“We had been exploring India and had made small steps in to premium supermarkets – that worked well and we decided to expand it,” Luuk Reijnders, global business director, at Duc d’O told ConfectioneryNews.
“The Indian chocolate market is growing rapidly and the middle class is expanding. We feel that the market is dynamic. We want to be in early because we believe that it is a market that will grow.”
Mintel Food and Drink analyst Ranjana Sundaresan recently said that the premium category in India was one of the fastest growing segments in the domestic chocolate market, evidenced by Ferrero’s rise from insignificant player in 2011 to the third largest brand in the market through Ferrero Rocher in 2013.
Low per capita chocolate consumption
However, annual per capita chocolate consumption in India is among the lowest in the world at 700 g compared to 2.5 Kg in Brazil and 1.2 kg in China.
“You have to multiply the per capita consumption with the capita. India has over one billion inhabitants,” said Reijnders.
He said that Duc d’O intended to target the 1-3% of affluent Indian consumers who were attracted by Western brands and shopped in premium supermarkets.
The company has secured distribution in top tier cities through deals with high-end retailers such as Fresh Market and Nature’s Basket.
Potential barriers
Reijnders said that the middle class was growing as quickly in India as it was in China, but acknowledged that the company faced road blocks in the macroeconomic environment in India.
“There’s some struggle in the labelling requirements and local legislation…For example you have to put a green dot to show the product is suitable for vegetarians.”
Under India’s stringent labeling requirements, 200 metric tons of imported chocolate from many international manufacturers was impounded at ports in November last year as the products failed to signify India-specific requirements such as the green dot for vegetarian products.
Reijnders added that price points for Duc d’O in India were substantially higher than in China due to local taxation and import levies.
The competition
Duc d’O will produce products for the Indian market from its factory in Belgium.
“I see quite some competition. It’s a big market and you have some of the big players such Cadbury, Lindt and Mars and niche competitors like Guylian,” said Reijnders.
Mondelēz International-owned Cadbury is the undisputed market leader in the Indian chocolate market with a value share of 56%, according to Euromonitor International. It recently ‘premiumized’ its Bournville brand to appeal to affluent Indian consumers.
Reijnders said the company saw Lindt as its principal competitor as the larger players such as Cadbury had factories in the country and produced on far greater scales.
Chocolatier Duc d’O was established in 1983 and was acquired by fellow Belgian firm Gudrun in June 2011. The Duc d’O Gudrun Group has an annual turnover of around €60m ($78.3m).