Mondelez plans to step up play in premium products

Firm to add new products under 5Star, other brands

The country’s largest chocolate maker Mondelez appears to be taking a leaf out of the marketing manual of rival Hindustan Unilever (HUL) when it comes to premiumisation. Much like the latter, which has launched high-end products across its portfolio, Mondelez is doing the same.

The chocolate major, which has nearly 65-66 per cent of the ~8,500-crore domestic market, will soon launch a premium product under 5Star, its mid-market brand. This launch will be followed by more such across the portfolio in the new year. The move comes at a time when the premium end of the chocolate market is growing ahead of the overall category.

Mondelez has pre-miumised some parts of its portfolio in the past such as Cadbury Dairy Milk, which saw the addition of Silk. Or the introduction of specialist brands such as Bourville and Fuse some time ago. This is, however, the first time, that the premium experience will move down the portfolio to brands such as 5Star, which have been around for close to five decades in India. It is the second-largest brand for Mondelez after Cadbury Dairy Milk.

Experts peg the premium chocolate market in the country at ~2,800 crore, which is a third of the ~8,500-crore overall chocolate category, growing at a rate of around 18 per cent per annum. The overall chocolate market, in contrast, is growing at 12-14 per cent per annum, putting pressure on companies such as Mondelez to respond to this shift quickly.

Prashant Peres, director, marketing, (chocolates), Mondelez India, said the need for premiumisation comes as consumers increasingly demand “better eat experiences”.

“The new 5Star 3D is softer, chewier, has more crunch and chocolate in it. It takes the overall (5Star) experience to a different level, thanks to a new technology we are using,” he said.

While a premium chocolate also pinches the wallet a little more in comparison to regular chocolate, experts say, consumers are prepared for it. The new 5Star 3D, for instance, is priced at ~30, higher than the ~20-25 per unit for a regular 5Star. Other premium offerings in Mondelez’s portfolio come for nothing less than ~40 and above (a unit), way ahead of the ~5-10 price points that mass-market chocolate brands (such as Cadbury Dairy Milk) play at.

Though premiumisation is something that Mondelez is aggressively pushing, it is not the only company banking on this strategy.

Across the board from Nestlé to Ferrero, Mars to Hershey’s, almost all chocolate majors are coming up with new and premium offerings, catering to the demand in the market.

Even new entrants such as ITC, which stepped into the domestic chocolate market last year, are doing so at the premium end.

A study by global market research firm Mintel recently said that India’s volume consumption of chocolates, which stood at 228,000 tonnes last year, would rise as it emerged as a better option to traditional sweets in urban areas. The research firm said that the need for better chocolates and eat experiences would drive the market.