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Hershey eyes bigger bite of India market with launch of global brands

Chocolate maker Hershey has decided to bring its core global portfolio to India, eight years after it began operations here. The firm is launching its chocolate bars and popular Kisses brand of confectioneries across the country, which may significantly ramp up its portfolio in a highly competitive market.

This comes at a time when the firm has been struggling to turn profitable here. Hershey India incurred net losses at least since 2014-15 (FY15). It has, however, managed to cut these down in past two years. From Rs 365 crore net loss in FY15, it’s bottom-line improved to Rs 109 crore net loss in FY19. The firm’s revenue, though, continues to lag the FY15 level (Rs 385 crore) as sales amounted to Rs 375 crore last year.

According to Herjit Bhalla, managing director, Hershey India, the firm’s brand building exercises and channel development activities during its initial years here impacted bottom-line. “We are still a very young player in India and in the past two years we have invested heavily to pave the way for launching our iconic global products like Jolly Rancher, Brookside and Kisses,” he said.

While, Hershey lags other global majors like Mondelez, Nestlé, Ferrero, and Mars International in the local market, Bhalla said it has been heavily dependent on its peripheral products like chocolate syrups and soya milks till now, with no key global brands available in India. Launched here in three variants, Hershey bars are the American firm’s first products — introduced during its entry into the US chocolate market 110 years ago. It is also re-branding its Brookside brand of chocolates by changing the name to Hershey’s Exotic Dark.

Priced at a premium compared to average chocolate and confectionery products in the country, Hershey’s offerings are primarily targeted at urban consumers. It is now aiming to make the new brands available only in large-format kirana stores, modern trade and on e-commerce portals in the top 70 cities.

India’s chocolate market, worth around Rs 10,000 crore, is dominated by Mondelez that raked in Rs 6,746 crore in sales in FY19, followed by Ferrero (Rs 1,473 crore). Swiss fast-moving consumer goods giant Nestlé that got some Rs 1,400 crore in sales from the segment, although dominates the confectionery space. According to Bhalla, despite an overall slowdown gripping the country’s FMCG market chocolates have remained immune to it with 12 per cent yearly growth.

Source: Business Standard