Market watch: Sweet spot for chocolate confectioneries

Chocolate confectionery market is growing, so is the associated packaging segment. A roundup of the chocolate market in India. By Aultrin Vijay

09 Jul 2021 | By Aultrin Vijay

In 2020, the chocolate confectionery market in India was valued at USD 1.9 billion. Today, the country is considered one of the fastest-growing markets for chocolates in the world. Subsequently, this trend has boosted the chocolate packaging market, including films and paper, as well. India’s strong economic growth over the past decade has catalysed the country’s per capita disposable incomes resulting in the growth of the chocolate confectionery industry.

As a result, consumers are now buying chocolates for everyday consumption rather than just special occasions. India’s large young population – a key consumer segment for confectioneries – is another major factor driving the chocolate confectionery industry. Currently, around half of the total population in India is below 25 years and two-thirds are below 35 years. Other factors driving the market include changing lifestyles, westernisation, growth of the food services sector, value addition, and more. Driven by these factors, chocolates are replacing traditional sweets in the country.

Changing consumer behaviour
As millennials constitute a major chunk of the consumer segment, emphasis on sustainable and eco-friendly packaging is paramount. This segment of consumers prefers healthier options such as sugar-free, gluten-free, organic, and low-calorie chocolates, which could also make a difference in terms of product packaging and the packaging materials used. Thus, changing consumption patterns are also said to impact the chocolate packing industry. Young consumers are looking for newer formats and flavours in confectioneries and brands and packagers are equally cashing in on this demand.


The rise of eco-friendly packaging is expected to drive the growth of the chocolate market

According to an estimate by IMARC Group, the Indian chocolate market is expected to witness a CAGR of 12.1% from 2021 to 2026. The increasing consumer preferences towards chocolate-based baked goods, confectioneries, western desserts in the country represent one of the key drivers for the Indian chocolate market.

The outbreak of the Covid-19 pandemic and the implementation of stringent lockdown regulations across several nations has resulted in a shift from brick-and-mortar distribution channels to eCommerce platforms for the sales of chocolates. For brands, the challenge was to redefine packaging that attracts consumers through electronic screens. Moreover, brands had the additional task of making their packaging eCommerce-friendly, so as to reduce the use of tertiary packaging.

Milk chocolates hold the majority of the total chocolate market share

The market has been classified into milk chocolate, dark chocolate, and white chocolate. Currently, milk chocolate holds the majority of the total market share. On the basis of the packaging type, the market has been divided into pouches and bags, boxed chocolate, and others. Among these, pouches and bags dominate the largest segment. In terms of the distribution channel, the market has been bifurcated into retail sales and institutional sales. Among these, retail sales hold the largest market share.

The chocolate market in India has a well-entrenched presence of multinational players such as Mondelez India, Ferrero India, Nestle India, Mars International India, Gujarat Cooperative Milk Marketing Federation (Amul), Hershey India, Global Consumer Products, Surya Food and Agro, Lotus Chocolate Company, and ITC Limited. Multinational companies such as Ferrero, Hersheys and Lindt have a strong presence in the premium chocolate market. In the chocolate confectionery segment, Cadbury holds a market share of around 65-70%, followed by Nestle at around 20%.

Emerging trends
With the aim of developing active materials for the use in the design of packages, coatings, and packaging technologies, which helps in maintaining and improving the sensorial and nutritional characteristics and safety of foodstuffs, as well as increase their shelf life, nanofabrication technologies are emerging as innovative solutions across the region.

Consumers are now buying chocolates for everyday consumption rather than just special occasions

With the growing awareness, the requirement for eco-friendly and sustainable packaging is steadily on the rise. The country is focusing more on sustainable solutions, which is increasingly becoming a business imperative. Companies such as Evirocor in India are providing eco-friendly food packaging products to food outlets, restaurants, hotels, hospitals, factories, caterers, and all other users. The rise in usage of eco-friendly packaging is expected to drive the growth of the market.

The chocolate confectionery
The packaging industry in India is moderately competitive, owing to the several players competing to improve their market share. Sustainable competitive advantage can be gained through innovation in design, technology, and application. Companies are increasing their market presence by expanding their business footprint across various end-user markets. With these trends in tow, the market is only set to grow.

The chocolate confectionery market in India was valued at USD 1.9 billion in 2021