Mondelez Foods, the global confectionery giant known for iconic brands like Cadbury and Oreo, foresees a robust recovery in the Indian market, driven by favourable monsoon conditions and political stability. However, the company warns that soaring cocoa prices could pose challenges for pricing and demand.
Samir Jain, President of Mondelez India, highlighted the positive impact of a good monsoon on consumer sentiment and economic stability. “A good and well-distributed monsoon is crucial for agricultural productivity and overall economic health,” Jain said in his first major interview since taking the helm last year. He added that the stability of the government and its welfare-focused policies are key factors that could boost economic growth and consumer confidence.
Despite these positive indicators, Jain noted that record-high cocoa prices are a significant concern. “Cocoa prices have surged to unprecedented levels, impacting our costs substantially. While prices have slightly decreased from the peak of over $11,000 per metric tonne in April, they remain more than double compared to last year,” he explained. This inflationary pressure is expected to influence product pricing, although Mondelez aims to manage this with a careful and measured approach.
Mondelez plans a major investment of ₹4,000 crore in India over the next four years, focusing on expanding manufacturing and strengthening the supply chain to meet rising demand. India, a crucial market for Mondelez, generates approximately $1.2 billion in revenue for the parent company and controls nearly two-thirds of the country’s chocolate market. Cadbury Dairy Milk holds a leading market share in India, making it one of Mondelez’s top-performing brands globally, alongside Oreo, for which India is the third-largest market after the US and China.
Cocoa prices have typically hovered around $2,500 per metric tonne in recent years, but the recent surge to over $11,000 has led to increased costs. “The inflation we are experiencing is unlike anything seen in decades. We anticipate further inflationary impacts into the second half of next year, but we plan to adjust our pricing strategies carefully,” Jain emphasized.
The chocolate and confectionery sector in India is valued at around ₹25,000 crore, with each category contributing roughly half to the overall industry. Last year, the sector saw double-digit growth in impulse categories like candies and chocolate bars, even as the broader FMCG market slowed down. With India’s per capita chocolate consumption at around 200 grams per year, compared to over 10 kilograms per year in the UK, there is significant potential for growth. Mondelez aims to expand its distribution network, which currently reaches nearly 2.5 million retail outlets.
Luca Zaramella, Chief Financial Officer of Mondelez International, underscored India’s strategic importance during a recent conference. “India is one of our most successful markets, showing tremendous growth across both entry-level and premium chocolate segments,” Zaramella said. He highlighted Mondelez’s focus on driving volume growth in high-potential markets like India, China, and Brazil, aiming for at least high single-digit, if not double-digit, growth rates.
As Mondelez navigates the challenges of inflation and rising costs, the combination of favourable monsoon conditions and a stable political environment in India offers a promising outlook for sustained growth and market expansion.