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Premium chocolates take off in India

August 30, 2010 10:30 IST

ChocolatesHigher disposable incomes and a taste for richer chocolates are ensuring a steady growth of the premium chocolate market in India.

At 10 per cent of the overall Rs 2,000-crore (Rs 20-billion) chocolate market, the premium segment is small.

Yet, it is growing at a steady 30-40 per cent per annum, according to industry estimates.

Premium refers to those products whose average price is Rs 100 and above.

Quite a few chocolates fall in this segment, including brands such as Lindt, Ferrero, Godiva, Mars, etc.

Mostly imported and distributed in the country, some of them such as Ferrero are going a step further, by setting up local manufacturing facilities.

Ferrero recently announced it was setting up its second manufacturing plant in the country through its wholly-owned subsidiary, Imsofer Manufacturing.

The unit would be located in Maharashtra, near its first one, which is near Pune.    

"I am not surprised with the interest that premium chocolate makers are showing for a market like India," says Shradha Nichani, business head, Lindt chocolates, Narang Group.

"There is a segment out there, mostly in the urban areas, which is aware and conscious of premium chocolate brands. These discerning consumers want these chocolates and are willing to pay the price for it."

A 100 gm bar of Lindt, for instance, costs anywhere between Rs 195 and Rs 255. It will soon introduce smaller packs of 38 gm. This will be priced between Rs 90 and Rs 120, says Nichani.

Lindt is not the only one doing this.

When leading chocolate maker Cadbury's launched a rich chocolate variant of its Cadbury Dairy Milk called Silk earlier this year, it did so at Rs 99 for a 169 gm pack.

The 69 gm pack sells for Rs 49. Cadbury's dark chocolate, Bournville, is competitively priced at a little over Rs 70 for an 80 gm pack.

As a Cadbury executive explains, "India's per capita (yearly) consumption of chocolates is just about 53-54 gm in comparison to the US' 10.5 kg and UK's 10 kg.

"So, even as you have discerning consumers willing to pay the price, at some stage you have to look at how many more consumers you can get into the fold. Your pricing strategy depends on that."

Festivals, say industry experts, are an occasion when sales of premium chocolates are seeing a spurt, mainly because of their ability to be fine gifting options. Nichani agrees as much.

"We have a number of seasonal offerings, which we find are lapped up easily by consumers during festivals such as Diwali, Christmas and Easter. We also have assortments for occasions such as Valentine's Day, which have done well for us," she says.

Ferrero has its gift boxes, competitively priced at Rs 290 for a pack of five to over Rs 1,000 for a large 24-piece pack. According to industry sources, price points of Ferrero could fall further after its second manufacturing facility takes off in the middle of next year.

Clearly, premium chocolate makers are keen to initiate more consumers into the habit of having their products.

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