWith the rise in disposable incomes people do not mind spending on designer chocolatesmost of which costs between Rs 500 and Rs 2500 per kg Few chocolate makers cater only tocorporate clients for festive occasions product launches new employee joinings and managementtraining programmes From logos to company names being embossed in chocolates of differentshapes and colours these are all in demand

CONCLUSIONThe Indian Chocolate Industry is a unique mix with extreme consumption patterns attitudesbeliefs income level and spending At one hand we have designer chocolates that are consumedwhen priced at even Rs 2500kg while there are places in India where people have never even tastedchocolates onceUnderstanding the consumer demands and maintaining the quality will be essentialCompanies will have to keep themselves abreast with the developments in other parts of the worldPRICING is the key for companies to make their product reach consumersrsquo pockets Rightpricing will make or break the product SUCCESS Economical distribution of the products willalso be equally importantThe companiesrsquo strategies should focus on driving sales through a right product mixefficient materials procurement reduced wastages increased factory efficiencies and improvedsupply chain managementTherersquos an immense scope for growth of chocolate industry in India - geographically as wellas in the product offeringThe Indian Chocolate Industry is destined to grow and will do so in the future


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Bibliographywwwrediffcomwwwindiainfolinecomwwwbusiness-standardcomwwwIndia-statscomwwwAgencyfaqscomwwwEquitymastercomwwwindiantelevisioncomwwwmyiriscomwwwibeforgwwwthehindubusinesslinecom

Table of contentsSr No Topic PageNo1 Project Objective 62 An Overview of Chocolate Industry in India 83 Types of Chocolates 124 Categories of Chocolates amp Form of Consumption 145 Chocolate Manufacturing Process 156 Market Size (by value amp by volume) 167 Major Players amp their Market Share 178 Cadburyrsquos India Limited ndash A Study 189 Cadbury amp The Worm Controversy 3710 MARKETING - PROMOTION of CHOCOLATES in INDIA 4611 Nestle India 5012 Amul (GCMMF) 5313 CAMPCO 5914 Home-made Chocolates 6215 Interesting Chocolate Facts 6316 Problems amp Challenges in Indian Chocolate Industry 6417 External Factors affecting Growth of Chocolate Industry in INDIA 6618 Growth Opportunities in Indian Chocolate Industry 6719 Strategies for Growth amp Success in India 6920 Chocolate Boutiques amp Designer Chocolates 7021 Conclusion 7222 Bibliography 73Project ObjectiveThis project aims at understanding the overall Chocolate Industry in India the productportfolios of different players in the market various factors affecting the growth and success ofchocolate industry in India the challenges and opportunities which the market offers and thechanging trends in the Indian Chocolate Industry The project also covers a brief study of CadburyrsquosIndia with reference to above pointsAn Overview of Chocolate Industry in IndiaThe chocolate industry in India as it stands today is dominated by two companies both




































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