Premium chocolates to drive confectionery growth
Mar 31 2011 , Hyderabad
The Indian confectionery market was ranked 25th globally in value terms in 2009. It grew at a compounded annual rate of 10.5 per cent during 2004–09, placing it among the fastest growing confectionery markets. By 2014, it is expected that India would be in the 19th position, the report said.
“Higher disposable income and the resultant higher purchasing power will be instrumental in the rising value and volume growth of the confectionery market in India,” said Gaurav Marchanda, author of the latest report, Market Insights: Confectionery in India, released by the company.
“With the premiumisation trend on the rise, categories like chocolates and cereal bars are expected to gain sales, while the market is set to grow at an even faster rate of over 12 per cent during 2009–14,” said Marchanda.
But there could be obstacles inhibiting growth. “Added strains on household budgets due to high food inflation in India will indirectly place pressure on the confectionery market, as discretionary spending on comfort food items diminishes,” said Marchanda.
The price of main ingredients like sugar and cocoa beans is on the rise, which is likely to exert pressure on the profit margins of manufacturers. “Higher sugar prices directly impact input costs of low-value sugar confectionery products, which in India tend to have lower price elasticity,” he said. On the other hand, health consciousness is a trend that has certainly caught the attention of manufacturers. “New product launches are increasingly moving toward a healthier positioning. The health consciousness trend significantly impacts sales of cereal bars,” the report pointed out.
As a result, cereal bars are currently the fastest growing category in the confectionery market. “Such products have a longer shelf-life than traditional sweets, and are also accompanied by well-targeted marketing campaigns and product positioning. This is leading to a shift from gifting dried fruits and sweets to chocolates,” the report said. The confectionery market is highly consolidated, with the top five manufacturers accounting for a major share.