The Economic Times: March 13, 2015
Mars Inc, the world's biggest chocolate company, will kick off its Make-in-India production plan when its wholly-owned India arm signs a memorandum of understanding with the Maharashtra government on Wednesday to invest Rs 1,000 crore in manufacturing.
It will be one of the largest investments by the maker of Mars, Snickers, Twix and Bounty chocolates outside the US. The $30-billion privately-held Mars will bet on local innovations and expanding the overall market to compete with rivals such as Mondelez, Nestle and Ferrero Rocher, says Ehab Abou-Oaf, Asia Pacific regional president at Mars Chocolate, in an exclusive interview with ET's Ratna Bhushan.Edited excerpts:
Mars has been a relatively late entrant to India, where your rivals Mondelez, Nestle and now Ferrero Rocher have been scaling up presence.How do you plan to make up for the lost time?
When you take a long-term view, we see India in terms of sheer potential. Per capita consumption of chocolate in India is 200 gm per person per year. To give you a comparison, it is 8-10 kg in the US. In Asia, in certain cities like Shanghai and Beijing, it has reached 1-2 kg. So, looking at the numbers gives us conviction of the potential of the Indian chocolate market.
This is a rapidly growing market with young consumers and our journey here is going to be long-term. There is a big job to be done here and right now is the best time to be here. Asia-Pacific is the continent of potential for us. We're going to play in a much bigger market and are more focused on how we will grow the market. In the long term, we hope to get 20%-25% share.
Has the perception of India as a potential investment destination improved after the Narendra Modi government took over?
I can say that the Indian government cements our conviction that now is the best time to be here, invest here, and grow the market here. Apart from the progressive government and policies, you have a growing middle class, an expanding infrastructure and a young population. This combination is great for any company that want to do business. We are also happy to work with the government whenever there will be an opportunity.
Indians eat less chocolate compared to consumers in many other countries.What are you doing to spur category growth?
Our first local production, which will start mid-next year, will help us innovate not just on recipes, but on prices and packaging as well. It will be a key enabler to accelerate growth. There are local innovations which we have done only for consumers in India - like the first vegetarian Snickers made only for India, and heat-stable Galaxy, which doesn't need to be refrigerated. We are putting display chilled units at retail points, which we believe will bring a category like chocolates top-of-mind to Indian consumers.
We are also investing heavily on advertising across a multi-media environment. Chocolate consumption is slowing down in the West.How has that impacted your growth?
Our experience says emerging markets don't grow in straight lines. Our job is not to get deterred by the slowdown. We are continuing with our growth strategies market by market exactly the way we had planned. The benefit of being a privately-held company is that we can plan really long-term.
At the same time, the world is running out of chocolate with even bumper crops unable to keep up to soaring demand in Asian markets.How are you dealing with that?
We have got active projects on in Asia and Africa to ensure supply of ingredients. We are working actively on accelerating production of ingredients like peanuts, which will help farmers give better yields. We are investing in solutions that will increase yield of coco farms. At this stage, these are very workable plans and we are not worried.
What are the challenges you see in scaling up the category in India?
Actually, since the market here is in infancy stages, we can shape it to make it bigger and better. Emerging markets help companies to sharpen their business skills amidst volatility. As GDP grows, chocolate consumption becomes a lot more accessible. And that children eat chocolate more than adults is more perception than reality.
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