Chocolate Industry India: The Rise of Dark Chocolates

With this piece, we take a look at the Chocolate Industry India. The industry has been growing over the past few years and is still to realize its full potential in India. We take a look at the market size, growth drivers, the bummers, consumer trends, and finally, the rise of the dark chocolate in India. Hold on tight, lock your chocolate boxes if you’re on a diet and let’s just jump right in the post.

Chocolate Industry India: Market Size

The average chocolate consumption per capita in India is 100g to 200g per person. This is in stark contrast to Japan, Asia’s biggest chocolate consumer, at 2kg per person! And way out of line when compared to Europe, where the consumption is between 5kg to 9kg per person!

Although small, India is one of the fastest-growing markets for the impulsive and indulgent industry as chocolate confectionery with plenty of room for growth. The overall chocolate market currently pegged at approximately US$ 1,682 Million (2019) and slated to grow at 16% CAGR, the category is well-placed to sweeten the bitter after-taste of the slowdown.

Within the overall chocolate category, the share of premium and super-premium combined is a mere 11%. Talking about the spending, while the mass chocolate brands were at 15% of spends, premium brands comprised 43% of spends and the super-premium segment constituted over 40% of spends. The Pareto principle at play.

The total value of the Indian chocolate market is estimated to reach $3.3 billion by 2023.

A report by Mintel (2019) also emphasized the popularity of chocolates in India:
● Almost 3/5 (58%) Indians have consumed chocolate in the past 3 months
● 1/5 (21%) said they eat chocolate daily
● 3/5 (61%) said they are frequent users

Take a look at the image by the Economic times.

Growth drivers:
  • The per-capita income of the Indian population has increased, thus increasing the disposable income in their hands
  • Chocolates have become a part of casual snacking, unlike earlier when they were consumed just for special occasions
  • The growing population of the younger generation is a major driving force behind the chocolate industries rapid growth
  • Westernization and change in lifestyle also aid in the growth of the industry
Challenges faced:
  • Inflationary pressure on prices of cocoa
  • Continuous demand for product innovations
  • Unexpected aberrations in rainfall have made cocoa more dependent on drip irrigation and more susceptible to waterlogging, in Kerala and Tamil Nadu. Warmer maximum temperatures have reduced the area suitable for cocoa cultivation, in the plains of Tamil Nadu.
Consumer Trends:
  • People travel abroad and bring chocolates back, which is helping in changing the perception of chocolate in the country
  • A growing trend in premium as well as dark chocolate as people pay more attention to health and sugar reduction now. The demand for organic, vegan, sugar-free, and gluten-free in chocolates is growing. From July 2016 to June 2019, more than 3% of chocolate confectionery launches carried a no-added-sugar claim in India (Mintel 2019)
  • India is still a relatively price-sensitive market. While Indian consumers love chocolate, they have become pickier. This means they are more willing to pay more for better quality chocolate
  • There is also a growing trend in gifting chocolate in India
  • Consumers have started consuming chocolate for emotional reasons, such as to boost their mood or to reward themselves, as well as for functional benefits like to boost energy levels
  • Consumers have started moving towards smaller packs and bite-sized portions are gaining popularity in India which hints at increasing health-consciousness among Indian consumers who are trying to control portion size. Between time period August’17-July’18 and August’18-July’19, the percentage of individually wrapped chocolate launches doubled, increasing by 50.4% (Mintel 2019)
Dark Chocolate in Indian Market: The Rise

Though India is still predominately a milk chocolate market, the India Chocolate Market is showing a growing appetite for premium chocolate. It accounts for 9% of the total chocolate category in India. What’s more, the availability of dark chocolate brands such as Hershey’s, Lindt, Amul, Cadbury and Toblerone among others has led to the increased market penetration for dark chocolates.

The low sugar content in the dark chocolates is another reason for propelling the demand for dark chocolates, as consumers have become aware of high sugar intake and its link with chronic diseases like diabetes.

The pervasive health and wellness trends continue to influence the dark chocolate market in India. Manufacturers are now incorporating organic ingredients and natural sweeteners to make this category an attractive alternative of heavy sugar milk-based chocolates. Not to say that Milk-based Chocolates have not tried to enter this “Healthy chocolate space”. In fact, Cadbury earlier this year released their Cadbury Dairy Milk 30% less sugar, but unfortunately, A lot of consumers did not like the taste of the product. But we believe that the work is underway to come back with a stronger taste quotient.

Over the past few years, the demand for dried fruits, as well as blueberries and cranberries have witnessed steady growth. The ingredients are important for the manufacturers of a few of the most well-known dark chocolate brands in the country.

Related: Take a look at the Organic skincare industry in India

The health benefits associated with dark chocolate are high. Surprising? Yeah. Owing to the high percentage of cocoa present in it. It is known to reduce Blood pressure and lower the risk of a heart attack. Which is why the consumers are ready to pay a little premium for high-quality products. Leading to the growing penetration and consumption.

Realizing the value in going premium, home-grown brands like Amul had launched its Bitter chocolate in the ‘80s. Around 2010, the company recalibrated its focus on the back of an increasing acceptance of dark chocolates with higher cocoa ratio and launched its offerings in dark chocolate with many cocoa variants as well as new flavours like Sugar-free, Mystic Mocha, Green-T, and the now-popular single-origin chocolates range with cocoa originating from Venezuela, Peru, Tanzania, etc. By volumes, Amul claims to be the number one player in the dark chocolate category in India, according to R S Sodhi, managing director, GCMMF Ltd (Amul).

Related: Take a look at the story of Amul during the lockdown: how it clocked an unnatural growth
Competitive Landscape:

The market studied is highly fragmented.

Startups are yet to make a name for themselves in the category. The big and the old players remained in control of chocolate confectionery sales by the end of 2019.

Mondelez, Nestlé, Ferrero, Mars, Hershey, and Lindt & Sprüngli combined accounted for three-quarters of category value sales in 2019, with “others” accounting for the vast majority of the remainder.

Mondelez especially has been particularly successful in India. It remains in a dominant position in chocolate confectionery with a 65% share of India’s ₹12,090-crore ($1.73 billion) chocolate confectionery market, Dairy Milk accounts for 42% of the chocolate market.

Take a look at the image by the Economic times.

Related: Take a look at the story of Mondelez India 
The Author:

Anyway, that was it for this piece. Hope we were able to add value to you. The author of this piece is Ananya Garg, a student at NMIMS Mumbai. Drop a thank you to her when you can. Share this piece with your best friend (who loves chocolates) on WhatsApp.

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