By

Hoshedar Batliwalla (CMBA2/1314)

Payal Patel (CMBA2/1318)

Arjun Sanka (CMBA2/1313)

Kuhu Pathak (CMBA2/1316)

Pushkaraj Halge (CMBA2/1320)

To understand the…

1. Overall market size and growth trends & future projections.

2. Main market segments, size and consumer behavior trends.

3. Major macro and global environmental influences on the market and the critical success factors.

4. Analyze the industry with the help of porters 5 forces model.

5. Main market competitors, market share, strength & weaknesses.

6. Main channels of distribution, strengths & weaknesses.

MARKET

………………………………………………………………………..….......….....

DRIVERS & CHALLENGES

TRENDS

COMPETITION

………………………………………………………………………..….......….....

………………………………………………………………………..….......….....

..….…

….…

……

…..

DRIVERS CHALLENGES• Increase in disposable income.• Chocolate gifting prevailing.• Attractive pricing.• Huge Potential as low per

capita consumption.

• Rise in cocoa prices.• High entry barriers.• High excise and

import duties.

• Premium chocolates.• Dark Chocolates.

• Gift packaging schemes.• Entry of retailers and

confectioners.

………………………………………………………………………..….......….....

CADBURY NESTLE

AMUL MARS

• Indian chocolate market is growing at a compounded annual growth rate (CAGR) of about 25% (Commodityonline,2013).

• India is considered to be loaded with great potential for growth of chocolates.

• Increased convenience of premium chocolates and budding taste for dark chocolates aided with higher purchasing power will lead to further development of the market.

………………………………………………………………………..….......….....

Source: Commodityonline

DRIVERS Vs. CHALLENGES

DRIVERS

Tradition of gifting chocolates

Attractive pricing

Increase in disposable income

Low per capita consumption of chocolates

Changing taste of Indians

(Marketresearch.com)

CHALLENGES

Rise in cocoa prices

High entry barriers

High excise and import duties

Social problems like child labour

Regulations over imported chocolates

(Marketresearch.com)

A chocolate bar is often considered an “affordable luxury.” (Franchisehelp)

Source: MarketresearchSource: Franchisehelp

• 55,000 tons in 2008 : Mintel, 2013

• 88,000 tons in 2011 : Mintel, 2013

Volume Produced

• Rs. 1,011 Crore in 2008 : Mintel, 2013

• Rs. 4,914 Crore in 2011 : Mintel, 2013

Sales

• Global chocolate market is worth $85 billion annually : Mintel, 2013

Global Chocolate Scenario

Source: Times of India, 9th Oct 2012Source: Pitchonnet

Source: KPMG Report, June 2012

16800

12808

14095

15480

12428

6460

5627

2791

2272

2200

655.8

03

Net Sales 2012 (US$ millions) Cadbury (India)

Source: International Cocoa Organization, 2012Source: Indiainfoline

Source: Make Chocolate Fair

(Make chocolate fair report, 2012)

(Make chocolate fair report, 2012)

Sales of chocolate have increased from $418 million in 2008 to $857 million in 2011

(Mintel, 2013)

India has posted the largest increase in

volume sales with 21%

growth between 2008 and 2012

Per capita consumption

increases 2008-40 gms to 120 gms in 2013.

(Economic times, 2013)

Premium chocolates saw launches grow

from 4% in 2008 to 6% in 2011

Seasonal & boxed assorted chocolates have experienced the fastest growth &

sales are expected to expand 13%

between 2010 & 2015

(Franchisehelp, 2013)

Seasonal launches

increased from 2% in 2008 to 7% in 2011

(Mintel, Pitchonnet)

(Mintel,2012)

(Mintel, 2013)

Source: Pitch on netSource: Mintel

Source: Franchisehelp

Avera

ge G

row

th R

ate

2012-2

017

India-13.8%

Brazil-8.1%

Turkey-6.4%

China -5.8%

Colombia-5.2%

Russia -1.3%

South Africa-0.7%

(Euromonitor, International Confectionery News 2013)

(Min

tel, L

ivem

int) Chocolate sales

estimated at Rs.6007 crore in 2013

(Min

tel, L

ivem

int) Sales are

expected to rise to 22.24% in 2013

(Min

tel, L

ivem

int) Chocolate prices

are estimated to rise 9.84% to Rs.574.70 per kg in 2013 from an average price of Rs.523.20 per kg in 2012.

(Tim

es

of In

dia

, 2012) The Associated

Chambers of Commerce and Industry of India (ASSOCHAM) estimated consumption of chocolate to cross Rs.7500 crore by 2015

PROJECTED RETAIL SALES IN 2017

In US $ BILLION

BRAZIL 18.5

RUSSIA 9.3

CHINA 2.6

INDIA 2.3

TURKEY 1.8

SOUTH AFRICA 712 Mn

COLOMBIA 324Mn(Euromonitor, Confectionery News2013)

Source: Mintel Source: Times of India, 2012

Milk Chocolate

• Combination of atleast 10% chocolate liquor (not alcohol), cocoa butter, sugar and milk or creamat (12%min.)

Sweet Chocolate

• A combination of chocolate liquor, cocoa butter and sugar, but contains

at least 15% chocolate liquor.

Dark chocolate

• A combination of chocolate liquor, cocoa butter and sugar,

but contains at least 35% chocolate liquor.

Unsweetened Chocolate or Baking Chocolate

• This chocolate can be sold as unsweetened chocolate or baking chocolate or used to make other chocolate types.

White Chocolate

• Made from the same ingredients as milk chocolate but without the non fat cocoa solids. As per FDA 2001 it must contain at least 20% cocoa butter and 14% total milk ingredients.

Source: Hershey's, 2013

Source: Barry Callebaut, 2012

0.1 0.1

2

0.7

1

1.5

1.5 1.6

2.1

4.7 4.8 5

5.2 5.3 5

.5 5.6

Chocolate confectionary consumption perperson in kilograms

Source: Barry Callebaut, 2012

13-19 years29%

20-25 years23%

26-30 years19%

30-40 years29%

13-19 years 20-25 years 26-30 years 30-40 years

Source: Economic Times, Aug 2013

23

19

32

12

24

23

23

14

20

24

19 20

24

23

23

14

RELAXATION SHARING HUNGER REJUVENTAION

7

4

3

1

11

6

0

1

9

10

0

1

9

6

1 1

INDULGENCE CELEBRATION HEALTH ROMANCE

Any Snack Small Individual Chocolates Bar Chocolate Any Chocolate

Source: Mars Survey, Economic Times, 2013

Traditional Mithai

Consumer Preference

Chocolate

70% Urban Consumption 30% Rural

40 gm (2008)

India per capita consumption

(Economic times,2013)

120 gm

(2012)

IMPULSE SALES

Premium chocolates increasing due to growing preference for better quality chocolates. Consumption of premium chocolates by rural consumers also witnessed a sharp rise in 2012.(Euromonitor, 2013)

Interestingly, small pack sizes experienced a rapid increase in sales across rural areas and tier III cities owing to the affordability attached to it. In line with the preference for small pack sizes, volume sales of mini chocolates launched by Mars also started to emerge in 2012.(Euromonitor, 2013)

Source: Times of India, 9th Oct 2012

Domestic:

Factors affecting prices of chocolate:

• Cost of milk production grown by an annual pace of 14% in 2012 (Credit Suisse, Oct 2013)

• Rise in fodder prices by 23% as compared to last year in 2012 : (Credit Suisse, Oct 2013)

• Rural wage rate has risen by more than 15% (Credit Suisse, Oct 2013)

• Evidence of why importers are hesitant to come to Indian markets: 200 tons of imported chocolates are rotting in warehouses across airports & ports due to Indian regulatory issues of labelling norms (Economic Times, Nov 13)

International:

• India imports more than half of its

requirement of cocoa every year with

the demands increasing at 8% per

annum (Indian Express, 2012)

• Rise in global cocoa prices by 9.84%

in 2013 due to production shrink in

West Africa : (Livemint, 2013) is

going to hamper Indian chocolate

market in India.

Source: Economic Times Source: Livemint Source: Indian Express

Chocolate industry offers a wide variety of opportunities for the small business owner, even when economic recession is manageable and is growing despite increased health-consciousness and calorie counting consumers. (Franchisehelp, 2013)

Growth will be driven by population growth as well as expansion into new markets, product innovation and rising disposable income levels leading to greater purchasing of premium offerings. (Franchisehelp, 2013)

Chocolate and confectionery makers say adult consumption of chocolates and candies is growing at the fastest pace in India, and companies like Mondelez, Mars, Nestlé, Perfetti Van Melle, Parle and ITC are launching new products and brands that target the grown-up. (Times Infomedia, 2013)

Seasonal and boxed assorted chocolates have been experiencing the fastest growth, and sales are expected to expand 13% between 2010 and 2015(Franchisehelp,2013)

Product innovation in 2010 brought a 16% increase in new product releases over 2009(Franchisehelp,2013)

Maximizing the distribution

channels has enabled touch

points at almost every available

retail venue

Adaptation to different taste buds makes a

chocolate available for every palette

Increasing demand for

sugar-free and diet chocolates

among consumers

Rising income levels and rapid development in rural markets helps

chocolate companies penetrate into the

untapped rural sector

Source: Times of India, 9th Oct 2012

Bargaining Power of Buyers (High)

• Diverse offerings to choose from.

• Price sensitive consumers for low-priced chocolates, especially rural consumer base

• No brand loyalty.

• Chocolate retailers margin ranges between 10 to 20% depending on the price point at which the product is placed.

Bargaining Power of Suppliers (Moderate)

(Cocoa farmers & others)

• High Foreign dependence

• Domestic market suppliers short

• But the bargaining power of suppliers is moderate to high.

• Limited access to distribution channels for importers.

Potential Entrants (Moderate)

• Difference in products.

• Need for large capital requirements.

• Health-consciousness and calorie counting products.

• Product innovation can result in new entries.

• Caramel candies.

Threat of substitute products & services

(Moderate)

• Threat of substitutes such as soft drinks, snacks & beverages is moderate.

• Industry must also compete in retail arena with traditional mithai.

• Sugar candies are more readily available than chocolate.

Intensity of rivalry among competitors (High)

Few major players but with high influence Price wars.

Advertising battles High launches of product lines

High quality of customer service High variety of products offered

Source: Euromonitor

Cadbury56%

Mars16%

Nestle20%

Amul8%

Sales

Cadbury Mars Nestle Amul

Nestle India’s market share in chocolates dropped from 26.1% in 2008 to 23.6 % in 2012, Nielsen Co.In the same period, Cadbury owner Mondelez India’s market share fell from 70% to 64.5%. (Livemint,2013)

Mondelez Int. announced plans to invest Rs.1000 crore in Andhra Pradesh to establish the company's largest manufacturing plant in Asia Pacific. This investment in is part of their ongoing supply chain reinvention plan. (Business Today,2013)

Mars is exploring gujrat to set up new factories as it imports all the chocolate form US presently. (Business standard,2013)

Both Nestle and Mondelez lost market share to Mars International India Pvt. Ltd and Ferrero India, which are gaining ground in chocolate confectionery driven by new products, according to a March report by research firm Euromonitor.(Livemint, 2013)

Premium chocolate confectionery brands such as Ferrero Rochers, Mars and Tobelerone outperformed overall chocolate confectionery in terms of growth in 2011 and 2012, according to the Euromonitor report. (Livemint, 2013)

1. Wide consumer base across the globe.

2. It is a global chocolate brand built upon a reputation for fine products and services.

3. One of the Fortune Top 100 Companies to work for in 2005. (CNN Money)

4. Cadbury launched its Cocoa Partnership in 2008 - a ten-year, £45 million (US$ 73 million) investment in cocoa sustainability in Ghana, South-east Asia, India and the Caribbean.(Tradeforum,2010)

1. Strong presence in the United States of America, UK and India but they need to look for a portfolio of countries, in order to spread business risk.

2. Cadbury's recall over 1 million chocolate bars over salmonella (BBC UK,2007)

3. The company has no apprehensions of cannibalization of its chocolate brands.

CAD

BU

RY S

TREN

GH

TS

CAD

BU

RY W

EAKN

ESSES

: Source: Marketingprofs

1. Strong brand equity in the Indian market.

2. Strong support by its parent company which is listed under the Fortune 500 companies. (CNN Money,2013)

3. Invested Rs.280 crore- Global R&D centre and for India in Manesar.(Livemint,2013)

4. Mergers and acquisitions and joint ventures to increase market share. (Nestle M&A,2013)

5. Strong advertising.

1. Being a big global brand, numerous controversies in different countries of operation can cause issues.

2. Complex supply chain management.N

ESTL

ÉSTREN

GH

TS

NESTLÉ

WEAKN

ESSES

Source: UNC

1. High brand equity.

2. Products available at affordable price.

3. Successful advertising and marketing campaigns.

4. Strong network of Amul retail outlets, stalls and parlours.

1. Low market share in chocolates segment.

2. Strong competition from international markets. A

MU

L S

TREN

GTH

SAM

UL W

EAKN

ESS

Source: Business Standard, 2007

1. Top Products in the Mind of

Consumers.

2. Even after a late entry to the

Indian market it has a good market

share.

3. Mars products outsells chocolate

candy market internationally,which

implies their great potential.

4. Established image and advertising

presence for Mars products.

5. Volume sales of mini chocolates

launched by Mars started to emerge

in 2012. (Euromonitor,2013)

1. Promotions is weak.

2. M&M’s is the number one selling

candy in the chocolate market;

however this product steals most of

the promotion and advertising

money.

3. Milky Way has a low sales

percentage of Mars domestic market

share.

4. Because of constantly changing

campaigns, people are not aware of

Milky Way’s positioning in the

market.

MARS S

TREN

GH

TS

MARS W

EAKN

ESSES

Source: UNCSource: Euromonitor

With support of District Rural Development Agency

(DRDA) will provide interest free loans to its milk producers in Anand and Kheda districts to set

up ‘pucca’ toilet blocks.(Amul CSR,2013)

Amul extended its expertise in implementation of the

Swarnjayanti Gram Swarozgar Yojana (SGSY).

(Amul CSR,2013)

Blood donation Camps are organized in Amul Dairy

Campus. (Amul CSR,2013)

Contributed $ 3,012,457 in form of money and food

(Triplepundit, 2013)

Flagship Vision For Change Program to support cocoa

farmers

Supporting local schools

Blood donation camps and health awareness

programs in and around the factory locality(Nestle

CSR,2013)

Training farmers on animal health and welfare

Veterinary check ups (Nestle, official site 2013)

.

Joined hands with Akshaya Patra and distributed food

across India

(Cadbury CSR,2013)

SARVAM(Sri Aurobindo Rural Village Action

Movement) : a project to redevelop two villages in

the coastal regions of Puducherry

(Cadbury CSR,2013)

$ 4 million to non-profit organizations for humanity

development

(Cadbury CSR,2013)

Source: Nestle Source: Cadbury India Source: Triplepundit Source:Amuldairy

AMUL MARS NESTLE CADBURY

Wholesaler

Manufacturer

Wholesaler

Company OwnedOr Stockist

Retailers:Grocery/Kirana stores Gift shops Book shopsAirport shops, Railway Stations Bus StandsShopping Malls Chemist Super markets Speciality Shops Tobacco Kiosk

Market for confectionary products in India report, 2005

STRENGTHS Vs. WEAKNESSES

WEAKNESSES

Poor infrastructure, such as transportation, storage, and refrigeration facilities.

Manufacturers and importers rely heavily on the middle man for the distribution of confectionery products in India.

Most importers rely on distributors or wholesalers to reach retail outlets, confectionery manufacturers often rely on C&F agents or dealers to work with the wholesalers and distributors.

India’s retail sector is highly unorganized, as small independent stores are the main outlets for consumer purchases.

(Market for Confectionary Products in India Report, 2005)

STRENGTHS

Retail sector is changing and the organized sector is gaining ground with the emergence of supermarkets and hypermarkets in metropolitan India.

Once shipments are cleared by ports, it penetrates into the market very easily and reaches the consumers effortlessly.

Small retail shops have a presence almost everywhere which helps reaching the rural customers.

(Market for Confectionary Products in India Report, 2005)

Source: Nestle.com

Raw Materials

• Agricultural raw materials such as cocoa are sourced from suppliers into safe and value-added food products for consumers.

• High environmental standards have to be met by suppliers and cocoa farmers.

Manufacturing

• ‘Manufacturing’ encompasses all the processes that are necessary to transform perishable raw materials into safe, shelf-stable, value-added food products for consumers.

• Efficient technologies and applying best practices are used to improve environmental impacts.

Packaging

• Packaging is essential to reducing food waste by protecting products during transportation and storage.

• It is also vital for food safety, freshness and providing consumers with nutritional information and portion guidance at the point of purchase.

Transport & Distribution

• Products are delivered via a network of road, rail and sea to an increasingly urbanised population.

• On a daily basis, large consignments are transported to customers from factories and distribution centres, delivering the products in highest quality and on time from the factory to the consumer.

Promoting Sustainable Consumption

• The desire to create a more sustainable world requires understanding, collaboration and action at many levels by governments, companies, brands and consumers.

• This drive also comes from consumers themselves, who want to understand the environmental impacts of their choices.

Wastes & Recovery

• Waste has consequences beyond the loss of valuable products.

• If waste increase, then scarce resources such as water, energy and land generate additional costs for treatment.

• Reverse logistics.

Amul,CSR :

http://www.amuldairy.com/index.php/csr-initiatives/tribhuvandas-foundation

BBC UK:

http://www.news.bbc.co.uk/2/hi/uk_news/England/6900467.stm

Barry Callebaut:

http://www.barry-callebaut.com/cms/download.dhtml?url=/cms_files/N-9004-

enen_FileFile_35.pdf,filename=BC_Journal%202012_E_Chocolate%20consumption%20

and%20taste%20preferences.pdf&ei=BICfUtGnIoOTrgeDtYDgDg&usg=AFQjCNHgNe1fK

vFfDZeXAODwCPPDiMobzw&bvm=bv.57155469,d.ZGU

Business Standard:

http://www.business-standard.com/article/companies/amul-revamps-chocolate-strategy-

107091101125_1.html

Business Today: http://businesstoday.intoday.in/story/cadbury-india-plant-

investment/1/197592.html

Business Standard:

http://www.business-standard.com/article/companies/us-based-mars-eyes-gujarat-for-

chocolate-plant-113061801032_1.html#

Cadbury India: http://www.cadburyindia.com/in/en/about/pages/ourbusinessinindia.aspxCommodity Online: http://www.commodityonline.com/news/india-sweet-tooth-chocolates-the-new-festive-favourite-56742-3-56743.htmlConfectionery News:http://www.confectionerynews.com/Markets/Mondelez-chocolate-chief-pinpoints-markets-beyond-BRICCNN Money: http://www.money.cnn.com/search/index.htmlCNN Money:http://www.money.cnn.com/magazines/fortune/global500/2013/snapshots/6126.htmlEuromonitor: http://www.euromonitor.com/chocolate-confectionery-in-india/reportEconomic Times: http://articles.economictimes.indiatimes.com/2013-08-01/news/40963259_1_chocolate-consumption-chocolate-market-indian-consumersEconomic Times: http://articles.economictimes.indiatimes.com/2013-11-02/news/43611397_1_fssai-indian-food-new-labelling-norms

Franchise Help: http://www.franchisehelp.com/industry-reports/chocolate-industry-reportFood Confectionary: http://69.17.111.188/site/c4/w116/downloads/India.pdfIndian Express: http://www.indianexpress.com/news/indians-get-sweet-on-chocolates/972675/0ICCO: http://www.icco.org/about-cocoa/chocolate-industry.htmlIndia Infoline: http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Cadbury-India-Ltd/500793KPMG:http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Market%20Sector/Retail_and_Consumer_Goods/chocolate-of-tomorrow.pdf

Live Mint: http://www.livemint.com/Companies/xBxGxG5fHCAIDg8Brn0wyH/Nestle-expects-India-to-become-its-fourth-biggest-market-by.htmLive Mint: http://www.livemint.com/Industry/JAAQ4OuYXMmB4m7ZsHm2SI/Nestle-to-introduce-premium-chocolate-brands-in-India.html

Live Mint: http://www.livemint.com/Industry/dzZbXrsKi74yU2v6bHUMJK/Rising-global-cocoa-prices-to-hurt-Indian-chocolate-buyers.html

Make Chocolate Fair:

http://makechocolatefair.org/issues/cocoa-prices-and-income-farmers-0

Marketingprofs:

http://www.marketingprofs.com/ea/qst_question.asp?qstid=13692#ixzz2mX9SLrpJ

Mintel:

http://www.mintel.com/press-centre/food-and-drink/indias-craving-for-chocolate-unwraps-business-opportunities-for-manufacturers

Market Research:

http://www.marketresearch.com/Netscribes-India-Pvt-Ltd-v3676/Branded-Chocolate-India-6795080/

Nestle:

http://www.nestle.com/csv/environmental-sustainability/highlights-challenges

Nestle M&A:

http://www.nestle.com/investors/mergers-and-aquisitions

Pitch on Net: http://pitchonnet.com/blog/2012/11/08/chocolate-consumption-doubles-in-india-since-2008/

Times Infomedia: http://issuu.com/timesinfomedia/docs/beverages___food_august_issue

Times of India: http://articles.timesofindia.indiatimes.com/2012-10-09/india-business/34342337_1_chocolates-traditional-sweets-d-s-rawat

Trade Forum:

http://www.tradeforum.org/Cadbury-Goes-Fairtrade/

UNC:

http://www.unc.edu/~refisher/swot.html