Chocolate market beckons Gujarat players eye larger share

After the success of his food startup Flourish, Sushil Handa, a city-based serial entrepreneur, is now planning to foray into manufacturing of chocolates. Dominated by multinationals, India’s Rs 10,000 crore chocolate market has seen domestic players stepping up their efforts to grab a bigger share of the business.

The likes of Cadbury and Nestle have seen competition from Amul and Schmitten over the past few years. Enthused by the growing demand, these players from Gujarat are now expanding their production capacities further. They are eyeing a bigger share of the chocolate market which is expected to grow at CAGR of 15% till 2028.

Dairy giant Amul — marketed by Gujarat Co-operative Milk Market Federation (GCMMF) — raised its production capacity by building a new plant at Anand, which was inaugurated by Prime Minister Narendra Modi last year.

At present, Amul has 1,000 tonnes per month chocolate making capacity. "Addition of one or two new production lines is under way, after which the capacity will increase to 1,200 tonnes a month," said R S Sodhi, managing director, GCMMF.

"We aim to double our production capacity from the current level over the next one and a half years. Civil work for expansion is already done," he

added.

Rajhans group with its chocolate brands--Schmitten and Hoppits – started with a monthly capacity of 600 tonnes in 2015. The Surat-based entity is now ramping up its producttion capacity to 1,000 tonnes.

New players like Flourish plan to start in a small way and then build up. "In the next six months or so, we aim to foray into chocolate making. We will make artisanal chocolates that are authentic, original and natural, meeting international standards," said Sushil Handa, founder, Flourish Purefoods.

Instead of masses, the focus of Flourish will be to cater a niche audience for chocolates. Handa sees a huge opportunity in the rapidly growing artisanal market.

Increase in purchasing power and changing food consumption patterns coupled with marketing and promotional activities have boosted the chocolate market. Sales of boxed assortments are growing at a faster pace driven by increased trend of gifting on occasions.

"Two factors have helped change the taste of our Indian sweet tooth. One is the growing health-consciousness resulting in cutting down on traditional sweets. The other being the international exposure of Indian consumers," said Jayesh Desai, chairman, Rajhans group.

From milky sweet chocolates, the younger generation has developed a liking for slightly bitter or even plain bitter taste in chocolates. "The demand for dark chocolate was such that major players who catered to the Indian market had to come up with darker versions and new players with foreign collaboration caught a sniff of the Indian markets," said Desai. He added, "More than half the varieties of Schmitten and Hoppits are dark chocolates and they sell more than regular ones even in Gujarat today."

Amul, too, is betting big on dark chocolates. "Amul has so far launched around 22 variants of dark chocolates," said the MD of Amul.

While Gujarat is warming up to chocolate production, it is already a leader in candies and toffees. Surendranagar-based Makson group is the largest contract manufacturer of candies in India.

"Since 1984-85, Makson group is engaged in contract manufacturing. We make candies and chocolates for Cadbury, Nestle, Hershey’s, Parley and ITC," said Dhanjibhai Patel, chairman, Makson group. He said there are around 50 confectionery plants in Gujarat. The group operates a plant with 100 tonne per day output at Surendranagar and a similar plant in Bhopal. "We expand our capacity by 20-25% every year," Patel added.

Gopinath Foods Private Ltd operates a 10-tonne per day unit for toffee and candies at Kamrej near Surat. "We sell 1,000 kg of candies and toffees every day. Smaller packs of branded chocolates, however, are eating into the market share of candies," said Harish Mundraniya of Gopinath Foods.