Ferrero reveals mass market expansion plans in India

By Lester Wan

- Last updated on GMT

Ferrero India manufactures Kinder Joy, Tic Tac and Kinder Schoko-Bons Crispy, and imports Ferrero Rocher and Nutella. ©Ferrero India
Ferrero India manufactures Kinder Joy, Tic Tac and Kinder Schoko-Bons Crispy, and imports Ferrero Rocher and Nutella. ©Ferrero India

Related tags India Ferrero Nestlé

Ferrero India has revealed its plans to build a new product portfolio for the mass market in India, with the firm assessing opportunities for some of the 20 confectionery brands it acquired from the US unit of Nestle at the start of the year.

Reeta Philip, Institutional Affairs, Ferrero India, told FoodNavigator-Asia that Ferrero had invested about Rs1,500 crore since entering the Indian market in 2007 and is looking to invest another Rs500 crore over the next three years.

“We are exploring synergies of the sugar confectionery brands that we had acquired earlier this year. We may bring some of them to India. We want to expand our reach, go mass market with lower price points. There will be more variants of our existing brand, Tic Tac, and some more brands in the sugar confectionery space,” ​Ferrero India managing director Stefano Pelle had said.

Philip added, currently, there has only been “preliminary discussion” ​on the possibility of bringing in brands from the US, and that nothing has yet been finalised.

“A lot more time and discussion is needed. There is no direct change or effect from the acquisition on the India business currently,”​ she said.

Targeting the masses

According to Philip, the Indian facility locally manufactures Kinder Joy, various flavours of Tic Tac, and Kinder Schoko-Bons Crispy. The company imports Ferrero Rocher and Nutella from the US.

As part of the acquisition, it now has access to other candy and chocolate brands such as LaffyTaffy, Nerds, Butterfinger, Crunch, Wonka and several others.

Nevertheless, Philip revealed to us that Ferrero India is in the process of developing plans to enter the mass market segment in India’s confectionery sector.

Currently, all of Ferrero India’s brands fall within the premium category.

Euromonitor International shared with FoodNavigator-Asia that ‘standard’ and ‘economy’ products sold best in India’s chocolate confectionery market due to the offer of quick-bite ranges and lower prices. For Indian consumers, premium products were more of an occasional purchase.

“Private label players compete against established branded companies by offering chocolate confectionery at lower price points and bulk purchase deals,” ​said the market research firm’s country report on chocolate confectionery in India in 2017.

New portfolio

Philip said Ferrero India is contemplating a new ‘tropical portfolio’, a more heat-tolerant product for the market, which can withstand 32 to 35 deg Celsius heat well.

While they are not ready to divulge any detail on the particular products and flavours, she did reveal that they will all be completely new products that are being developed within the company’s R&D facility in Pune.

“We are presently also exploring how to introduce these brands to the market,” ​she said.

“We will continue to expand our product portfolio in India and grow our business in the domestic market, as well as continue to grow our export to other countries.”

At the moment, Ferrero India exports its confectionery products to South East Asia, some African countries and the Middle East.

Indian confectionery potential

Euromonitor stated that India’s chocolate confectionery market is projected to see a 4% retail value compound annual growth rate (CAGR) at constant 2017 prices over the forecast period to reach Rs148bn in 2022.

“A rising penetration rate, including among rural consumers, and a growing fondness for chocolate as a healthy snack option, are expected to stimulate sales,” ​said the firm.

In India, Mondelez International is top, followed by Nestle SA.

Nonetheless, in January, the Italy-based Ferrero Group acquired Nestle SA’s US confectionery business for US$2.8b, opening new opportunities for Ferrero India.

Though Philip said that the company does not disclose revenue figures, in May, Pelle had reportedly said that Ferrero India’s sales had already surpassed Rs1,000 crore.

Ferrero India is targeting the mass market to increase its market share in the country.

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