An improved distribution network and the increasing penetration of domestic and international players are expected to drive the candy market in India further.
If you were a child growing up in the ’90s, then the chocolatey Melody and colourful Ravalgaon candies were probably among your best friends. From birthdays to special events like the Independence Day parade at one’s school, one looked forward to being offered these sweets.
However, since then, many other candy brands/toffees have entered the Indian market as international as well as Indian companies are expanding and experimenting in the segment. The confectionery market in India is valued at $1.5 billion, growing at a two-year CAGR of 9%, as per Nielsen India. Various reports suggest that India is the fastest growing confectionery market among the BRIC countries. India’s increasing population, rising disposable income coupled with innovative product offerings by major players, their aggressive marketing strategies and robust supply chain networks with increasing penetration in rural areas are a few of the major factors fuelling the demand of candies in India, as per a TechSci Research report.
Indian consumers look for the most fun and enjoyable products. This means manufacturers need to innovate with new and novel shapes, textures, flavours and packs. The Indian candy market is divided into three main categories — sugar candy, chocolate candy and gum candy, on the basis of type, region
“The biggest segment in the category is hard boiled candies (HBC) growing at 1.5 times the category size during the previous two fiscals. Interestingly, the HBC segment was underperforming three to four years ago. However a new brand was launched in 2015 disrupted the category, and helped the HBC segment on a high growth trajectory,” says Sameer Shukla, executive director, Nielsen India.
Breaking the mould
When it comes to disruption in a segment that had seen very little innovation in the past decade, Dharampal Satyapal (DS) Group’s Pulse has taken the category by storm. It reached `100 crore within just eight months of its launch in 2015. After deliberation and research, the company entered the market with Pulse Kachcha Aam with a tangy twist as its first product offering to carve a niche.
Recalls DS Group’s new product development VP, Shashank Surana, “More than 80% of the market was at 50 paise (for 2-2.5 grams) per candy; however to get a fulfilling Pulse experience, we had to introduce a bigger product at the price point of Re 1 (for four grams) per candy. There was a lot of speculation on whether a Re 1 product would succeed in a 50 paise dominant market.” With flavour and pricing being the most important factors in the category, companies have tried to capture audiences and play by their own rules.
Parle Products, for instance, was the leading manufacturer in sugar confectionery in 2017 with a 13% share of retail value sales. Strong brand penetration, lower price points and consumer loyalty for its brands contributed to the company’s position, as per the Confectionery in India report by Euromonitor India. “In today’s competitive landscape, brand consolidation makes a lot of sense to strengthen the brand’s position and Parle has been doing the same,” opines Krishna Rao, category head, Parle Products.
The north region of India constitutes the largest share in the candy market followed by the west region.
According to a report by Research and Markets, metros such as Delhi/NCR, Mumbai, Hyderabad, Bengaluru, Chandigarh, Chennai and Kolkata are amongst the leading demand generators of candies in the country, while tier II cities have also been contributing.
Seeing this potential, in 2017, MTR Foods launched fruit-flavoured chews — Laban (a leading confectionery brand in the Norwegian market). The company has invested close to Rs 40 crore on
this project. The aim for Pulse was to ensure that it gets everything right — from getting the best manufacturing equipment and ingredients from around the world to constant testing and research. Says Sunay Bhasin, CMO, MTR Foods, “We knew how discerning the Indian audience is; and that we would need to undertake a product customisation in order to succeed in the country.”
Overcoming the sour patch
What is worth noting is that today, most candy segments target not just children but youngsters as well. To expand their horizons, many have moved beyond advertising in children’s books and traditional mediums. For instance, on Valentine’s Day, Parle Kismi came together with Mumbai dabbawalas to send a reminder to working professionals about celebrating the day.
“Though the communication target group of Pulse is the youth, it was launched with an aim to strike a chord with consumers of all age groups. The candy is enjoyed across all ages because of its flavour combinations,” says Surana.
The preference for premium chocolate candies as gifts on festivals and functions is also growing considerably due to increasing marketing initiatives to position such a product as one for indulgence.
“We are confident that Laban will provide a growth platform for both MTR and Orkla by foraying into the confectionery segment,” says Bhasin. Having said that, the confectionery category comes with its own set of problems. It is much cluttered (with many unbranded toffees and candies in the market). Not to mention, the sheer number of ads and other collaterals that are issued by many brands throughout the year.
Therefore, a brand, especially if it is new and trying to establish itself, needs to reach out to many people with an aim to create awareness and generate trials. There is also an extensive presence of small, unorganised players in the market leading to a deep fragmentation. Apart from this, increasing penetration and consumption still remains an issue. Unlike the West where candies are bought in large quantity for consumption, India’s consumption is still occasion and mood-based. Being an impulse driven category, distribution plays a very important role. “Jo dikhta hai, woh bikta hai,” highlights Rao. Therefore, most brands try to be available pan-India at paan outlets, mom-and-pop stores and modern retail outlets.
GST too played a spoilsport by adversely affecting the FMCG industry. However, after most of the industry became GST compliant, things got back on track for many brands.
The candy category, currently at saturation point, needs another groundbreaking launch to shake the monotony. HBC is a category with very low consumer loyalty; keeping this in mind, players need to keep reinventing their offerings in order to avoid fatigue and remain top of mind.