Cadbury-Maker Wants To Take Bigger Bite Of India’s Biscuits Market
India’s largest maker of chocolates wants to increase focus on biscuits to widen its reach and tap the nation’s rising consumer demand.
Mondelez India Pvt Ltd.—the No. 1 player in India’s chocolate market pegged at $1.8-billion by Euromonitor International— forayed into the biscuit market six years ago Oreo and Bournvita brands. “It (making biscuits) sits very well with the categories that we sell, and we see a fairly good headroom to grow this entire business organically,” said Deepak Iyer, managing director of Mondelez India.
“It’s (India) a big market, which is also growing and hence naturally attractive,” Iyer told BloombergQuint in an interaction. “We have the capability and opportunity to develop brands.”
Asia’s third-largest economy, with a population of over 1.3 billion, also has the world’s largest population of the young, according to the U.N. Low inflation and a rising middle class with high disposable incomes make the nation a destination for manufacturers wanting a slice of the ever-growing market.
However, replicating the success in biscuits may not be easy. The segment is dominated by entrenched organised players such as Britannia Industries Ltd., Parle Products Pvt Ltd. and the FMCG major ITC Ltd. that are dominant across segments—be it the economy range or the higher-end cookies. At stake is a market, which according to Nielsen, is worth nearly $5 billion.
“The biscuit market is growing at a healthy rate, both the unorganised and organised biscuit players are witnessing a decent growth rate which will continue at least for the next five years,” said Dhanraj Bhagat, consumer and retail partner at Grant Thornton India LLP.
But the maker of Cadbury Dairy Milk and Silk chocolates has a template to fall back on. It built a product portfolio that catered to the Indian market such as 5 Star, Fuse and Lickables, catapulting it to the pole position. Products that were designed for India in India, such as the 5 Star, were taken to foreign markets such as Brazil and South Africa. Lickables, which was also first launched in India, recently debuted in China under a different brand name, Iyer said.
That’s where its recently inaugurated global research, development and quality centre in Mumbai, its tenth globally, is expected to contribute. Mondelez said that the centre—entailing an investment of $15 million—will support product and technology development for its global chocolate and beverage brands. “The centre will help the company come up with chocolate and beverage brands,” Iyer said, without disclosing a timeline when the products would be unveiled.
That’s not all. The company, Iyer said, is also focusing on its backbone, its network of around 1 million stores across India. “We’re investing in route to market and a fair bit in chillers,” he said. “We now cover 50,000 villages directly.”
The strategy isn’t new, though. ITC Ltd., for instance, leveraged its network that supplied cigarettes to push products that it subsequently ventured into, such as paper products and consumables.
Mondelez may have a third ace up its sleeve. Iyer, when asked whether the company would resort to acquisitions, didn’t rule out the option.
The company’s growth in India in the July-September period was in high-single digits, which it attributed to strong a consumer sentiment and price reduction due to the Goods and Services Tax. Mondelez International gives out its quarterly numbers, but it doesn’t specify its Indian performance in them.