Home >companies >Mondelez looks at double digit growth in chocolates category

Mumbai: Chocolate maker Mondelez India Foods Pvt. Ltd has over the last year spent more on advertising and marketing, increased the scale of its launches, sharpened its positioning on niche brands and also on media, and piloted online sales as it looked at growth in a slowing India market.

The initiatives come after the local entity of the world’s largest snacks company Mondelez International Inc. was called out for its soft performance a year ago.

Now, in the 12 months to June, even as chocolate category sales have further slowed, the company, formerly Cadbury India Ltd, claims to have grown at a faster pace.

“Our overall share of performance was not yet where we wanted it to be, but we began to see meaningful improvements in a number of key markets like chocolates in UK, Germany, Australia and India," said Irene Rosenfeld, chairman and chief executive officer, Mondelez International on 27 July in an investors call following the June quarter earnings.

Prashant Peres, director-marketing (chocolate) at Mondelez, pointed to Nielsen’s market research that said India’s 7,500 crore chocolate category grew at 10% in the 12 months to June, slower than 12% a year ago, adding that his company grew at a faster pace. He did not reveal the actual sales growth for Mondelez India.

According to Peres, the company’s top brand Cadbury Dairy Milk led the growth, increasing its market share to 41%, followed by Cadbury Silk variant Bubbly which crossed 200 crore in revenues within one year of launch. The company also relaunched Cadbury Dairy Milk (CDM) Shots at 2, a price point it had earlier vacated while moving to 5, a step that affected sales.

Even Bournville, its premium dark chocolate was relaunched with a new positioning: “End of the day reward."

“We have driven the entire portfolio," said Peres, adding the company also revisited its media choices, to have more focused communication plans for individual brands. So, for instance, Bournville communication is focused on the digital medium whereas CDM Shots is advertised through television with a focus on regional channels. Its latest launch CDM Marvellous Creations which will hit the markets later this month will focus on all media—television, outdoor, activations, trade visibility and digital.

With CDM Marvellous Creations, the company will also look at tie-ups with online marketplaces such as Amazon. In the last six months, Mondelez has been running a pilot in Delhi with Amazon to make sure that its chocolates are delivered in the right condition. It is now looking at extending this tie-up to 20 top cities over the course of the year.

Globally, the parent has seen revenues from e-commerce grow by over 30% in the first half of the calendar year and is targeting snacking leadership in e-commerce with over $1 billion in sales by 2020, said Rosenfeld in the same investor call.

Peres, however, did not wish to share a target for India as the company is still in the process of learning and only said that it will look at a leadership position online as well.

To be sure, there is a lot of headroom to grow the chocolates category in general trade, as well as it reaches just about two million outlets. In comparison, the overall retail general trade consists of 9.4 million outlets, according to Nielsen. Moreover, rural contributes 15% of the category sales which is much less than the average for the consumer packaged goods industry where some categories are known to get half their sales from the rural market.

“As category leaders, Mondelez needs to drive the penetration further into the interiors and reach more towns. Additionally, with trends like health and wellness taking off in India, they need to see how they can get into it now," said Nikhil Bhandare, executive director, PwC Strategy&, the global strategy consulting team at PwC while pointing out to the growing competition and threat from newer companies like Patanjali Ayurved Ltd which has in the past announced its intention to enter categories like chocolates.

Peres knows that he has his job well cut out. “For us, what is also important is that we are category leaders and we must make sure that we make the double digit growth happen. Also, we are playing for fair share and have to make sure we are staying competitive in the category," he said adding that there is enough potential to drive double digit growth in the category in the years to come.

Mondelez International on Monday appointed Deepak Iyer as managing director of its India unit, replacing Chandramouli Venkatesan, who has decided to pursue opportunities outside the company after a two-year stint as managing director.

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