10-08-2012, 01:06 PM
A Comparative study of Chocolate Market in India
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THE CHOCOLATE INDUSTRY IN INDIA
The chocolate industry in India has a size of 20000 tones and is worth about Rs 400 crores. The chocolate market has been growing by nearly 35 %. However there has been some slowdown in the last two years.
The chocolate market is predominantly urban with coverage of 95 %. The sales volume has decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tones to the current level of 125000 tones
Chocolate consumption in India is extremely low. Per capita consumption is around 160gms in the urban areas, compared to 8-10kg in the developed countries. In 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 90's when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base. Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings, which are affordable to the masses.
Cadbury, a subsidiary of Cadbury Schweppes is a dominating player in the Indian chocolate market with strong brands like Dairy Milk, Five Star, Perk, and Gems etc. Dairy milk is the largest chocolate brand in India. Chocolates & Confectionery contribute to 75% of Cadbury’s turnover. Cadbury also has a strong brand Bourn vita in the malted health drink category, which accounts for 24% of turnover. The parent Cadbury Schweppes during 2001 made an open offer for acquiring the 49% non-promoter holding in the company. It has already acquired over 90% of the equity and proposes to buy back the balance equity and delist the stock from Indian bourses.
THE FLIGHT WHICH FAILED TO TAKE OFF
Gujarat cooperative milk marketing federation limited (Amul)
Amul is the third player in the chocolate market in India. The brand doesn’t have any international lineage and is miniscule in terms of market share in chocolates and compared to the two other players Cadburys and nestle.
Amul had an extremely focused positioning of a gift for someone you love albeit not target to a single group however Amul failed to capitalize on it seemingly due to the following reasons.
a. Chocolates have never been Amul’s main products and hence there was lack of organizational commitment. The company has never really supported or pushed its chocolates. This reflects on the drastic cutback on advertisement expenditure for its chocolates which has negatively affected its top of the mind awareness level
b. The company has enjoyed a high customer equity and pulls in butter and so it offered a very low retailer margin of 3.1 % as against the industry average of around 7-8 % Amul tried the same technique in chocolates too. However since it was neither leader nor enjoyed a customer pull like in butter the company got very little support for its chocolates
c. Amul chocolates have shown a very limited product differentiation and have not really given any important additional benefit to the consumers. The product line also suffered
d. in comparison to the portfolios of the competitor Cadbury and nestles. Its only strength was its low price