Chocolate sales – Rising graph in India

The rise of consumerism in India has created certain interesting trends which were never seen. These trends and the reasons behind them are totally different and unique which a marketer would have never had expected. The one such trend is rise of demand for chocolate which has seen phenomenal rise in demand across the geographical & demographic segments from small to big towns & from young to old people.

While the marketers had to bring up innovative & creative ideas to sell them the solution lied in not creating a new event or generating any special occasion but in the traditional events and then linking it with the fundamental aspect of celebrating them. Brand management is one of key aspects since brand retention among customers is one the differentiating factor for any company to be successful which explains that only few multinational hold the maximum market share.

Bitter problem for Sweet Chocolate

                            
There are many challenges that are faced by these companies even the current players to maintain this demand because it is to be noted that not only in India is demand increasing but similar emerging economies also like China where it is even huge. But the problem here is not just about penetration and brand management it is also about availability of raw material. The main component of cocoa comes either from Ivory Coast and similar African countries or from Brazil but due to increasing demand especially from these emerging economies the production is not able to match up which basically is going to get the maths of basic economics in negative direction.

Cocoa Prices Trend Analysis

The effect of this is already visible in India because not only Indian industry has to deal with international woes the domestic situation is no less encouraging. The continuous high inflation which has pushed up the prices of raw material ranging from milk to dry fruits to even coffee beans which has a direct effect on the pricing of the chocolate. The pricing of chocolates be it any brand or from any company are exorbitantly high which has put a great limitation on the marketers to push further in the market for a healthy growth.

Although after seeing the sustainable demand now there are many farming committees have considered cocoa as a viable option which has led increase in production across the belt of Andhra Pradesh & Kerala which has been adopted well. Interestingly, the pricing of chocolate bars has been not in sync with the popular demand but still the sales are going up and there are many encouraging statistics which are a proof of it even though import of cocoa is a price dampener. The rise of demand in China for cocoa at outrageous level has led to global demand- supply imbalance & it also significantly affect Indian companies as well.

Great Indian Chocolate Affairs

The share of few brands is much higher as compared to other brands and is skewed in favor of multinationals and not a single domestic player has been able to make its mark pan India including Amul.

Many reports & media agencies have analysed that Cadbury & Nestle hold the maximum share in Indian market more than 80% followed by various brands. Following is analysis by Wall Street Journal

Market Share of Various Brands

The rise in chocolate sales is being attributed to strong brand management where the marketers were able to associate chocolate with celebrations like sweets. The emotional aspect of relationship & the bonding that are developed are being celebrated with chocolate and being significantly replaced by sweets. Here is the catch that marketers understood wherein they were successful in portraying that any relationship can be valued and shown by use of chocolates especially during any festival. Be it Rakhi or Diwali or any other festival and similarly be it a relationship of sibling’s or friends and so on it can be celebrated using chocolates.

The dynamics of chocolate industry which is basically most relished product of all times faced with crisis which it needs to address in a scientific manner so that it does not lead to a situation where the production of cocoa collapses & along with it the entire industry.

In the domestic front the lack of reforms or rather the policy paralysis has created a situation of stagflation which sees no light at the end of tunnel.

Therefore companies will have to grapple with twin challenges of high input & investment cost along with creation of strong brands which would help in customer retention significantly.

 The new companies would find it difficult as far as market entry strategies are concerned but once established it is further rewarded with high consumption pattern. Although the future looks bright in terms of economics but one factor –supply of raw material is a big worry