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Dispatches from NCA Miami Conference

Mondelez chocolate chief pinpoints markets beyond BRIC

By Oliver Nieburg+

04-Mar-2013
Last updated on 04-Mar-2013 at 13:26 GMT2013-03-04T13:26:17Z

Columbia, Vietnam, Turkey and South Africa are markets to keep on your radar according to Mondelez's chocolate chief
Columbia, Vietnam, Turkey and South Africa are markets to keep on your radar according to Mondelez's chocolate chief

Brazil, Russia, India and China are not the only markets capturing the attention of the world’s leading chocolate company Mondelez International.

Speaking at the National Confectioners Association State of the Industry Conference in Miami last week, Bharat Puri, senior vice president of global chocolate at Mondelez International, said: “70% of world confectionery growth will come out of eight markets.”

Beyond BRIC , those markets were identified as Colombia, Vietnam, Turkey and South Africa.

“That’s where future growth is,” he said, adding that young populations and a growing middle class were responsible.

Mondelez strategy

The markets differ from those Puri identified as chocolate priorities for his company, at Barclays Back to School Conference  in Boston, Massachusetts, US in September last year.

Then he split Mondelez’s core geographies for chocolate into three categories: Big Bet markets, Next Wave markets and Scale markets.

He said Mondelez’s Big Bet chocolate markets were India, Brazil and Russia, which represented a fifth of the firm’s chocolate revenues. China, the big omission, is a market commanded by Mars.

Average year-on-year growth rate for chocolate - 2012-2017

India – 13.8%
Brazil – 8.1%
Turkey – 6.4%
China – 5.8%
Colombia – 5.2%
Russia – 1.3%
South Africa – 0.7%

Source: Euromonitor International

The company’s Next Wave markets were identified as Indonesia, South Africa, China and Ukraine, while developed markets such as the UK, Australia, France Canada and Germany were labeled Scale markets.

Barriers to entry

The eight markets Puri identified in his latest speech, won’t be easy to enter, he said.

According to Puri, India for example has two seasons: “hot and hotter”, and many people live on less than a $1 a day.

In India, Mondelez sells a lot of Cadbury Dairy Milk Shots 8g packs, which are much smaller packs than it sells in developed markets, raising concerns that consumption levels may not be on-par with North America or Western Europe.

Nonetheless, Puri said that due to the focus on emerging markets, innovation that was happening in BRIC markets would soon seep into global markets.

Projected retail value sales for chocolate in 2017 (US $):

Brazil – 18.5bn
Russia – 9.3bn
China  - 2.6bn
India – 2.3bn
Turkey – 1.8bn
South Africa – 712m
Colombia – 324m

Source: Euromonitor International

Megacity strategies

He urged the industry to “start looking at a lot of cities as countries”.

“A lot of us will have to look at city strategies rather than country strategies,” he said.

Numbers in many large cities come close to some of the largest global confectionery markets.

The UK for example, which consumes more confectionery than any nation,  has a population of around 63m, while the population of one city alone in India, Dehli, has a population nearing 17m.

Aging population

Puri added that those in the over fifties age group would rise globally from 1.5bn to 1.9bn by 2020. He questioned whether confectioners were really reaching this age group or just focussing on the “18 till I die” sub-section of it.

“As people get older they will look at offers tailored toward them rather than their children,” he said.

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