UK food producer Cadbury is making a long-term commitment to investing in India’schocolate market by encouraging local farmers to cultivate cocoa.
While many multinational food companies are experiencing reduced sales across global markets, Cadbury’s chocolate brands, which include Dairy Milk and Bournville, are experiencing continued profit growth of about 20% and sales growth of 30% year on year in India.
President of Cadbury’s Asian operations and managing-director of Cadbury India Anand Kripalu said: “Cadbury should be in a position to sustain the growth we have had in the last three years.”
Cadbury controls more than 70% of the chocolate market in India with a presence in 1.2 million stores, while competitor Nestlé controls about 25%.
Chocolate consumption in India is a cultural habit which Cadbury has had to develop over the 60 years the company has been operating in the country.
Other challenges have included a 30% import duty on cocoa beans, mostly grown in Ghana and the Ivory Coast, which has prompted the company to encourage local farmers to become producers of the commodity. “Cocoa remains a stubbornly highly priced commodity,” said Cadbury Schweppes chief executive Todd Stitzer.
Cadbury’s long-term plan is to source all of its cocoa beans for its Indian operations domestically by 2015, rather than from the traditional overseas markets in Africa, which are also less politically stable than India.
Cocoa seedlings grow alongside coconut palms in southern India and therefore do not require fresh clearing of forests for plantations.
Cadbury aims to persuade 20% of Indian coconut farmers to include cocoa trees in their plantations to increase national production of cocoa beans from 10,000 tonnes a year to 150,000 tonnes a year, which would represent 3% of world production by 2020.
A key driver of Cadbury’s 7% revenue growth in 2008 was growth in emerging markets, which rose 12% last year, said Mr Stitzer.
“Clearly the developed markets were slowing towards the end of the year. However, our emerging markets have continued to be relatively strong,” he added.
“There are predictions of lower GDP in places such as India, but so far we are seeing very strong performances.”