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India chocolate to reach $5.04 billion by 2034
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Monday, 28 October, 2024, 08 : 00 AM [IST]
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Milind Khangan
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Chocolate is the seed of the fruit of the Theobroma tree. It takes a cocoa tree a year to produce 2 to 3 bars of chocolate. Chocolate has many unique benefits, such as preventing tooth decay and reducing the risk of heart disease by a third. The characteristic smell of chocolate increases theta waves in the brain and creates a feeling of relaxation.
Chocolate is also an excellent aphrodisiac and mood enhancer. Cocoa beans contain a chemical that dilates blood vessels, reduces bad cholesterol, and protects your skin from the sun's harmful rays. Cacao and chocolate contain compounds like flavonoids and caffeine that may improve cognitive function and mood and even protect against age-related mental decline. The antioxidants and anti-inflammatory compounds in cocoa and chocolate may help reduce the risk of developing chronic diseases such as heart disease, diabetes, and some types of cancer.
According to estimates by leading marketing consulting firm Prophecy Market Insights, India Chocolate Market was valued at $2.45 billion in 2024 and is projected to grow at a CAGR of 8.2% to reach $5.04 billion by 2034.
Chocolate consumption in India has grown incredibly in recent years, especially in urban and semi-urban areas. Until a few years ago, chocolate confectionery was considered a premium product compared to sugar confectionery and chewing gum, but large companies in the market have found channels to produce and distribute their products at more affordable prices. This has given Indian consumers many options while giving manufacturers a level playing field to compete, especially in the premium and affordable segments. Local companies are much smaller and operate at a more regional level.
The per capita consumption of chocolate in India is 100-200 g/person, which starkly contrasts Japan, Asia's largest chocolate consumer, with 2 kg per person and is a far cry from Europe, where consumption is between 5 and 9 kg per person.
Although India is still dominated by milk chocolate market, the Indian chocolate market is showing increasing demand for premium chocolate. It accounts for 9% of all chocolates in India. Additionally, the availability of dark chocolate brands such as Hershey's, Lindt, Amul, Cadbury, and Tolerance, among others, has increased market penetration of dark chocolate. According to the International Cocoa Organisation, in India the total consumption of cocoa beans was around 30,000 MT, and 57% was imported.
Market Dynamics in the Chocolate Industry India
The Indian chocolate market is witnessing a rise in demand and consumption due to various factors, including a shift in consumer preferences from traditional sweet treats, rising income, increased usage, consumer expectations for premium products, and increased awareness of health issues. To expand the customer base, significant players in the market are launching new product lines containing premium cocoa, unique flavours, and organic ingredients, including fruits and nuts, caramel, as well as salted and unsweetened products, thus presenting promising prospects for the market. Growing awareness of the health benefits of dark chocolate, such as its antioxidant properties, is driving demand. Chocolate is becoming a popular gift, replacing traditional sweets during festivals and special occasions. There is a growing trend of giving chocolates as gifts as their longer shelf life and attractive packaging drive sales. Rising disposable incomes, especially among the urban middle class, have increased spending on premium, indulgent products such as chocolate. This demographic is willing to spend more on luxury food items, including premium chocolate.
Prices of cocoa and other essential ingredients can fluctuate due to various factors such as weather conditions and global demand. These fluctuations can increase production costs and affect pricing strategies, making it difficult for manufacturers to maintain stable prices.
The chocolate industry faces strict food safety and quality regulations, which can pose challenges for manufacturers, especially smaller ones, who can comply with all requirements. Regulatory compliance increases operational costs and complexity. Effective distribution and supply chain management is essential to maintain product quality and availability. In India, logistical challenges such as inadequate cold storage facilities and transportation problems can hinder effective chocolate distribution, especially in remote areas.
Trends in India Chocolate Industry
Current Trends
Consumers are increasingly choosing dark and premium chocolate, which offers health benefits due to its lower sugar and higher cocoa content. Consumers' growing health-consciousness essentially drives this change. There is a growing demand for chocolate with healthier ingredients, including sugar-free, organic, vegan, and gluten-free options. Brands like The Whole Truth have introduced date-sweetened dark chocolate, responding to this trend. Supermarkets, hypermarkets, and online channels are dominating chocolate distribution channels. These chains' convenience and variety attract consumers, especially young people.
Consumers began consuming chocolate for emotional reasons, such as improving mood or rewarding themselves, as well as for functional benefits, such as increased energy levels. Consumers have started turning to smaller packages, and bite-sized foods are becoming popular in India, indicating growing health concerns.
Future Trends
Consumers are shifting towards luxury and premium chocolate, which has created an opportunity for international brands to enter the Indian market and increase their penetration by creating a premium space at affordable prices for those who desire it. Many Indian consumers consider chocolate containers to be of higher quality, hygienic, and durable than traditional Indian sweets. This mindset has contributed to increased sales as the popularity of seasonal chocolate gifts, significantly during Diwali, has risen in recent years.
Chocolate is increasingly becoming a popular gift choice, replacing traditional treats. This trend will continue as consumers opt for premium, beautifully packaged chocolate gift sets for various occasions. As the festive season approaches, India's demand for chocolate is increasing. Realising this trend, global brands target the Indian market with new product launches, and domestic players are embarking on promotional campaigns and festival launches. However, Indian festivals focus more on traditional sweets and homemade mithai. Chocolate brands are also tapping into the growing sensibilities and tastes of GenZ (born between the mid-90s and 2010). The trend of enjoying premium chocolate and unique flavours has been increasing in recent years. The national palette is growing in favour of dark chocolate, signaling a global trend towards healthier, more refined chocolate options. Brands like Cadbury and Amul, jumped on this trend. Mars Wrigley India recently announced the launch and local production of Galaxy Fusions dark chocolate in India.
Additionally, major market players are expected to further expand their product lines with innovative flavours and formats, including chocolates infused with nuts, fruits, and other ingredients. This diversification is intended to appeal to a broader consumer base. Technological advances are also expected to improve the efficiency and quality of chocolate production, allowing manufacturers to meet growing demand and explore new product innovations.
Import & Export
According to a recent update by Directorate of Cashewnut and Cocoa Development (DCCD) Kochi, cocoa is an essential crop for chocolate production worldwide. In India, cocoa is grown in Kerala, Karnataka, Andhra Pradesh, and Tamil Nadu on an area of ??103,376 hectare with a total output of 27,072 tonne. Andhra Pradesh ranks first in terms of area, with 39,714 hectare and an output of 10,903 tonne. The highest yield was also recorded in Andhra Pradesh, reaching 950 kg/ha. The average cocoa yield in India is 669 kg/ha. Andhra Pradesh had the highest volume of cocoa production in India in fiscal year 2022, amounting to over 11 thousand metric tonne. Kerala followed, contributing 35% to the cocoa production share in 2022, totaling over 10,000 metric tonne.
Export
Cocoa is an export product. In India, there are currently 10 multinational companies operating in the cocoa industry, exporting products such as beans, chocolate, cocoa butter, cocoa powder, and cocoa products to other countries. India earns foreign exchange worth Rs 1108 crore through the export of cocoa beans and their products.
Import
The chocolate and confectionery industry in India requires 50,000 tonne of dry beans annually. The current domestic cocoa bean output needs to be increased to meet the industry's needs. As a result, India imports the bulk of its needs from other cocoa-producing countries worth Rs 2,021 crore.
Leading Key Players in India Chocolate Industry
The chocolate industry in India is highly fragmented; the market includes well-established international brands like Mondelez (Cadbury), Nestlé, Mars, Ferrero, Hershey, Reliance Industries Ltd, Yildiz Holding AS companies alongside domestic solid players such as Amul and ITC, Surya Food & Agro Ltd, India Cocoa Private Limited, DP Cocoa Products Pvt Ltd., Jindal Cocoa, Amrut International among others.
(The author is manager marketing, Prophecy Market Insights. He can be contacted at milind.k@prophecymarketinsights.com)
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