Italy’s chocolate maker, Ferrero Rocher is investing Rs367 cr (US$56 million) in its operations in India with the focus of improving its production and distribution systems in the country.

 

"Ferrero is expanding its production facility at Baramati Maharashtra and strengthening its warehousing and distribution in India. We will continue to invest in the Indian market and have a long-term commitment to India," said a spokeswoman at Ferrero India. 

 

The maker of Nutella spread and Kinder Joy chocolates entered the Indian market seven years ago, and its Ferrero Rocher brand has grown its presence in the market overtaking Mondelez in the premium gifting category based on revenues, and is approaching Nestlé’s chocolate division with annual sales of Rs 1,000 cr (US$152.7 million).

 

Ferrero Rocher’s Indian business is its third largest following Italy and Germany based on workforce, and its production facility located in Baramati, which produces Kinder Joy and Tic Tacs, exports to China, the Middle East, and Southeast Asia as well as supplying India’s domestic market.

 

Indian consumers consume the least amount of chocolate among emerging markets and ten times less than consumers in developed markets at 117 grams per person per year. However, the huge population and vast number of potential consumers in the market have drawn chocolate companies that are betting on the potential growth in the nascent segment.

 

Ferrero India reported its first profit for the year ending August 2014, and even though its only Rs 12 cr (US$1.8 million) it has put pressure on the other players in the sector as the Diwali festival approaches when it is tradition to exchange sweets.

 

"Other companies may start to feel the pressure, but it will be limited to their gifting products. Ferrero for example does not operate in the massively popular bar format, which is the mainstay for Mondelez and Nestle," said Nitin Chordia, the founder of chocolate tasting club Cocoatrait.