Orkla enters India’s confectionery market with Laban

22-Aug-2017 - Last updated on 23-Aug-2017 at 15:07 GMT

Orkla to compete with Perfetti Van Melle in India’s growing candy market with gummies brand Laban. Photo: Orkla

Related tags Compound annual growth rate India

Norwegian group Orkla is bringing its Laban sugar confectionery brand to the thriving Indian market.

The company secured a foothold in India when it acquired domestic firm MTR Foods Pvt. Ltd in 2007 and is already present through the subsidiary in breakfast mixes, spices and ready-to-eat foods.

Orkla’s Laban – Norway’s best-selling gummies brand – will enter Indian stores in the next two weeks.

orkla event — Orkla announced Laban's India launch at a recent event. Photo: Orkla

Orkla has also been test-marketing Jordans range of toothbrushes and its chocolate spread brand Nugatti in India since the beginning of 2017.

‘Huge potential’ in India’s candy market

“The Indian confectionery market is seeing huge potential that Orkla would like to tap into,” Kari Westersund, senior vice president of communications at Orkla, told ConfectioneryNews.

India’s sugar confectionery market is expected to register constant value compound annual growth rate (CAGR) of +8% from 2016 to 2021, according to Euromonitor International. Perfetti Van Melle is the market leader with a 22% value share in 2016.

Orkla hopes Laban will compete with Perfetti’s Juzt Jelly and ITC Foods’ Jelimals.

“There have been quite a few entrants in the jelly space in the last four years – which has quickly grown to an INR 400 crore ($62m) category today,” said Westersund.

Orkla has tailored Laban to the Indian market. The brand will be available in strawberry, mango, orange and green mango, and will be aimed at Millenials.

The brand will come in a 26 g for INR 10 ($0.16) and a 65 g pack for INR 30 ($0.47).

Orkla has invested INR 40 crore ($6.2m) for a Laban production line at MTR Foods’ Bengaluru plant. The group will also spend an additional INR 35 crore ($5.5m) in Laban brand marketing over the next three years.

Orkla is targeting INR 20 crore ($3.1m) in Laban revenues in India in the next year.

Growth drivers in India

Westersund said rapid modernization, premium products, growing e-commerce and expanding retail channels will drive the candy market in India.

“The metro and Tier 1 cities of India, such as Delhi/NCR, Mumbai, Hyderabad, Bengaluru, Chandigarh, Chennai and Kolkata are among the leading demand generators of candies in the country.

“With increasing economic development in the country, lifestyle and preference of consumers is also significantly changing in Tier I and Tier II cities, which is driving candy consumption. Therefore, it seemed like a natural fit for Laban in the Indian context,” she said.

Orkla Confectionery & Snacks

Orkla Confectionery & Snacks makes up around 17% of Orkla group revenues and includes brands such as KiMs, Nidar, Göteborgs Kex and Panda, and has around 3,000 employees. Around 94% of the division’s sales come in Nordic and Baltic markets with Norway the largest single market. The business unit posted NOK 6.2bn ($726m) in 2016 revenues, representing 4.9% organic growth. Last year, it became PepsiCo snack brand Lay’s distributor in Norway, Sweden and Finland, but Wrigley this year dropped Orkla as its Norway Wrigley distributor, handing responsibility to Mars Norge.