AN OVERVIEW OF CHOCOLATE INDUSTRY IN INDIAN:The chocolate industry in India as it stands today is dominated by two companies, both multinationals.

The market leader is Cadbury

with a lion's share of 70 percent. Tillthe early 90s, Cadbury had a market share of over 80 percent, but its party was spoiledwhen Nestle

appeared on the scene. The Gujarat Co-operative Milk Marketing Federation(GCMMF) and Central Arecanut and Cocoa Manufactures and Processors Co-operative(CAMPCO) are the other companies operating in this segment. Competition in thesegment will get keener as overseas chocolate giants Hershey's and Mars consolidate tograb a bite of the Indian chocolate pie.INDIA, stands nowhere even near to these countries when compared in terms of Per Capita Chocolate Consumption. The Indian chocolate industry is extremely fragmentedwith a range of products catering to a variety of consumers. We have the bars/slabs, jellies,lollipops, toffees and sugar candies. Given India's mammoth population, it comes as asurprise that per capita chocolate consumption in the country is dismally low - a mere 20gms per Indian. Compare this to over 7 kgs in most developed nations.However, Indians consumed 22,000 tones of chocolate last year and consumption isgrowing at 10-12 percent annually. The market size of chocolates was estimated to bearound 16,000 tones, valued around Rs.4.16 billion in 1998. Volume growth which wasover 20% pa in the 3 years preceding 1998, slowed down thereafter.Both chocolate and sugar confectioneries have abysmally low penetration levels, infact, even lower than biscuits, which reach 56 per cent of the households. Market growthin the chocolate segment has hovered between 10 to 20%. In the last five years, thecategory has grown by 14-15% on an average and will expect it to continue growing at asimilar rate in the next five years.Per capita consumption of chocolates in India is minuscule at 20gms in India ascompared to around 5-8 kgs and 8-10 kgs respectively in most European countries.Awareness about chocolates is very high in urban areas at over 95%.The launch of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption.

This is also because chocolate, which was considered to be an elitist food,has caught the fancy of buyers looking for a lifestyle item at affordable cost.A study had projected that sales of the Indian chocolate industry would rise from$125/$130 million in 1998 to $175/$180 million by the year 2000 and to $450 million bythe year 2005 which ACTUALLY happened irrespective of various negative factors AC Nielsen ORG Marg report estimates the Indian Chocolate Industry worth at Rs 2,000-crore (Rs 20 billion)

Chocolate Consumption Structure - 2004

Children 55%

Adults 12%

Young Adults 33%

Chocolate & Confectionery Market of India - 2004

Chocolate Counts Rs. 250 Cr. 10%

Chocolate Bar Rs. 350 Cr. 14%

Mints & Chewing gums Rs. 325 Cr. 13%

Sugar Boiled Confectionery Rs. 1600 Cr. 63% INTERESTING CHOCOLATE FACTS:-Why is Chocolate in India different than most European chocolates? The temperatures in India are much higher than that of the European countries. To prevent the chocolate from melting and to enable shape retention under such hightemperatures the recipe of the chocolate is adapted to the Indian climate. Therefore themilk fat content in Indian chocolates is lesser than that of European chocolates and hencethey taste different. Sometimes, white spots appear on Chocolates sometimes. Is that safe? When a chocolate gets exposed to temperature variances from a hot day to a coldnight (which is very common all across India), the fat expression happens on the surfaceof the chocolate. 'This means white spots emerge on the surface of the chocolate. This phenomenon is called 'fat bloom' . It is entirely safe to consume chocolates however thefeel and the taste of the chocolate may not be the same as is originally intended to.

Are chocolates available for diabetics? Currently in India no manufacturer produces chocolates for diabetics, as thegovernment regulations do not permit manufacture of such chocolates. The industrymajors are liaising with the government authorities to enable manufacture of suchchocolates in India. Chocolates for diabetics, though, are available in certain parts of theworld. Chocolate: the new solution for blood pressure? Cocoa beans have antioxidant compounds called flavanols, and scientific researchsuggests they do good things to blood vessels. Dark chocolate contains flavanoids, anantioxidant which helps the body by neutralizing potentially cell-damaging substancesknown as oxygen-free radicals, a normal byproduct of metabolism. ABOUT HOME MADE CHOCOLATES:Another area of chocolate industry in India is HOME-MADE CHOCOLATES.

Thissegment is highly fragmented and operates independently. They are more pronounced for manufacturing distinct flavors and varieties of chocolates in various shapes and size. But,these chocolates are usually priced at a higher price than that available for branded products for the same quantity. House-wives from elite class usually indulge in this kindof business. They usually operate in local area and through their contact network. Somehome-made chocolate manufacturers manufacture really attractive GIFT CHOCOLATES. GROWTH OPPORTUNITIES IN INDIAN CHOCOLATE INDUSTRY:Untapped Market & Limited Consumption: The fact that chocolate is not a traditional food, high prices and domestic production problems will provide the main problems to market growth. As these markets develop, prices will fall making these products more accessible to the wider population. However the Indian market is still untapped and provides immense scope for growth, bothgeographically as well as product basket wise. Chocolates right now reaches about 70mnto 75mn consumers. It is estimated that chocolates have a potential market of about 116mnconsumers.Chocolate consumption in India is extremely low. Per capita consumption is around160gms in the urban areas, compared to 8-10kg in the developed countries. The per capitachocolate consumption in India is still much below the East Asian standards. Hence per capita consumption has a immense scope for improvement. In rural areas, it is even lower.Chocolates in India are consumed as indulgence and not as a snack food.In the past five years, the chocolate business grown by 14-15% on an average and isexpected to grow further for at least next five years. Changing Attitudes & Consumption pattern:

In the past, chocolate consumption had been restricted by low purchasing power inthe market. Chocolates and other cocoa-based snack foods were looked upon as foodsuitable only for elitist consumption till recently.But with the launch of lower-priced, smaller bars of chocolate in the last two yearsand positioning of chocolate as a substitute to traditional sweets during festivals, have boosted consumption. Chocolates which were considered to be an elitist food hit the fancyof masses looking for change in life style at affordable cost. Rural expansion: Rural market and small town markets are seen as the key to spurring double-digitgrowth. Products such as liquid chocolate packs from the existing portfolio are expected toenable rapid acceptance. Leverage India for offshoring : India is being leveraged for export of finished goods, as a superior destination for manufacturing best practices, and for BPO opportunities. All the above points bring us to aconclusion that theres an immense scope for growth of chocolate industry in India notonly in its offering pattern but also for increment in its total consumption value and size. Strategies for Growth & Success in India

Revamp the product to keep the excitement alive.

Companies should look at new avenues, while expanding the reach of its products.Distribution will hold the key. Companies need to reach out to smaller towns, wherethree-fourths of the population does not even know the product.

Merger & Acquisitions: Mergers & Acquisitions with companies that match the product portfolio & overall growth strategy should be considered which will notonly strengthen the company to establish a stronger hold in the country but alsoward off possible competition in the select category. Such collaborations will alsofacilitate companies to use each others distribution networks. Chocolate Boutiques & Designer Chocolates They call it 'choco fever'. Chocolate Boutiques are a complete chocoholicexperience. Surrounded on all sides by scrumptious chocolates wrapped neatly incolourful foil and paper, any one will be gripped by this fever.Its a world of chocolates where the flavour of Jamaican rum truffle melts in your mouth even as your hand reaches out greedily for a kiwi-flavoured concoction or whereroasted almonds are a delight to eat while your mind flirts with hazelnut praline.Manufacturers are finding an increasing number of curious customers who're pampering their taste-buds to apricot and peach chocolate,

strawberry chocolate or better still wild berry in cognac flavoured chocolate. Manufacturers are now luring their patronswith chocolates in geometric shapes, animal figurines coloured in metallic hues and glitter.For the more adventurous, there are also chocolates with pan-supari, cardamom flavoursand liqueur filling. Products like nut-based praline chocolates, some unique flavors liketamarind and chilli chocolates, and champagne and Jamaican rum truffles are alsodemanded in the market. hese manufacturers also cater to the older and the health-conscious choco-lovers,the high fibre, low fat and sugar ones are quite popular. Apart from the festive season,weddings and baby announcements also see heavy offtake of premium sweet delicacies.For those who are health conscious there is also a special range of sugar-free and dietchocolates. These are usually bought by corporates or individuals who want to make aspecial statement.Designer chocolates are tailored for customers who're looking at gifting chocolateswith a personalized touch. Embossing of names, logos of companies and personalizedmessage on the chocolates are fast becoming popular.There are 1,000 varieties of designs to choose from -- ranging from good luck charms, X'mas figurines and animals -- and nearly 50 kinds of gift packaging available tosuit any particular occasion.These designer chocolates focus a lot of attention on packaging. The packaging of these products includes materials like imported mesh, gold foils and brocade, lace andsatin-draped boxes being in heavy demand.With the rise in disposable incomes, people do not mind spending on designer chocolates, most of which costs between Rs 500 and Rs 2,500 per kg. Few chocolatemakers cater only to corporate clients for festive occasions, product launches, newemployee joinings and management training programmes. From logos to company names being embossed in chocolates of different shapes and colours, these are all in demand. THREATS IN THE CHOCOLATE INDUSTRY:-1. TEMPERATURE: A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to melt under even moderate heat. The temperatures can reach as high as 48degrees in summers, whereas chocolate starts melting at body temperature (about 37-38degrees) .Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer. 2. UNAVAILABILITY OF CONTROLLED REFRIGERATION: India does not have controlled refrigerated distribution. Air-condition supermarketsare rare. Chocolate enterprise in general

loses 1.5 percent of annual sales of Rs. 6.8 billion o heat damage.

Companies revise ingredients to make chocolate withstand heat, and soIndian chocolates are more resilient to heat than Eurupean chocolates by a factor of 2degrees. Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but tohold down power costs the shopkeepers switch off the

fridges at night. As a result thecocoa fat melts and migrates to the main body of the chocolate bar. When the cooling isswitched on in the morning, the cocoa fat solidifies and turns white, presenting a bizarre,un-sellable white on black form.Small coolers were provided to retailers to keep the chocolate from melting, but thatdidn't quite do the trick. Electricity costs money and is not provided in a uniform way, soon and off the electricity goes and the product may suffer sometimes 3. RAW MATERIALS: Cocoa is the key raw material and accounts for around 35% of the total materialcost (including packaging) of chocolates. The price of cocoa has been hitting a new highof late. Cocoa prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India does not produce cocoa to any noteworthy extent but is a large consumer of chocolates. Consumption of chocolates and other cocoabased products, especially amongthe middle class, has been growing. 4. TRANSPORTATION: Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products are sold directly to retailers. Building such a direct network in rural areas is adaunting task since the infrastructure is poor in India in rural areas. 5. THREAT FROM IMPORTED BRANDS: Free availability of imported brands bought through illegal routes pose a threat tothe domestic chocolate industry. Usually, these imported chocolates taste better thandomestic chocolate due to recipe difference. Hence consumers who are willing to spend alittle more, prefer these imported chocolates.However, the premium brands, which come through official channels, do not pose athreat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferior brand of imported

chocolates. These are not only of low quality, but are brought very near to their expirydates. Most of the cheap chocolate brands that are available do not meet Indian FoodRegulations. FACTORS AFFECTING THE GROWTH OF CHOCOLATE INDUSTRY ININDIA:-

Good monsoon ensures adequate availability of raw materials, which are mainlyagricultural in nature. Raw material prices have significant influence on margins.

Government policies

in terms of licensing, duties, movement of agriculturalcommodities etc. also affect the introduction of products, time lag for a productlaunches, taxes, excise, etc all influence the business.

Market growth driven by overall economic growth and urbanization alsocontributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases. Also, the absolute number of consumers inmiddle class & upper middle class increases.

Rupee depreciation improves export realizations; however it also makes import of raw material (esp. cocoa) expensive. BUSINESS MODEL:-

OFFER/VALUE PROPOSITION Our area of business deals with semi finished chocolates and raw chocolates. The reasonfor selecting this is due to the need in the hotels and also as a gift item for the corporate. TARGET CUSTOMERS Our target customers are hotels and corporate. The need of chocolates in hotel is in largedemand, though the making of it is easy the handling the same becomes hard. DELIVERY CHANNEL We prefer direct marketing as delivery channel by which we have a direct contact with thehotels and can deliver the product in prompt timings. RELATIONSHIP BUILDING In order to build a strong relationship with the customers and to maintain a strong bond,discounts are given to the customers even at the off seasons. REVENUE MODEL We prefer to have cash and carry method for receiving revenue but when bulk orders are placed 75 % are paid as cash and 25 % a CORE CAPABILITY We the partners in our business are versatile in various fields like production, operations,system marketing, finance and human resource management. This versatility makes usexcel our self in our business. COMPETITIVE ADVANTAGE The competitive edge in our business is to provide a unique product with a center filledsoft chocolate and also to provide seasoned chocolates with spices like cardamom, elache, pepper and other Indian spices. PARTNER NETWORK In order to succeed in the current business a strong relation is maintained with other co partners like the logistics, dealers providing raw materials, mechanics dealing with themachinery and the others relating to the business. COST METHOD

As mentioned already we are using automated machines in our business to yieldhigher profit our basic investment is for the machines in the form of fixed asset, and therest of the investment will be for the avenue where our project is going to be estabilishedand on the human resources. ANALYSIS OF BUSINESS PLAN:-

MARKET ATTRACTIVENESS As the investment in the chocolate industry in low and at the same time the return from theindustry is high, it finds an attractive market for our business to start. As said by themanagement gurus that the best way the start a business to have a minimum investment again maximum returns from it. INDUSTRY ATTRACTIVENESS As the chocolate industry is in growth trend, we are expecting to have a high demand for the chocolates in the future. Since the demand is high we find the market very attractive tostart up the business and excel in it. SEGMENT ATRACTIVENESS By segmenting the work and concentrating on a particular field further innovation can beimplemented this in turn can result in production of bulk output with the automatedmachines and delivering the same through the delivery channel. SUSTAINABLE ADVANTAGE Reasonable time maintenance has to be done with in to achieve the requirements. To havean edge compared to the competitors an unique characteristics has to added with theexisting products like the centre filling etc.. VISSION / RISK TAKING ABILITY All the steps taken should always lead to the success path of the organization aiming toreach the vision by setting out small goals. And the risk taking ability and focus to achievesuccess results in reaching out with the vision . CRITICAL SUCCESS FACTOR The USP of our business and the various other uniqueness like using of automatedmachine and use of natural species makes us exhibit among our competitors and results asa critical success factor. CONNECTEDNESS IN SCM In order to meet out with various requirements like acquiring raw materials , maintenanceof the available machinery and other related works a proper and well maintained.

These manufacturers also cater to the older and the health-conscious choco-lovers,the high fibre, low fat and sugar ones are quite popular. Apart from the festive season,weddings and baby announcements also see heavy offtake of premium sweet delicacies.For those who are health conscious there is also a special range of sugar-free and dietchocolates. These are usually bought by corporates or individuals who want to make aspecial statement.Designer chocolates are tailored for customers who're looking at gifting chocolateswith a personalized touch. Embossing of names, logos of companies and personalizedmessage on the chocolates are fast becoming popular.There are 1,000 varieties of designs to choose from -- ranging from good luck charms, X'mas figurines and animals -- and nearly 50 kinds of gift packaging available tosuit any particular occasion.These designer chocolates focus a lot of attention on packaging. The packaging of these products includes materials like imported mesh, gold foils and brocade, lace andsatin-draped boxes being in heavy demand.With the rise in disposable incomes, people do not mind spending on designer chocolates, most of which costs between Rs 500 and Rs 2,500 per kg. Few chocolatemakers cater only to corporate clients for festive occasions, product launches, newemployee joinings and management training programmes. From logos to company names being embossed in chocolates of different shapes and colours, these are all in demand. THREATS IN THE CHOCOLATE INDUSTRY:-1. TEMPERATURE: A peculiar problem that hinders the distribution to far-off places is the tendency of chocolates to melt under even moderate heat. The temperatures can reach as high as 48degrees in summers, whereas chocolate starts melting at body temperature (about 37-38degrees) .Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer. 2. UNAVAILABILITY OF CONTROLLED REFRIGERATION: India does not have controlled refrigerated distribution. Air-condition supermarketsare rare. Chocolate enterprise in general

loses 1.5 percent of annual sales of Rs. 6.8 billion

to heat damage.

Companies revise ingredients to make chocolate withstand heat, and soIndian chocolates are more resilient to heat than Eurupean chocolates by a factor of 2degrees. Nestle and Cadbury have tried to provide loans for retailers to buy fridges, but tohold down power costs the shopkeepers switch off the fridges at night. As a result thecocoa fat melts and migrates to the main body of the chocolate bar.

When the cooling isswitched on in the morning, the cocoa fat solidifies and turns white, presenting a bizarre,un-sellable white on black form.Small coolers were provided to retailers to keep the chocolate from melting, but thatdidn't quite do the trick. Electricity costs money and is not provided in a uniform way, soon and off the electricity goes and the product may suffer sometimes 3. RAW MATERIALS: Cocoa is the key raw material and accounts for around 35% of the total materialcost (including packaging) of chocolates. The price of cocoa has been hitting a new highof late. Cocoa prices are at a near 20-year high at $2358 per ton, up from $900 a year back. India does not produce cocoa to any noteworthy extent but is a large consumer of chocolates. Consumption of chocolates and other cocoabased products, especially amongthe middle class, has been growing. 4. TRANSPORTATION: Chocolate needs to be distributed directly, unlike other FMCG products. 90% of our products are sold directly to retailers. Building such a direct network in rural areas is adaunting task since the infrastructure is poor in India in rural areas. 5. THREAT FROM IMPORTED BRANDS: Free availability of imported brands bought through illegal routes pose a threat tothe domestic chocolate industry. Usually, these imported chocolates taste better thandomestic chocolate due to recipe difference. Hence consumers who are willing to spend alittle more, prefer these imported chocolates.However, the premium brands, which come through official channels, do not pose athreat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal, etc of inferior brand of imported

chocolates. These are not only of low quality, but are brought very near to their expirydates. Most of the cheap chocolate brands that are available do not meet Indian FoodRegulations. FACTORS AFFECTING THE GROWTH OF CHOCOLATE INDUSTRY ININDIA:-

Good monsoon ensures adequate availability of raw materials, which are mainlyagricultural in nature. Raw material prices have significant influence on margins.

Government policies

in terms of licensing, duties, movement of agriculturalcommodities etc. also affect the introduction of products, time lag for a productlaunches, taxes, excise, etc all influence the business.

Market growth driven by overall economic growth and urbanization alsocontributes. An overall booming economy will consume tonnes of chocolates because consumer spending increases. Also, the absolute number of consumers inmiddle class & upper middle class increases.

Rupee depreciation improves export realizations; however it also makes import of raw material (esp. cocoa) expensive.

Coffee and tea Coffee mate Dolce Gusto Nescaf Nespresso Nestea and Enviga (controlled by the joint venture with The Coca-Cola Company, called Beverage Partners Worldwide) Ricor Sweet Leaf Tea

Ice cream Extrme Dreyer's Drumstick Hagen-Dazs Maxibon Mvenpick Ice Cream Parlour (acquired from Ault Foods and rebranded from Sealtest) Mega Kimy (Philippines only)

Bottled water (Nestl Waters) Aquarel Arrowhead Water Contrex Deer Park Spring Water Perrier Poland Spring Nestl Pure Life San Pellegrino Vittel Ozarka

Breakfast cereals (some distributed by Cereal Partners Worldwide, the joint venture with General Mills) Cheerios Chocapic Golden Nuggets Nestle Fitness Nesquik Shreddies Trix

Baby food Cerelac

Milkshakes and other

beverages Carnation (now part of Alaska Milk Corporation in the Philippines, but under a long-term license agreement with Nestle) Caro Juicy Juice Milo Nesquik Ovaltine La Laitire (controlled by the joint venture with Lactalis)[22]

Gerber Nido S-26 Gold, SMA and Promil (acquired from Pfizer Inc.)

Seasonings, soups and sauces (Nestl Professional) Buitoni Davigel Maggi CHEF

Frozen and refrigerated foods DiGiorno (pizza) Herta Hot Pockets Lean Cuisine Stouffer's

Chocolate and confectionery Aero After Eight Baby Ruth Butterfinger Caramac Nestl Crunch KitKat Lion Bar Galak/Milky Bar PowerBar Quality Street Rolo Rowntree products Smarties Wonka products Toffee Crisp

Pet food (Nestl Purina Pet Care) Dog Chow Felix Friskies Purina ONE Winalot

Pharmaceutical products and active cosmetics (controlled by joint ventures with L'Oral) Innov Biotherm Galderma

Performance and healthcare nutrition Boost PowerBar

Life insurance Gerber Life Insurance Company

As of year end 2010, Nestl held 29.7% of the shares of L'Oral, the world's largest company in cosmetics and beauty. Its brands including Garnier, Maybelline, and Lancme as well as The

Body Shop stores. LOral holds 10.41% of the shares of Sanofi-Aventis, the world's number 3 and Europe's number 1 pharmaceutical company.[1]