An Analytical Study of Chocolate Industry
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“An Analytical Study of Chocolate Industry in India with Special Reference to Cadbury’s
India” is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA, which
enlightens us about the size & status of chocolate industry in India. The project gives information
about the competitors, their market share, and their product basket and highlights success features.
The project also presents data on types & categories of chocolates, a brief study of chocolate
The project also covers a brief study of Cadbury’s India Limited – the biggest player in the
Indian Chocolate Industry with reference to its presence, market share, product offerings, marketing
strategies, strengths & weaknesses, success factors and Worm Controversy Management. Also, the
implication of pricing, distribution strategies and impact of external environment has been recorded.
The project throws light on problems and challenges of the Indian Chocolate Industry, growth
opportunities and strategies to be adopted for growth in this industry.
Finally, the project gives information about home-made chocolates and Chocolate Boutiques
and the ways in which Indian consumers and Chocolate players are experimenting and innovating
chocolates and giving the Indian Chocolate Industry a new sweetness.
Table of contents
Sr. No Topic Page
1 Project Objective 6
2 An Overview of Chocolate Industry in India 8
3 Types of Chocolates 12
4 Categories of Chocolates & Form of Consumption 14
5 Chocolate Manufacturing Process 15
6 Market Size (by value & by volume) 16
7 Major Players & their Market Share 17
8 Cadbury’s India Limited – A Study 18
9 Cadbury & The Worm Controversy 37
10 MARKETING - PROMOTION of CHOCOLATES in INDIA 46
11 Nestle India 50
12 Amul (GCMMF) 53
13 CAMPCO 59
14 Home-made Chocolates 62
15 Interesting Chocolate Facts 63
16 Problems & Challenges in Indian Chocolate Industry 64
17 External Factors affecting Growth of Chocolate Industry in INDIA 66
18 Growth Opportunities in Indian Chocolate Industry 67
19 Strategies for Growth & Success in India 69
20 Chocolate Boutiques & Designer Chocolates 70
21 Conclusion 72
22 Bibliography 73
This project aims at understanding the overall Chocolate Industry in India, the product
portfolios of different players in the market, various factors affecting the growth and success of
chocolate industry in India, the challenges and opportunities which the market offers and the
changing trends in the Indian Chocolate Industry. The project also covers a brief study of Cadbury’s
India with reference to above points.
An Overview of Chocolate Industry in India
The chocolate industry in India as it stands today is dominated by two companies, both
multinationals. The market leader is Cadbury with a lion's share of 70 percent. The company's
brands (Five Star, Gems, Eclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s,
Cadbury had a market share of over 80 percent, but its party was spoiled when Nestle appeared on
the scene. The latter has introduced its international brands in the country (Kit Kat, Lions), and now
commands approximately 15 percent market share. The Gujarat Co-operative Milk Marketing
Federation (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 get
keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian
Per Capita Chocolate Consumption (in lb) of first 15 countries of the world
Rank Countries Per Capita
Consumption (in lb)
1 Switzerland 22.36
2 Austria 20.13
3 Ireland 19.47
4 Germany 18.04
5 Norway 17.93
6 Denmark 17.66
7 United Kingdom 17.49
8 Belgium 13.16
9 Australia 12.99
10 Sweden 12.90
11 United States 11.64
12 France 11.38
13 Netherlands 10.56
14 Finland 10.45
15 Italy 6.13
INDIA, stands nowhere even near to these countries when compared in terms of Per Capita
Chocolate Consumption. The Indian chocolate industry is extremely fragmented with a range of
products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops, toffees and
Given India's mammoth population, it comes as a surprise that per capita chocolate consumption in
the country is dismally low - a mere 20 gms per Indian. Compare this to over 7 kgs in most
However, Indians swallowed 22,000 tonnes of chocolate last year and consumption is growing
at 10-12 percent annually.
The market size of chocolates was estimated to be around 16,000 tonnes, valued around Rs.
4.16 billion in 1998. Volume growth which was over 20% pa in the 3 years preceding 1998, slowed
Both chocolate and sugar confectioneries have abysmally low penetration levels, in fact, even
lower than biscuits, which reach 56 per cent of the households. Market growth in the chocolate
segment has hovered between 10 to 20%. In the last five years, the category has grown by 14-15%
on an average and will expect it to continue growing at a similar rate in the next five years.
The market presently has close to 60mn consumers and they are mainly located in the
urban areas. Growth will mainly come through an increase in penetration as income levels improve.
However, almost all of this consumption is in the cities, and rural India is nearly
‘chocolate-free’. But the fact is that three quarters of Indians live in Rural Areas. “Average
summertime temperatures reach 43 degrees Celsius in India. Chocolate melts at body temperature of
Per capita consumption of chocolates in India is minuscule at 20gms in India as compared
to around 5-8 kgs and 8-10 kgs respectively in most European countries. ... Awareness about
chocolates is very high in urban areas at over 95%. ...
Growth of other lifestyle foods such as malted beverages and milk food have actually
declined by 3.7 per cent and 11.7 per cent, however the CHOCOLATES continue to grow at
the rate of 12.6%.
Low priced unit packs, increased distribution reach and new product launches can be
said to have fuelled this growth.
The launch of lower-priced, smaller bars of chocolate in the last two years and
positioning of chocolate as a substitute to traditional sweets during festivals, have boosted
consumption. This is also because chocolate, which was considered to be an elitist food, has caught
the fancy of buyers looking for a lifestyle item at affordable cost.
Till recently, chocolate consumption had been restricted by low purchasing power in the
market. Chocolates and other cocoa-based snack foods were looked upon as food suitable only for
After economic liberalization in 1991, major changes have occurred in food habits, partly on
account of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of
the middle-class representing a third of the total population. Availability of chocolate products has
A study had projected that sales of the Indian chocolate industry would rise from $125/$130
million in 1998 to $175/$180 million by the year 2000 and to $450 million by the year 2005 which
ACTUALLY happened irrespective of various negative factors.
Per capita chocolate consumption continues to be low at about 200g per person, being
mainly consumed in urban areas. In the middle and higher income groups, 70 per cent of children, 43
per cent of young adults and 16 per cent of adults consume chocolate.
Chocolate Consumption Structure - 2004
Form of Consumption
a. Pure Chocolates
c. Cakes & Pastries
d. Malted Beverages
e. Wafer Biscuits & Baked Biscuits
f. Chocolate Desserts
Chocolate Manufacturing Process
Workers cut the fruit of the cacao tree, or pods open and scoop out the beans. These beans are
allowed to ferment and then dry. Then they are cleaned, roasted and hulled. Once the shells have
been removed they are called nibs. Nibs are blended much like coffee beans, to produce different
colors and flavors. Then they are ground up and the cocoa butter is released. The heat from the
grinding process causes this mixture of cocoa butter and finely ground nibs to melt and form a freeflowing
substance known as chocolate liquor. From there, different varieties of chocolate are
What is conching?
Raw unprocessed chocolate is gritty, grainy and really not suitable for eating. Swiss
chocolate manufacturer Rudolph Lindt discovered a process of rolling and kneading chocolate that
gives it the smoother and richer quality that eating chocolate is known for today. The name
'conching' comes from the shell-like shape of the rollers used. The longer chocolate is conched, the
more luxurious it will feel on your tongue.
Market Size (by value & by volume)
The Indian chocolate market is valued at Rs. 650 crores (i.e. Rs. 6.50 billion) a year. The
Indian chocolate bazaar is estimated to be in the region of 22,000-24,000 tonnes per annum, and is
valued in excess of US$ 80 million.
Chocolate penetration in the country is a little over 4 percent, with India's metros proving to
be the big draw clocking penetration in excess of 15 percent. Next, comes the relatively smaller
cities/towns where consumption lags at about 8 percent. Chocolates are a luxury in the rural segment,
which explains the mere 2 percent penetration in villages.
The market presently has close to 60mn consumers and they are mainly located in the urban
Major Players & their Market Share
The major players in the Indian Chocolate Industry are:
1. Cadbury’s India Limited
2. Nestle India
3. The Gujarat Co-operative Milk Marketing Federation (GCMMF) – AMUL
4. Cocoa Manufactures and Processors Co-operative (CAMPCO)
Lines Wafer Panned Premium
Cadbury’s Dairy Milk &
Treat Perk Gems,
Nestle Milky Bar Bar One,
Fruit ‘n’ Nut
Campco Campco Bar,
Cadbury’s India Limited – A Study
Cadbury is a very old trusted name. It all started in Birmingham in England when John
Cadbury started his family grocery shop with side business of cocoa and chocolate products in
around 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 their
Cadbury family is also known for their contribution in social reforms and considered as liberals.
This family was in the forefront of adult education movement in England.
CADBURY’S INDIA LIMITED
Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes
Overseas Ltd (CSOL) in 1948. The company’s original name was Cadbury Fry (India) Ltd. In 1978,
CSOL diluted its equity stake to 40% to comply with FERA guidelines. In 1982, the name was
changed to Hindustan Cocoa Products. CSOL’s shareholding was increased to 51% in Jan ’83
through a preferential rights issue of Rs700mm. The current name was restored in Dec ’89. In 2001,
Cadbury Schweppes made an open offer to acquire the 49% public holding in the company. The
parent holds over 90% of the equity capital after the first open offer. A second open offer has been
made to buyback the balance shareholding, after which the company would operate as a 100%
subsidiary of Cadbury Schweppes Plc
Ever since the Cadbury is in India in 1947, Cadbury chocolates have ruled the hearts of
Indians with their fabulous taste. The company today employs nearly 2000 people across India.
Its one of the oldest and strongest players in the Indian confectionary industry with an
estimated 68 per cent value share and 62 per cent volume share of the total chocolate market. It has
exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24 per cent
throughout the 1990’s. Cadbury is known for its exceptional capabilities in product innovation,
distribution and marketing.
With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations, Bytes, Chocki,
Delite and Temptations, there is a Cadbury offering to suit all occasions and moods.
Today, the company reaches millions of loyal customers through a distribution network
of 5.5 lakhs outlets across the country and this number is increasing everyday.
OBJECTIVES AND VALUES
Our objective is to
Grow shareholder value…over the long term
Cadbury in every pocket
Our marketing strategy is aimed at achieving this vision by growing the market, by appropriate
pricing strategy that will create a mass market and to have offerings in every category to widen the
Our Managing For Value Process incorporates
Setting stretched financial objectives.
Adopting Value Based Management for major strategic and operational decisions and business
Creating an outstanding leadership capability within our management.
Sharpening our company culture to reflect accountability, aggressiveness and adaptability.
Aligning our management rewards structure with the interests of our shareowners.
Life Full Of Cadbury
Cadbury is an organisation which impacts and interacts with the consumers.
Cadbury is present in most happy occasions in the life of our consumer.
Our brands excite our consumer.
Cadbury is an expression of a consumer's life.
Cadbury Full Of Life
Cadbury as a company is vibrant.
Cadbury ia a fun and energising workplace.
Cadbury is robust and alive.
Cadbury dominates the Indian chocolate market with above 65 – 70 % market share. Besides, it has a
4% market share in the organized sugar confectionery market and a 15% market share in milk/
malted foods segment.
Changing product mix
Contribution to turnover
Contribution to turnover
Chocolate 59% 65%
Sugar Confectionery 9% 10%
Food Drinks 32% 24%
Chocolate Bars , Count lines , Panned confectionery ,
Wafer chocolates, Assorted Chocolates & Gift Chocolates
Sugar Confectionery Googly , Mocka, Gollum, Frutus & Nice Cream
Food Drinks Bournvita, Delite & Drinking Chocolate
Cadbury's Indian operations are not just the largest in Asia but also the cheapest. In India,
Cadbury has the largest market share anywhere in the world and has been the fastest growing
FMCG Company in the last three years with a compound annual growth rate of 12.5 per cent.
Cadbury’s manufacturing operations started in Mumbai in 1946, which was subsequently
transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view to promote
modern methods as well as improve milk yield. In 1981-82, a new chocolate manufacturing unit was
set up at the same location in Talegaon. The company, way back in 1964, pioneered cocoa farming in
India to reduce dependence on imported cocoa beans. The parent company provided cocoa seeds and
clonal 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 milk
by setting up a subsidiary Induri Farms Ltd near Pune. In 1989, the company set up a new plant at
Malanpur, MP, to derive benefits available to the backward area. In 1995, Cadbury expanded
Malanpur plant in a major way. The Malanpur plant has modernized facilities for Gems, Eclairs,
Perk etc. Cadbury also operates third party operations at Phalton, Warana and Nashik in
These factories churn out close to 8,000 tonnes of chocolate annually.
Raw Material Composition in 2004
Product Name Quantity
(Rs) / Ut
Milk Powder / Liquid Milk / Cream 26232610 15.79 414212911.9
Dry Fruits 432340 162.6 70298484
Edible Oil 2167450 51.72 112100514
Glucose-Liquid 27061090 13.17 356394555.3
Cocoa Beans / Butter/ Powder 8478460 109.95 932206677
Malt Extract 8679690 20.39 176978879.1
Cadbury's India Limited
Raw Material Composition in 2004
FINISHED PRODUCTS DETAILS (as on 2004)
Product Name Stock
Chocolates / Coated Wafer & Confectionery 58.57 23810373 22064912 518.51
Malt Foods (Jar/Refill/Tin) 22.02 3206253 3030579 194.97
Excise duty 13.69 - - 121.23
Confectionery- Hard Boiled 4.04 4425758 4023276 35.79
Cocoa powder (Tin/Bags) 1.67 33312 29904 14.78
Total 99.99 31475696 29148671 885.28
Cadbury's India Limited
Finished Products - Sales Revenue - 2004
(in Rs. Crores)
Cadbury’s India Limited
Sales in Rs. Million
Years 1998 1999 2000 2001
Sales 3354 3892 4324 4716
98 99 00 01