Indian confectionery retail sales grew by seven per cent last year, boosted by “key indulgence categories” such as chocolate and functional gum, says Euromonitor.
Sugary confectionery, chocolate and functional gum in particular command higher unit prices and are particularly sensitive to an improvement in the economic climate, said Euromonitor analyst Francisco Redruello.
Chocolate confectionery sales jumped up 13 per cent in constant value terms in 2010, compared to a 10 per cent growth in 2009.
Redruello said the increase can be attributed to Indian manufacturers' efforts to tap into both upper and lower income consumers.
In addition, he said giving chocolate as a gift for festive occasions had returned in India and that consumers are more confident spending their income due to the better economic climate.
Improving consumer confidence and increasing disposable income played a positive role in the rising demand for sugar confectionery products, which grew by one per cent in constant retail value terms in 2010.
Although this is a “mild” growth, it is a reverse of 2008’s one per cent decline, said the analyst.
For the sugar category, medicated confectionery was the best performer in 2010, growing by 2.4 per cent.
The growth is partly due to the inclusion of ayurvedic herbal ingredients in most medicated confectionery products, said Redruello. Indian consumers are quite familiar with this ingredient in terms of taste and health benefits, he explained.
Gum value sales grew by four per cent in 2010, up by 1.6 percentage points from the year before, due to the rising consumption of gum in smaller towns and cities, said Redruello.
Due to its small base, functional gum remained the best performing gum category in value terms in 2010, growing by some 17 per cent, he said.
However, the consumer base for functional gum is still relatively small, accounting for only around five per cent of retail gum volume sales in 2010, said Redruello. This is because its average retail price remains much higher than that of other gum products, he said.
Additional factors driving growth included support from manufacturers in terms of educating consumers about the dental benefits of functional gum.
Growth in India
According to Euromonitor, India is the second most populous country in the world with a population reaching around 1.2 billion in 2010.
The urban population is set to increase by 46 million between 2010-2015 driving demand for processed food items such as chocolate and dairy, said the market analyst.
Real GDP growth stood at 10 per cent in 2010, four percentage points up on the previous year, claims Euromonitor International's Countries & Consumers database.