INDUSTRY ANALYSIS OF CONFECTIONERY

INDUSTRY INDIA

Oindrila Roy
Sayan Ghosh
Raktim Sengupta
Vedshree Upadhyay
OVERVIEW OF INDIAN CONFECTIONERY

The global confectionery market has been forecast to increase at
annual growth rate (CAGR) of 3% for the five-year period
2011 - 2016, rising from a valuation of $157,640 million in 2011,
to
hit an industry value of $182,697.1 million by the end of 2016.

The Indian confectionery market is expected to grow at a CAGR of
more than 18% during 2012-15

Sugar confectionery (candies and toffees) has the largest
share(50%), followed by chocolate, (16%), and bubble gum, (10%)

The chocolate segment is the fastest growing in value terms (9.8%
average annual growth rate) closely followed by the gum segment
(9.5%).


MARKET STRUCTURE
The Market value for Indian confectionery market was 1726.3 $million (11054.72 crores) in 2012 and it is
expected to have a value of $3,060.2 million(19585 .28 crores) in 2016.
The Indian confectionery market reached a volume of 213.1 million kg. In 2016, the Indian
confectionery market is forecast to have a volume of 297 million kg, an increase of 39.4% since
2012
The Indian confectionery market had total revenues of $1,727.3 million in 2011, representing a
compound annual growth rate (CAGR) of 12.4% between 2007 and 2012

CONFECTIONERY PRODUCTS IN INDIA
Candies & Toffees 68,000 MT
Chocolates 22,500 MT
Breath Fresheners 7000 MT
Bubble Gum 14000 MT
Chewing Gum 3350 MT
Other Categories 23150 MT
Candies
&Toffees
49%
Chocolates
16%
Breath
Freshener
5%
Bubble Gum
10%
Chewing
Gum
3%
Other
Categories
17%
Market Share
Revenue Analysis
Volume Growth
MARKET SHARE
Company Market share(%)
Perfetti Van
Melle
22.6
Mars Inc 15.8
Nestle 10.6
Krafts Food 20.5
Others 30.5

PLAYERS

Cadbury I ndia Ltd
Nestle I ndia
Lotte I ndia Corporation Ltd
Nutrine Confectionery Co Pvt Ltd
Candico I ndia Ltd
Perfetti Van Melle I ndia Ltd
Parle Products Pvt Ltd
I TC Foods
Hindustan Lever Ltd
PLAYERS AND STRATEGIES
Cadbury India

Cadbury India Ltd. is a part of Mondelz International.
Cadbury India operates in five categories
1) Chocolate confectionery,2) Beverages,3) Biscuits,4) Gum and Candy.

Pricing strategy:

Cadbury has a very convenient prices for all it's products.

The price charged for a chocolate determines whether a consumer will buy
it & the level of sales determine whether or not Cadbury Schweppes will
make a profit.

Cadbury World works with a number of 3rd party promoters and businesses
in order to offer a discount on the entry price

NESTLE INDIA
Brands in Beverages category
1. Nescafe 2. Nescafe Cappuchino 3. Nescafe Classic 4 .Nescafe Sunrise Premium
5. Nescafe Sunrise 6. Nescafe Sunrise Strong 7. Nestle gold 8. Nestle Iced Tea


Strategies Of Nestle

Competitive Advantages-
1. Unmatched product and brand portfolio. 2. Unmatched research and development
capability.
3. Unmatched geographic presence. 4. People,culture,Values and attitude.

Growth Drivers-
1. Nutritional health. 2. Emerging markets popularity and positioned products.
3. Out of home consumption. 4. Premium.

Pricing Strategy
Nestle again decides it price on the basis of competition.
The best think about the company nestle is that it is very flexible and it can come down
with the price very quickly.
The company is renowned to bring the price down even up to half if needed.
PERFETTI VAN MELLE INDIA
Perfetti entered the Indian market in 1994 and offered brands like
1) Center Fresh,2) Big Babool ,3) Alpenliebe ,4) Mentos,5) Happydent,6)
Centerfruit

Pricing Strategy:
The prices of different products do not vary from region to region, i.e. the
part of the country they are being sold in, they are same throughout. But
almost all of the products are available in different kinds of packaging.

MONOPOLI STI C COMPETI TI ON AND PRODUCT
DI FFERENTI ATI ON
The Confectionery industry in India follows a strictly Monopolistic-type structure
which combines features of Perfect Competition and Monopoly

Monopolistic Competition is a type of market in which
1. Many sellers each satisfying a small but not microscopic share of market

2. Product differentiation where the goods that are sold arent homogenous

3. Ease of entry of new firms in the long run because there are no
significant barriers to entry



Understanding Monopolistic Competition -Short Run
In the short run, firms have given fixed costs and the number of firms in
the industry is given. Costs shown by ATC and MC. Each firm has a
Demand Curve, DF, which is the one in which other firms have a given
price. From demand curve, obtain MR, just like the case of monopoly.
Firms maximize profits by setting MC=MR, and Price is found from
demand curve, as in monopoly case.

UNDERSTANDING MONOPOLISTIC COMPETITION IN LONG
RUN: ENTRY AND EXIT

In the long run firms can change fixed costs (ignore this change, for simplicity) and
firms can enter and exit. If firms make positive profits, new firms will enter, and
the demand curve for each firm will shift to the left (as each firm has a smaller
share of the total, with more firms). If firms make losses, firms exit and the
demand curve shifts to the right. MR shifts in the same way. These changes
will continue as long as profits are not zero


UNDERSTANDING MONOPOLISTIC COMPETITION IN LONG RUN: ZERO PROFIT
EQUILIBRIUM
In long-run equilibrium there will be no entry or exit. Profits will be zero, so that
price = ATC. MC = MR for profit maximization. Demand curve for the firm must
be tangential to the ATC; it shifts till this happens. Otherwise, profits can be
increased with a change in output. Demand curve must lie everywhere below ATC

UNDERSTANDING MONOPOLISTIC COMPETITION COMPARISON WITH PERFECT
COMPETITION
In long-run equilibrium, with perfect competition, firms are at the minimum point
of the ATC curve, and P=MC. With monopolistic competition:
1. Firms produce on downward-sloping part of ATC, not where ATC is at minimum.
Sometimes referred to as excess capacity.
2. P > MC, so that firms would like to sell more at going price. Firms dont
increase output because they know that it will drive down the price. So they engage
in advertising and other sales promotion activity. P>MC means that some mutually
beneficial trades are not exploited.

REGULATIONS
Current FSSAI Standards-Emphasis on vertical compositional standards (finished products) .
Sugar Boiled/Sugar free Confectionery Chewing gum/bubble gum
GENERAL RECOMMENDATIONS

For Sugar Confectionery, lozenges, Chewing gum & Bubble gum

Vertical standards and compositional requirements to be removed.
Horizontal controls on additives should be expanded in line with
codex & EU.
Combination of sweeteners should be allowed .
Use of aluminum and calcium lakes should be allowed.
To expand the list of permitted additives in line with Codex
(JEFCA) and EU.

All the Food, Feeds, Fruits and Vegetables and its extracts,
Spices, Condiments etc are to be permitted at GMP level .

Certain labelling requirements, specifically use of advisory and
warning statements, need to be reviewed e.g. sweeteners &
ployols.

CURRENT TRENDS
CONCLUSI ON
The confectionery market in India is expected to continue to grow at
healthy rates
Sugar confectionery will remain the largest segment, and new
products like mints, lollipops and chewing gum, as well as boxed
assortments will grow at the fastest rates.
The mass market will continue to be very price sensitive pushing
manufacturers to price discounting and offering smaller packages in
order to continue penetrating the rural market.
Boxed chocolates show the greatest potential for growth within the
chocolate category; chewing gum, medicated confectionery and
power mints are also expected to grow rapidly, particularly among
the young adults segment.