Cadbury is a lone success where India’s local brands reign

A factory that recently opened in the south of India will churn out 60,000 tonnes of Cadbury’s Dairy Milk chocolate a year. That’s just to start.

By 2020, the US$30 billion Mondelez International, which owns the confectionery brand, aims to produce 250,000 tonnes of the chocolate at the plant in Andhra Pradesh annually and employ 1,600 workers. As its largest factory in the Asia Pacific region, it has been set up with an investment of $190 million and it covers more than 53 hectares.

Mondelez, which also has brands including Oreo biscuits and Trident chewing gum, has been producing food in India for 70 years and already has factories in Himachal Pradesh, Karnataka, Maharashtra and Madhya Pradesh.

“We are bullish about India and see this country as a huge opportunity,” says Maurizio Brusadelli, the president, Asia Pacific, for Mondelez International. “India is a priority market for us. We are investing today and building capacity for tomorrow.”

Mondelez and Nestle are the main multinationals operating in the packaged food space as they strive to compete here, which is dominated by Indians brands including Amul, Britannia, Mother Dairy and Parle.

There is a great deal to be gained for successful companies here, in a country that has a population of more than 1.2 billion. India’s packaged food industry is rapidly growing. The sector is likely to rise to $50bn next year from $32bn last year, according to the Associated Chambers of Commerce and Industry of India (Assocham).

Demand for ready-to-eat food and snacks is surging in India amid factors including the country’s young demographics, rising incomes, the expansion of organized retail and that more women in India are working so households have less time to prepare fresh meals.

“The consumption of packaged food is much higher in the urban areas, especially metros, where life is fast-paced, attracting a lot more companies to launch new types of products and variants,” says D S Rawat, the secretary general of Assocham.

A survey conducted by Assocham revealed that 80 per cent of the demand for packaged food is in urban areas.

Domestic manufacturers are increasing their distribution and penetration into rural India, according to Euromonitor. “Launching smaller packs with lower price points boosted their efforts in this direction in 2015.”

It says that the market managed to grow by 15 per cent last year despite the fact that Nestle’s popular Maggi noodles were temporarily banned in India after the food safety regulators raised concerns over the safety of the ingredients.

Euromonitor says that domestic manufacturers are dominating the packaged food sector, “whereas international players still have to understand the dynamics of the Indian consumer mindset”. Domestic manufacturers are also increasing their range of products, it says.

Amul, a dairy brand based in the small town of Anand in Gujarat, is considered to be one of India’s biggest success stories. It is the brand of Gujarat Co-operative Milk Marketing Federation, which is owned by millions of dairy farmers in Gujarat. Amul is a well-known name and produces butter, processed cheese, ice cream, chocolate and a range of other foods.

Amul turned over 230 billion Indian rupees (Dh12.7bn) in the financial year to the end of March, up by 11 per cent on the previous year, and holds the biggest market share in the packaged food sector in India.

Its pricing is attractive and it is quick to compete with any international names that come into the market. For example, when Unilever launched its Magnum brand of ice cream bars covered in Belgian chocolate, Amul responded last year by bringing out a similar product, Epic, which it sells for less than half the price of Magnum.

Source : thenational