Winning Online in India's Dynamic Chocolate Confectionery Market

Chocolate confectionery has been one of the fastest growing snacks within India in the last two years. Sales from 2021 to the end of 2023 are predicted to grow by 40%, with the next fastest snack category of nuts, seeds and trail mixes growing by 29%. Diving into the online retail market can provide tactical knowledge and insights on getting ahead in such a competitive and dynamic market. This piece utilises Euromonitor’s quarterly tracking e-commerce system alongside Via online SKU data to show how brands are winning with their pricing and promotional strategies and how consumers are reacting to brands’ activities and SKU portfolios.

India’s online chocolate sales continue to grow

Of the three major categories that make up confectionery, chocolate dominates online spend in India, accounting for 69% of all sales in Q2 (April, May, June) 2023. Despite some challenges in delivering such products in hot and humid conditions, purchasing these products greatly changed during the pandemic and retailers and delivery services have adapted with more improved last-mile delivery options.

Tracking quarterly data can showcase how seasonality plays a role and help anticipate how sales will trend for the rest of the year.

Online sales of chocolate confectionery grew by 47% in the second quarter of 2023 compared to 2022, adding INR349.2 million (USD4.2 million) in online spend

^{Source: Euromonitor International}

Q2 is actually a slow quarter for this market in India due to high temperatures, which favours demand for categories like ice cream and soft drinks. The holiday period for educational institutions also limits on-the-go consumption. As a result, sales are expected to continue to increase strongly and provide a variety of opportunities for manufacturers and retailers in still vastly undersaturated markets across both urban and rural areas.

Localised variations and flavours key to growth online

Mondelez International’s Cadbury is the leading player online and (similar to more traditional channels) has a strong advantage due to its plethora of brands and pack sizes accommodating a variety of consumers’ needs and wishes. However, comparing year-to-year quarterly growth, it is Mars’s Snickers that has performed the strongest among the leading brands. The company has made significant efforts to widen its reach into smaller towns and rural areas for all of its brands, but specifically for Snickers, it has launched a “heat-robust” formulation to help with shipments and storage across the country. Furthermore, the company continues to invest in local R&D with development of Indian flavours and variants.

Snickers Kesar Pista (saffron and pistachio flavour) was launched in March 2022 and has been popularly received, helping further drive online growth

While all four leading brands outperformed “others” with sales in Q2 year-on-year growth, competition is incredibly fierce and so it is important to look to their online SKUs’ performance for additional insights.

Online pricing and promotional positioning are important

With such a dynamic online market, pricing and promotional strategies are pivotal in attracting and retaining customers.  Within the chocolate confectionery market consumers are often exposed to new products, so standing out can be challenging. Analysing pricing performance of products can highlight successful strategies.  seethe chart on the left shows the price positioning and pricing stability of the leading four online players. With the exception of Cadbury which has a variety of bulk sized package types, all players had a lower average SKU price than their competitors with Snickers having the lowest average.  Pricing stability though is paramount in the online market where consumers often worry about rising prices. So using the coefficient of variation metric (which measures the variability of average prices throughout this time period), we can see that all significantly outperformed the average chocolate confectionery SKU. Once again it was Snickers that kept its online SKU prices the most consistent throughout this period.    

Companies and brands need to carefully assess when and how long to promote products online. Comparing a brand’s share of SKUs for a category against the share of SKUs on promotion (see the above chart on the right) can provide a straightforward benchmark for determining whether a brand is potentially over/underpromoting its products. In the case of the leading brands, Cadbury brand SKUs made up 31% of the sample being examined but were responsible for 34% of the SKUs that were promoted during the same period in the category which indicates that these SKUs are potentially being promoted too often compared to the competition. Amul’s SKU portfolio was slightly underpromoted in comparison and indicates that the company might look to be more aggressive moving forward.

Finally, the way consumers rate products holds vital online shopping insights. Tracking brand satisfaction and engagement metrics through average ratings and the number of ratings is pivotal for positioning future success.Monitoring changes from Q2 periods sees that, for the most part, leading brands improved either in average rating or number of ratings, but it was only Snickers that excelled in both metrics, highlighting not just its popularity but the overall consumer satisfaction with its diverse range of SKUs. Kit Kat's metrics slightly declined due to new SKUs with lower ratings, yet brand satisfaction grew, signalling contentment with new introductions. Moving forward, brands must consistently monitor these metrics for marketing and product launch and reformulation impact, which is crucial for a category like chocolate confectionery, which has immense potential in India.

Please see our E-Commerce page for more information on methodology and coverage and download our on-demand webinar, Mastering E-Commerce Growth: How to Win Online Amid Uncertainty.

^{Note: Sample based on SKU prices found in Euromonitor International’s e-commerce tracking tool Via with data extracted in August 2023. Please note that due to ongoing improvements to the AI-led product matching of SKUs to categories, supplier, and brands, data and SKU counts can be revised based on system updates. SKU counts used for India in time period by retailer include bigbasket (756), Flipkart (499), Blinkit (258), LuLu (252), Amazon (248), Reliance Smart (121), Spar (110), Nykaa (12), HealthKart.com (10), Holland & Barrett (7).}