Whalesbook
Confectionery Giants Face India Setback
Global confectionery titans Mondelez International and Perfetti Van Melle each reported a 2% decline in India sales for fiscal year 2025. Hershey's India operations saw flat growth, while Mars International managed only a modest 2% revenue increase. This marks the weakest performance for these major players in India since the pandemic.
Cocoa Price Shock Drives Consumer Trade-Down
The primary catalyst for this slowdown is the dramatic surge in cocoa prices. Record highs touched $12,000 per metric tonne in April 2024, a stark contrast to the $2,500 range seen for years. This cost pressure forced chocolate manufacturers to implement price hikes or reduce product grammages. Consumers, facing tighter budgets, gravitated towards lower-priced alternatives.
Regional Players Capture Market Share
Hundreds of regional Indian manufacturers flooded the market with hard-boiled candies. These local players offered significantly higher trade margins and aggressive discounts to retailers. Mayank Shah, vice-president at Parle Products, noted that the combined impact of these smaller companies is now evident in the financials of large confectionery firms. Consumers are downgrading to smaller chocolate packs or switching entirely to candies.
Local Innovation and Consumer Preference
Brands like Prayagh Consumer, maker of Cintu candies, crossed ₹900 crore in revenue, while DS Foods' Pulse candy brand neared ₹750 crore in sales. Rajiv Kumar, vice-president at DS Group, highlighted a shift in consumer preference towards 'Indianness,' favouring local flavours over Western profiles like caramel and chocolate. This trend, driven by consumer insight and product innovation, resonates deeply with Indian palates and nostalgia.
Cautious Optimism for Global Giants
Despite current pressures, executives from global firms express cautious optimism. Mondelez's global CEO Dirk Van de Put acknowledged short-term challenges but stated that India is performing better than expected and expects improvements as input costs cool and pricing resets occur in the current fiscal year. The Indian confectionery market, valued at approximately ₹25,000 crore, still presents significant long-term growth potential given its low per-capita chocolate consumption.