Sales of chocolates, candies, toffees, and chewing gum bars slowed significantly in India during FY24, impacting growth for major players such as Mondelez, Perfetti Van Melle, Hershey, and Mars International. Financial filings reveal that after experiencing robust double-digit growth in FY23, these companies saw sharp declines in their growth rates in the last fiscal year.
For instance, Mondelez’s growth rate fell from 22% in FY23 to 13% in FY24, while Perfetti’s growth dropped to 11% from 26%. Hershey’s sales slid by 3%, and Mars posted a modest 3% growth, down significantly from 24% the year before. This slowdown has persisted into the current fiscal year.
Inflation and Competition Weigh on Sales
Dirk Van de Put, Chairman of Mondelez International, attributed the decline to inflation affecting lower- and middle-income households in India, leading consumers to opt for more budget-friendly products. “We have seen a dip due to intense competition, with consumers moving to lower price points,” he said in an earnings call earlier this year.
The Indian chocolate and confectionery market, valued at around ₹25,000 crore, is split between chocolates and sugar-based confections. During the pandemic, the snacking boom boosted categories such as chocolates, chips, and cookies. However, recent data suggest that this trend is now receding.
Cocoa Prices Add to Challenges
Historically, indulgent products like chocolates perform well during economic slowdowns as consumers seek small, comforting treats. However, record-high cocoa prices disrupted this trend. From an average of $2,500 per metric tonne, cocoa prices soared to over $11,000 in March 2024, forcing confectionery brands to hike prices. Though prices have since dipped to around $7,000, they remain significantly higher than the previous year.
Industry Outlook
While India’s per capita chocolate consumption remains low at 200 grams per year (compared to over 10 kg per year in the UK), there is ample growth potential. However, Michelle Buck, Chairman of The Hershey Company, noted that recent softness in sales reflects difficult comparisons with the previous year’s growth and weaker seasonal demand.
As inflation continues to pressure household budgets, the chocolate and candy industry faces an uphill battle to regain momentum. Companies may need to balance pricing and affordability to sustain growth in the coming years.