INSUBCONTINENT EXCLUSIVE:
Mondelez's Cadbury Silk bars.Priced between Rs 70 and Rs 170, they seemed out of reach for customers used to paying only Rs 5 for the tiny
chocolates he has sold for years
But he took a chance and now rings up to Rs 3,500 ($50) in Silk bar sales a month."Villagers can afford premium chocolates now," he said.As
Satish and other Harohalli shopkeepers have found chocolate sales in India are taking off, helped by growth in disposable incomes that
extends to the country's 650,000 poorer villages where more than two-thirds of the population reside.A boom in e-commerce and a sharp tax
cut are also propelling sales higher, spurring global confectioners like Mondelez International Inc, Nestle SA and relative newcomer Hershey
Co to invest further in the still small but rapidly expanding market.Illinois-based Mondelez, the country's No.1 chocolate maker, told
news agency Reuters "the big bulk" of a $150 million increase in global investment this year - the first hike in five years - will be in
rural India.The company, which first started providing Indian store owners with free display coolers in early 2000s, ramped up their
distribution to rural areas over the last year
It now plans to be in about 75,000-100,000 villages in the next three years, up from 50,000 in 2018.To that end, it is also expanding its
fleet of refrigerated trucks and building a database that maps the country's small neighborhood stores and monitors sales of its products
at those shops."There's a misconception that rural consumers are poor
There are rich farmers, who are coming into the consuming class," Deepak Iyer, Mondelez's managing director for India, told Reuters.Mr
Iyer said Mondelez was targeting villages with as few as 3,000 people
"There are families aspiring for premium products because they see them through mobile connectivity today."New products, more
marketingMondelez CEO Dirk Van de Put said competitors will find it hard to match the firm's scale in the country.Cadbury's vast,
decades-old distribution network in the country was a key attraction for Kraft Food in its $19.6 billion takeover of the brand in 2010
Kraft later split into two firms with its global snacks business renamed Mondelez."It's not going to be easy (for rivals) to carve out
space, to be really be noticed in the store," he said an interview, adding that Mondelez has consistently grown market share in the country
for several years.Mondelez says it now commands 66 per cent of the country's chocolate market
Cadbury, a 195-year old British confectionery brand, entered India in 1948, and its Dairy Milk, Silk and 5Star products have since made it a
The Dairy Milk brand alone accounts for 40 per cent of the market.Nestle is ranked No
2, followed by Ferrero and Hershey, according to Euromonitor
The companies have not disclosed market share estimates.At $1.9 billion in annual sales, India has plenty of room to grow
China, also a developing economy with a similar population size, is a $3.2 billion market but both pale in comparison to the US market of
$19.2 billion, Euromonitor data shows.Last year, chocolate sales in the country jumped 15.4 per cent after the government, keen to win
re-election, overhauled its national sales tax for many items
The cut in tax to 18 per cent from 28 per cent reduced chocolate retail prices and companies nearly tripled the amount they spent on
promotions, according to market research firm Nielsen.Mondelez says its Cadbury brand, which has worked for decades with WPP's Ogilvy
India on Bollywood star-studded TV ads, is spending more on marketing
And to tap online demand, the company has created a Cadbury-only store on Amazon.com that personalizes gift boxes for the country's
year-round festivals.It is also introducing new products
Last month, it launched a low-sugar Dairy Milk bar, addressing a growing market for healthier products in the country where 9 per cent of
adults have diabetes.Kisses impactNestle, the world's biggest packaged foods company, has also been investing in counter-top coolers,
expanding distribution, running celebrity ads and launching premium products
Last year, it began importing its "hand-crafted artisanal" Les Recettes De L'Atelier bars from Europe.Hershey is doing its best to catch
up.It entered India's chocolate market in 2016 with its lesser known Brookside brand and announced plans the next year to spend $50
million in five years.Rapid growth has come with the introduction of its 112-year-old Kisses brand last autumn, helping it replace Mars as
4 chocolate company, although its products are only available in 14 cities and major online stores like Amazon.com, BigBasket.com and
Flipkart.com."We're at an early stagewe will extend this by going national and subsequently we'll look at going down from urban to rural,"
Herjit Bhalla, Hershey India's managing director, told Reuters.The unit had spent more than expected over the past year, funding celebrity
ad campaigns and technology including hand-held devices that analyze store preferences, Mr Bhalla said.India's e-commerce market is a
priority, he added, with online orders accounting for over 4 per cent of sales, higher than the 1 per cent seen for the country's overall
consumer goods market.($1 = Rs 68.8500)Get Breaking news, live coverage, and Latest News from India and around the world on
TheIndianSubcontinent.com
Catch all the Live TV action on TheIndianSubcontinent 24x7 and TheIndianSubcontinent India
Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.
