Premium chocolates to drive confectionery growth

Premium chocolates and health cereal bars are set to make post-dinner convers­ations more enjo­ya­ble. A gr­owing propensity to co­nsu­me these items will act as a growth driver for the Indian confectionery market, says a report by consumer market analyst Datamonitor.

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.

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