Since 1950s, Cadbury & Nestle had a chocolate duopoly in India
But got beaten by an Italian chocolate that entered in 2004
The CRAZY part? They easily sold expensive chocolates in a price sensitive market like India
THREAD: How Ferrero Rocher became the most gifted chocolate🧵
But got beaten by an Italian chocolate that entered in 2004
The CRAZY part? They easily sold expensive chocolates in a price sensitive market like India
THREAD: How Ferrero Rocher became the most gifted chocolate🧵
Ferrero entered India in 2004 as part of its global social enterprise
— a concept where they are set to make profit, but at the same time, address unemployment issues in the less advantaged areas of developing countries.
— a concept where they are set to make profit, but at the same time, address unemployment issues in the less advantaged areas of developing countries.
At the time, India hardly had a market for premium chocolates.
Ferrero Rocher’s only competiton was Cadbury celebrations which used to cost between Rs 100 and Rs 175 per box.
But the chocolates inside could easily be bought under Rs 25 individually.
Ferrero Rocher’s only competiton was Cadbury celebrations which used to cost between Rs 100 and Rs 175 per box.
But the chocolates inside could easily be bought under Rs 25 individually.
Ferrero introduced Ferrero Rocher at Rs 300 per box of 12 chocolates.
Which might have sounded crazy back then.
But today, the scenario has changed a lot as premium chocolates make up around 30% of the entire chocolate market in India.
Which might have sounded crazy back then.
But today, the scenario has changed a lot as premium chocolates make up around 30% of the entire chocolate market in India.
The Indian chocolate market was valued at $2.1 billion in 2022. It is expected to reach $4.3 billion by 2030.
Although it still lags behind giant Cadbury which commands 68% share and Nestle which has 19%, while Ferrero has almost 8% market share.
Although it still lags behind giant Cadbury which commands 68% share and Nestle which has 19%, while Ferrero has almost 8% market share.
Yet, both the brands weren’t able to compete with Ferrero in the niche market of premium chocolates with their existing products.
India is a price sensitive market, and most brands offer products at low prices in small packs.
India is a price sensitive market, and most brands offer products at low prices in small packs.
Cadbury has been selling Dairy milk at an entry price of Rs 5 for over a decade now.
So, how did Ferrero Rocher not only launch premium & expensive chocolates but also succeeded at that?
So, how did Ferrero Rocher not only launch premium & expensive chocolates but also succeeded at that?
First off, instead of hiring a research firm for test marketing, they researched on their own so that they understand the Indian consumer better.
They first carry out internal taste testing to see whether consumers rate the product to the same high standards as the company.
They first carry out internal taste testing to see whether consumers rate the product to the same high standards as the company.
Then conduct market testing in one state before going national.
To do so they set up their first branch office in Chennai. The southern region offered them contrasting cultures of India.
To do so they set up their first branch office in Chennai. The southern region offered them contrasting cultures of India.
As people in Kerala are open to experimenting while Tamil Nadu known to be more conservative.
So, within a short distance, they could see both the India's, one which runs faster and the other which is traditional.
This market research helped Ferrero in two ways:
So, within a short distance, they could see both the India's, one which runs faster and the other which is traditional.
This market research helped Ferrero in two ways:
1️⃣ They realised that there is a set of customers in India who are open to buying an expensive box of chocolates. Even if it was sold in a kirana store.
2️⃣ Customers would buy expensive chocolates mostly during festivals when they generally gift sweets.
2️⃣ Customers would buy expensive chocolates mostly during festivals when they generally gift sweets.
They supplied Ferrero Rocher to the supermarkets and retail stores and to the kirana stores too.
As per the distribution strategy, the retail stores got these chocolates round the year.
But the Kirana stores got these chocolates mostly during festivals from October to March.
As per the distribution strategy, the retail stores got these chocolates round the year.
But the Kirana stores got these chocolates mostly during festivals from October to March.
It’s because during summers it's difficult to stock chocolates in kirana stores due to the lack of refrigeration facilities.
So, they are allowed to stock only 3 to 4 boxes of chocolates.
As Ferrero never compromises on quality.
So, they are allowed to stock only 3 to 4 boxes of chocolates.
As Ferrero never compromises on quality.
If any of its products has even the slightest flaw in its presentation or packaging, it is called off from the market.
They want their customers to enjoy sophisticated flavours, elegant packaging and a sense of luxury.
Which shows up in their branding.
They want their customers to enjoy sophisticated flavours, elegant packaging and a sense of luxury.
Which shows up in their branding.
The key growth driver of the premium chocolates in India is the tradition of gifting sweets.
Few years back sweets were the only option in delicacy gifting, but smart marketing techniques have positioned chocolates as an alternative.
Few years back sweets were the only option in delicacy gifting, but smart marketing techniques have positioned chocolates as an alternative.
And Ferrero Rocher has become — the gift of choice.
The rounded shape and golden wrapper made Ferrero Rocher look like — a Ladoo.
Which made it an instant hit in delicacy gifting during festivals. Offering guests a bowl of Ferrero Rocher has become a symbol of generosity.
The rounded shape and golden wrapper made Ferrero Rocher look like — a Ladoo.
Which made it an instant hit in delicacy gifting during festivals. Offering guests a bowl of Ferrero Rocher has become a symbol of generosity.
The chocolates are of high status but — obtainable.
The aspirational aspect of Ferrero Rocher is part of its identity.
Ferrero rolled out Ferrero Rocher nationwide in 2007 and followed this up with Kinder Joy and Tic Tac in 2009.
The aspirational aspect of Ferrero Rocher is part of its identity.
Ferrero rolled out Ferrero Rocher nationwide in 2007 and followed this up with Kinder Joy and Tic Tac in 2009.
Ferrero has only a few of its product offerings in India as it wants to focus on a few things and do them well.
Be it Ferrero Rocher, Kinder Joy, Tic Tac or Nutella.
Be it Ferrero Rocher, Kinder Joy, Tic Tac or Nutella.
Although Cadbury and Nestle also sell premium brands now, their larger share of the revenue comes from mass-market products.
Ferrero never had any such plans of making cheaper variants of Ferrero Rocher, Tic Tac, or Kinder Joy.
Ferrero never had any such plans of making cheaper variants of Ferrero Rocher, Tic Tac, or Kinder Joy.
They followed a differentiation strategy which is an unconventional way of not focusing on low price products.
Tic Tac is priced at 10, while most mouth freshener candies cost Rs 1 or 2.
And Kinder Joy doesn’t even has any competition and it’s priced at Rs 30.
Tic Tac is priced at 10, while most mouth freshener candies cost Rs 1 or 2.
And Kinder Joy doesn’t even has any competition and it’s priced at Rs 30.
Ferrero was always bullish on India’s growth being exponential.
They have invested over Rs 2000 crores in setting up production lines, distribution and marketing.
In 2011, they started a factory at Baramati in Maharashtra.
They have invested over Rs 2000 crores in setting up production lines, distribution and marketing.
In 2011, they started a factory at Baramati in Maharashtra.
The factory makes 1M Kinder Joy eggs and 20M pallets of Tic Tac daily.
Though the company still imports Ferrero Rocher, it has made India its hub for Asia and exports half its local production.
The company has now over 2,000 employees working at its Baramati factory.
Though the company still imports Ferrero Rocher, it has made India its hub for Asia and exports half its local production.
The company has now over 2,000 employees working at its Baramati factory.
Indians now form the third largest workforce by nationality after Italians and Germans for its parent company.
Their initial vision of becoming a global social enterprise is definitely a success.
Their initial vision of becoming a global social enterprise is definitely a success.
If you liked this read, do RePost🔄 the 1st post
and follow us @FinFloww for such reads every Monday, Wednesday and Friday!
and follow us @FinFloww for such reads every Monday, Wednesday and Friday!
Join the FinFloww channel on WhatsApp to receive such stories daily: whatsapp.com
Subscribe to WHAT THE FLOWW?, our weekly email newsletter where we dive deeper into such concepts: finfloww.bio.link
Loading suggestions...