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Chocolate industry Presentation
1. Chapters
โข Research Methodology
โข Study of Global Market
โข Study of Indian Market
โข Product Profile
โข Demand Determination of Chocolate Industry
โข Distribution channel in chocolate industry
โข Key issues & current trends
โข PEST analysis
โข Michel Porterโs Five Force Model
โข Other Portfolio Model
โข Financial Analysis
โข Opportunity & Threat Analysis
โข Findings
โข Bibliography
2. Research Methodology
Objective
Main objective:
โขTo study the macro environment factors affecting chocolate industry
Sub-objective:
โขTo study the characteristics of chocolate industry
โขTo study political, economic, social and technological factors affecting chocolate industry
โขTo study opportunities and threats for the chocolate industry
โขTo find out the global trends in production, consumption, product development and Marketing
โขTo analyze driving forces for the chocolate industry
โขTo identify the porterโs five forces and its impact on chocolate industry
โขTo draw conclusion from the BCG Matrix
โขTo identify the level of competition between different players in chocolate industry
โขTo find out the key success factor in chocolate industry
โขTo analyze the value chain of chocolate industry
3. Contโฆ
Research design Exploratory
Data collection & sources Secondary data
Analysis plan
โข PEST Analysis
โข Michel Porterโs Five Force Model
โข BCG Matrix
โข Strategic Group Mapping
โข GE Nine-Cell
โข Driving Forces
โข Key Success Factors
โข Value Chain Analysis
Limitations
โข The whole study is based on secondary data
โข It is assumed that whole data is authenticated and on that basis conclusion is derived. So
it is may possible it is not in proper manner
โข The level of reliability may be less as it is based on secondary data
โข Financial data of some companies were not available at the time of the study
4. Study of Global Market
Market size
Global chocolate market will grow to $98.3
billion in 2016 from the 85 billion it was at in
2013
CAGR
21%
12% 11%
9%
8%
7%
4%
0%
5%
10%
15%
20%
25%
India Latin
America
Brazil China Russia Eastern
Europe
Mexico
Compound Annual Growth Rate
Per Capita Chocolate Consumption, by
country (2014)
Country Per Capita Consumption (Kg)
Switzerland 9
Germany 7.9
Austria 7.8
Ireland 7.5
United Kingdom 7.5
Norway 6.6
Estonia 6
Slovakia 5.4
Sweden 5.4
Kazakhstan 5.3
โข India - about 120 gm in 2013
5. Contโฆ
Segment of the chocolate industry
The market is segmented into various products such as,
๏ง Dark chocolate
๏ง Milk chocolate
๏ง White chocolate
Additionally, the market is segmented based on sales frequency such as
๏ง Daily chocolate
๏ง Premium chocolate
๏ง Seasonal chocolate
6. Contโฆ
Main manufacturers of chocolate in the world
Company
Net Sales 2013 (US$
millions)
Mars Inc (USA) 17,640
Mondelฤz International Inc (USA) 14,862
Nestlรฉ SA (Switzerland) 11,760
Meiji Holdings Co Ltd (Japan) 11,742
Ferrero Group (Italy) 10,900
Hershey Foods Corp (USA) 7,043
Innovation
โขPersonalizing chocolate
โขThe 3D printing revolution
7. Contโฆ
Cocoa suppliers
Major cocoa producing countries in each region include:
Africa: Cรดte dโIvoire, Ghana, Nigeria, Cameroon
Asia/Oceania : Indonesia, Malaysia, Papua New Guinea
Americas : Brazil, Ecuador, Colombia
Africa
68%
Americas
15%
Asia
17%
Global Cocoa Production
www.worldcocoa.org
8. Study of Indian Market
India's chocolate market is estimated at around Rs 3,000 crore
The overall chocolate market is growing 15% a year
According to India Chocolate Market Forecast & Opportunities,
2018, the per capita consumption of chocolates is increasing in
the country which will continue to flourish the market revenues
Continuous rise in per capita income, changing consumer
preferences and growing gifting tradition are boosting chocolate
consumption in India
Consumer preferences in India have gradually transitioned from
traditional sweets to chocolates over the last couple of decades
9. Contโฆ
Market share of major players
Mondelez
India
62%Nestle,18%
Mars, 6%
Ferrero,3%
Amul, 3%
Others, 8%
India Chocolate Market Share. Source: ValueNotes
Indiaโs chocolate sales (2008-2018)
10. Product Profile
Chocolate is a sweet that is thousands of years old, which today is made of the mass
of cocoa beans and cocoa butter obtained by processing roasted cocoa beans and
powdered sugar, in the case of milk chocolate, milk raw material is added to the
ingredients.
Ingredients
Chocolate Liquor
Chocolate
Lecithin
Sugar
Cocoa Butter
Vanilla, Fruits, Nuts
11. Contโฆ
Types of chocolate Share of milk, white and dark
chocolate in total sales of chocolate
Milk
75%
White
16%
Dark
9%
Milk chocolate is currently the
most popular category in
India, contributing to 75% of
the total sales of chocolates.
Cadbury dairy milk is the
market leader in the milk
chocolate segment
Dark chocolate, with only a
9% share of the market, is
expected to be the fastest
growing segment due to its
health benefits and increasing
awareness among Indian
consumers
15. Key issues & current trends
Key issues
โข Child Labor and Slavery in the Chocolate Industry
โข Rise in price of raw material
Current trends
โข Demand for Dark Chocolates
โข Consumption of chocolates
โข Occasion and celebration
โข Packaging
โข Premium chocolates
16. PEST Analysis
Political factor
Increasing price of cocoa
2200
2431
2825
3223
0
500
1000
1500
2000
2500
3000
3500
2011 2012 2013 2014
US Dollars Per Metric Ton
Source:indexmundi.com
17. Contโฆ
Increasing price of hazelnut
Cold chain facility
Mandatory Labeling & other FSSAI norms
Encouragement to private sector
Relaxed FDI norms
Incentives for development of storage facilities
18. Contโฆ
Conclusion
Factors Favorable Unfavorable
Increasing price of cocoa โ
Increasing price of hazelnut โ
Cold chain facility โ
FSSAI norms โ
Encouragement to private sector โ
Relaxed FDI norms โ
Incentives for development of storage
facilities
โ
21. Contโฆ
Conclusion
Factors Favorable Unfavorable
Gross domestic product โ
Per capita income โ
Inflation rate โ
Unemployment trends โ
Socio-cultural factor
Factors Favorable Unfavorable
Age distribution โ
Culture โ
Eating habits โ
Health consciousness โ
Technological factor
Personalizing chocolate and the
3D printing revolution are the
technological changes in
chocolate industry
22. Michel Porterโs Five Force Model
Intensity of rivalry among competitors in an industry
Parameters Description
Very High
(1)
High
(2)
Medium
(3)
Low
(4)
Very Low
(5)
Number of
players
More โ
Market growth
rate
High โ
Rivals become
equal in size
Yes โ
Switching cost of
buyers
Low โ
Frequent &
aggressive
moves
Yes โ
23. Contโฆ
Threat of new entrants
Parameters Description
Very High
(1)
High
(2)
Medium
(3)
Low
(4)
Very Low
(5)
Existing players struggling to earn
good profit
Profit margin is good โ
Industry outlook is risky Good future โ
Industry growth rate High โ
Economies of scale Required โ
Access to distribution channel Easy โ
Access to raw material Difficult โ
Capital requirement High โ
Switching cost of buyers Low โ
Customer loyalty Low โ
24. Contโฆ
Threat of substitute products
Parameters Description
Very High
(1)
High
(2)
Medium
(3)
Low
(4)
Very Low
(5)
Availability of
substitute
product
Easily available โ
Price of
substitute
product
Low โ
Switching
cost
Low โ
25. Contโฆ
Bargaining power of suppliers (cocoa)
Parameters Description
Very High
(1)
High
(2)
Medium
(3)
Low
(4)
Very Low
(5)
Number of
suppliers
Few โ
Price of raw
material
High โ
Substitute of
raw material
available
No โ
Suppliers are
scattered or
concentrated
Concentrated โ
26. Contโฆ
Bargaining power of suppliers (Milk powder)
Parameters Description
Very High
(1)
High
(2)
Medium
(3)
Low
(4)
Very Low
(5)
Number of
suppliers
More โ
Price of raw
material
Low โ
Substitute of
raw material
available
No โ
Suppliers are
scattered or
concentrated
Scattered โ
27. Contโฆ
Bargaining power of buyers
Parameters Description
Very High
(1)
High
(2)
Medium
(3)
Low
(4)
Very Low
(5)
Number of
buyers
Many โ
Buyers are
well informed
Yes โ
Buyers are
scattered or
concentrated
Scattered โ
Buyers are
loyal
No โ
28. Contโฆ
Conclusion
Rivalry among competitors Very High
Threat of new entrants Medium
Threat of substitute products Very High
Bargaining power of suppliers High
Bargaining power of buyers Low
Competitive
Rivalry
Threat of
new
entry
Buyer powerSupplier
power
Threatof
substitut
e
29. Other Portfolio Model
BCG Matrix
GE Nine cell matrix
Strategic Group Mapping
Driving force
Key Success Factor
Value Chain Analysis
34. Strategic Group Mapping
We have made the group mapping of five companies which are listed as below:
Mondelez India
Nestle
Mars
Amul
Lotus
We have selected two variables - Price and Number of brands. Price and number of brands
both are divided into three categories which is as per the below table
Price Number of brands
Low 0-10 Less than 7
Medium 10-20 7-9
High More than 20 More than 9
36. Driving forces
Festivals
Change in who buys the chocolates
Change in long-term industry growth rate
Technological changes
Product innovation
Key Success Factor
Tradition of gifting sweets in India
Shift in consumer preference from traditional mithai to chocolates
Rising income levels
Attractive packing i.e. marketing innovation
Pricing which is suitable to every pocket
37. Value Chain Analysis
Production Marketing
Crop
Harvest
Ferment, dry
Trading
Storage,
transport
Processing
Roasting
Grinding
Pressing
Chocolate
Mfg.
Consumer
Distribution
PrimaryActivitiesSupportActivities
Research & development
Human resource management
Technical assistance
General administration
41. Opportunity & Threat Analysis
Opportunities
โข Increasing gifting
culture
โข Increasing health
consciousness
โข Increase reach in rural
market
โข Acquire competition
โข Diversification of
product range
Threats
โข Increase in cost of raw
material
โข Availability of substitute
product
โข Low switching cost
42. Findings
Per capita consumption of chocolates in India has grown from 40 grams in 2008 to
120 grams in 2013
Mondelez India (Cadbury) is the market leader with 62% market share ,followed by
Nestle with 22% market share
Switzerland is the country with highest chocolate consumption
Cocoa price is continuously increasing
Urban cities account for nearly 80% of the consumption of chocolates
Future outlook of chocolate industry is good
Chocolate sales is continuously increasing for the last five years
Cadbury Glow has launched a unique gifting website that connect both the gifter and
recipient. Customers can add a personal touch to their gift of Cadbury Glow by writing
a personal note, sending a lovely song or experiencing again fond memories by
videos and photos
Personalizing chocolate and the 3D printing revolution are the technological changes
in chocolate industry
43. Contโฆ
Dark chocolate is expected to be the fastest growing segment due to its health
benefits and increasing awareness among Indian consumers
Political, economic, social and technological factors are favorable for chocolate
industry
Rivalry among competitors, threat of substitute product and bargaining power of
supplier is very high
Threat of new entry is medium and bargaining power of buyer is low
After analyzing GE nine cell matrix we come to know about that all the companies fall
in the high priority area
Cadbury has more than nine brand and offers chocolate in all the price range
Within Nestle and Lotus there is more competition having 7-9 brands
Mars and Amul are close competitor
44. Contโฆ
Driving forces in the chocolate industry includes festivals & occasions, changes in
who buys the product, change in long term industry growth rate, technological
changes & product innovation
Key success factors in chocolate industry are shift in consumer preference from
traditional mithai to chocolates rising income levels, attractive packing, pricing which
is suitable to every pocket
Mondelez India foods ltd. cocoa department produces over latest million hybrid
seedlings annually and distributes among farmers in Kerala, Andhra, Tamilnadu and
Karnataka
45. Bibliography
Book
โCrafting and Executing Strategyโ by A Thompson, Margaret A Peteraf, John E Gamble, A J
Strickland, A K Jain, Tata McGraw Hill Education Pvt. Ltd., Eighteenth Editionโ
Websites
โข www.confectionerynews.com
โข www.indianmirror.com
โข www.strategicmanagementinsight.com
โข www.livemint.com
โข www.moneycontrol.com
โข www.ibef.org
โข www.statista.com
โข www.bloomberg.com
โข www.kpmg.com
โข www.worldcocoa.org
โข www.myaccountingcourse.com
โข www.readyratio.com
โข www.indiaretailing.com
โข www.indexmundi.com