Global Consumer Products, a startup founded by former Godrej Group MD A Mahendran, is rolling out its first brand, Luvit chocolates, to compete with brands such as Cadbury from Mondelez International and Nestle’s KitKat.
Mahendran’s firm, backed by Goldman Sachs and Mitsui Global, is tying up sales and distribution for the launch. The investment firms have put in over Rs 300 crore in Global Consumer Products. Besides chocolate, the startup plans to diversify into confectionery and snacks.
“The rollout will be in a phased manner and will be scaled up to other confectionery categories. Chocolate is a growing category and we have enough funding to build distribution and scale,” Mahendran said.
There has been a slew of chocolate brand launches as demand picks up after two years of slowing sales in discretionary categories. Nestle came out with KitKat Senses, the first premium variant of its wafer-coated chocolate. Mars, the world’s largest chocolate maker, last week announced it would invest Rs 1,000 crore to set up its first plant in India to increase its presence in the country. Luxury chocolate brand Schmitten was recently introduced here.
Luvit will be priced in the range of Rs 20-30 per bar, said an official aware of the plans. “Its success will depend on how much salience and distribution muscle the company can put behind the brand,” the official said.
Though consumption of chocolate in India is small compared with developed markets, the country is among the fastest growing markets for the category.
The Rs 6,800-crore chocolate market is led by Mondelez, which has a share of almost 70%. Nestle and the Ferrero Group have a share of 18% and 8%, respectively.
The consumption of chocolate-flavoured products is among the fastest-growing within packaged foods – whether it is chocolate, flavoured milk food drinks, cookies and biscuits or bread spreads, according to Devendra Chawla, group group president, food and FMCG, at Future Group, the country’s largest retailer.
“Indian consumers have always had a sweet tooth but what’s happening now is a gradual transition from traditional ‘mithai’ to chocolate, with more innovation, better distribution and supply. Besides, research findings tell us that adult consumption of chocolate is growing steadily,” Chawla said.
Ehab Abou-Oaf, Mars Chocolate regional president, Asia-Pacific. The maker of Mars, Snickers, Twix and Bounty chocolates will step up its presence and expand the market through innovation.
“Our first local production will help us innovate not just on recipes, but on prices and packaging and will be a key enabler to accelerate growth. The innovations won’t necessarily be recipe-related, they could also be occasion-related,” Abou-Oaf had said. Mars’ local innovations include the first vegetarian Snickers, made only for India, and heat-stable Galaxy, which doesn’t need to be refrigerated.
Nestle’s KitKat Senses represents its maiden foray in the high-margin premium chocolate category. Over a year ago, Nestle had introduced Alpino chocolates in an attempt to build its presence in the premium segment, where Ferrero has been gaining traction with its Ferrero Rocher and Kinder Joy brands.
Gujarat-based textiles and hospitality group Rajhans too has brought in luxury Swiss chocolate Schmitten to India.
Gfx: Chocolate market size: Rs 6,800 crore
CAGR: 23% Global Consumer Products: to launch Luvit
Mars: to invest Rs 1,000 crore to kick off local production Mars has rolled out vegetarian Snickers and heat-stable Galaxy
Nestle: has launched 1st premium variant of KitKat called KitKat Senses Per capita consumption of chocolate in India: 200 gm.
Source: ET
