Mondelez India, the country’s biggest confectionery maker, said there has been a strong volume growth in chocolate sales, bucking the slowdown trend in the overall market and indicating consumers could be turning to comfort food in a time of stress and inflation.”We see a lot of growth being fired by double-digit volume, which is quite an exception given the kind of muted volume growth in the industry,” said Deepak Iyer, president at Mondelez India, which controls over two-thirds of the chocolates market.
“In case of severe lockdown, the one that will get rid of first is discretionary. But if you are talking about sad times, it’s a great comforting food. So I don’t think it is more recession or non-recession led. A lot of it is about how the business has been impacted, the reasons behind it and how chocolate or biscuits solve for it.”The maker of Oreo and Bournvita attribute its sales surge to newer innovations across categories and distribution expansion especially in the hinterland, where historically they had a smaller presence.
As a result, rural now accounts for over a fifth of its overall sales, nearly double compared to 10- 12% five years ago. With per capita consumption of chocolate around 140 grams per year in India while in the UK, it is over 10 kilos per year, the headroom is huge, said the company.”It is super important for us to stay focused on consumption and consumption means volume. And we always look at three levers to pull levers to press. One is relevance of the brand. Second is the availability of the brand and third is the affordability of the brand,” said Iyer.
According to NielsenIQ, rural markets recorded a higher sequential volume decline in July-September quarter at 3.6% against a 2.4% fall in the previous quarter. Since the past one year, the overall market has been impacted as companies try to offset rising raw material prices by increasing price-tags. While prices of palm and crude oil have tapered offtheir yearly highs, Mondelez said input costs in food are still a challenge although it held on to its affordable Rs 5 and Rs 10 price points, which in turn, boosted category growth.”We don’t think we are past the inflation super cycle.
We are still in the midst of it. Some of our ingredients like dairy and milk are getting more expensive. So our outlook is cautious optimism,” added Iyer.India accounts for about $1.2 billion of revenue for Mondelēz and the market share of flagship brand Cadbury Dairy Milk in the country is the highest for the parent company globally. In fact, MondelezInternational in July said theycould be selling much more in India if they had the capacity and have sinceadded new production lines to cater to the growing demand.
According to Tofler, Mondelez posted a 16% jump in sales at Rs 9,296 crore during FY22, while net profit fell 2% to Rs 978 crore. While chocolates are synonymous with Cadbury in India, the company said it wants to be as nacking company instead of just being known as a chocolate maker. They claimed to be the third largest snacking player in the country, and Cadbury asa master brand could cross a billion dollars in sales this year.
Source : The Economic Times 06th Dec 2022