Confectionery retail value sales in India rose by 7% in constant terms in 2010. Stronger economic growth boosted consumer confidence and led to increased disposable incomes. This benefited the performance of key indulgence categories like chocolate confectionery and functional gum, which command higher unit prices and are particularly sensitive to an improvement in the economic climate.
Real GDP growth stood at 10% in 2010, four percentage points up on the previous year, according to Euromonitor International’s Countries & Consumers database. According to a report released by the World Bank in February 2011, GDP growth will reach 8% over the 2011-2012 fiscal year. However, the World Bank’s report stated that “imports would continue to outpace exports”, hampering stronger economic growth in 2011 and 2012.
India is the second most populous country in the world. Its population reached the 1.2 billion mark in 2010, according to Euromonitor International’s Countries & Consumers database. India continues to be an agricultural country in demographic terms. The urban population accounted for just 30% of the total in 2010. However, the urban population is set to increase by 46 million over the 2010-2015 period, driving demand for processed food items like dairy and chocolate products.
India has more than 2,000 ethnic groups, and every major religion is represented, as are four major families of languages (Indo-European, Dravidian, Austro-Asiatic and Tibeto-Burman).
Chocolate confectionery sales grew by 13% in constant value terms in 2010, a stronger performance than the 10% recorded in 2009. This stronger growth can be attributed to Indian manufacturers’ efforts to tap into both upper- and lower-income consumers. Furthermore, giving chocolate as a gift for festive occasions has returned while consumers are more confident spending their income given the better economic climate in India.
India’s improving consumer confidence and increasing disposable income played a positive role in the rising demand for sugar confectionery products, which grew by 1% in constant retail value terms in 2010. This mild but positive growth reversed the 1% decline recorded the previous year.
Medicated confectionery was the best performer in 2010, growing by 2.4% in value terms. Its robust performance was partly down to the fact that most medicated confectionery products contain ayurvedic herbal ingredients. The latter are quite familiar to Indian consumers in terms of taste and health benefits.
Gum value sales grew by 4% in 2010, 1.6 percentage points up on the previous year. This robust performance was driven by rising consumption of gum in smaller towns and cities. The consumer base for functional gum is still relatively small (functional gum accounted for around only 5% of retail gum volume sales in 2010) because its average retail price remains much higher than that of other gum products. Due to its small base, functional gum remained the best performing gum category in value terms in 2010, growing by some 17%.
Other factors driving such a robust growth rate included active support from manufacturers in terms of educating consumers about the dental benefits of functional gum. Wrigley’s Orbit even bears an official seal of endorsement from the Indian Dental Association.