Sweet opportunities in India

Posted by Josette Dunn on 13th October 2010

Immense opportunities in the Indian confectionery market are encouraging confectionery companies from the West to enter into the Indian horizon by launching more and more new products for Indian consumers.

India, today, is in its ‘sunshine period’ owing to the fast paced economic development in the country. The country’s healthy growth has insulated it from the impact of the global economic turmoil. All these have led to higher consumer spending in the country. As a result, many multinational corporations consider India to be a high growth market, and have set their eyes on not just expanding into the market but also creating presence across various customer and product segments. Food and beverage sector, especially the confectionery market has been the key area of focus for several large multinationals to expand in the country.

In 2009, the Indian confectionery market witnessed the launch of over 200 products in various categories. According to Datamonitor, the Indian confectionery market ranked among top 20 in terms of new product launches in 2009. Sugar confectionery had the highest number of product launches during the year, followed by chocolate which saw a significant increase in sales in the recent years.

With the increasing discretionary incomes of people in urban India, spending on chocolates, which has long been considered a luxury good, has increased significantly over 2005-09. Furthermore, chocolate sales have surpassed the sugar-boiled confectionery sales in India in the last few years, reflecting a trend of increased spending.

For a long time now, Indians have followed the tradition of exchanging sweets during festivals and occasions. In the recent years, chocolates have been replacing sweets on such special occasions in India.

“An increasing number of wealthy and well-traveled Indians are demanding Western products, and many now see chocolate as a luxurious, exotic but affordable indulgence.” The year 2009 has witnessed the majority of new confectionery product launches in the last two quarters, which coincides with the Indian festival season,” says Saritha Pingali, Datamonitor Consumer Markets Analyst..

Another marking trend observed in the Indian confectionery market during 2009 was the emerging adult confectionery market, which is still in a nascent stage. “Considering that adults have higher discretionary income to spend on confectionery, manufacturers consider this to be a market which is less sensitive to price changes than the children’s confectionery segment” comments Saritha. However, manufacturers are also cautious of the increasing health consciousness among Indian adults and have launched few products specifically targeted at the health conscious adult consumer segment.

The Indian confectionery market seems to be trending towards health, with most of the claims on the new products launched in 2009 reflecting health and nutrition. ‘Vegetarian’ was the top claim among all the new confectionery products launched in the country in 2009, while claims such as ‘no sugar’, ‘no gluten’, ‘high fiber’ and ‘high vitamins’ have witnessed healthy growth over 2008. Surprisingly, ‘kids’ as a claim declined in 2009. This could be attributed to the increasing focus on adult confectionery in the country.

In 2009, majority of the top ten flavors of all the new confectionery products launched were fruit-based. Some of the top flavors that saw a significant increase over 2008-09 were: orange, raspberry and caramel however, despite the fact that Indians have started embracing foreign brands, the preference for local flavors remained unaltered.

“The trend of targeting the urban Indian consumer is expected to continue along with a focus on rural India, where the country is expected to see a growth in discretionary incomes and consumer spending,” concludes Saritha.