NEW DELHI: Nestlé plans to introduce a string of premium brands to India over the next few years, as it seeks to counter a falling market share in the chocolate sector.
Livemint reports that the Swiss confectionery giant's focus till now has been mainly in the bulk-sales market, with brands such as Kit-Kat, and the recently-introduced Alpino, which it targeted towards older consumers in metro cities.
This has coincided with a fall in market share from 26.1% in 2008 to 23.6% in 2012, according to data from market researcher Nielsen, and in common with other FMCG companies, Nestlé is hoping to expand sales among the rising affluent urban demographic.
"In the consumption pyramid, premiumisation will clearly happen," said Mayur Bhargava, general manager, chocolates and confectionery, Nestlé India.
He added that the company will phase in more premium products from its international portfolio over the next couple of years. Nestlé's head of Asia, Nandu Nandkishore, has said that the company "will start to tackle this premium opportunity, which is huge."
The policy has the support of analysts, with Euromonitor finding an increasing acceptance of premium brands, and their growth rate outperforming that of the overall confectionery market.
"The premium play also suggests better margins, especially at a time of persistent inflation and stressed margins for consumer companies," said Ankur Bisen, vice president at Technopak Advisors Pvt Ltd, the Indian consulting firm.
However, Nestlé is also planning to continue to engineer growth through popular brands such as Munch and Kit-Kat, primarily by expanding distribution outside of the 50 largest cities which are currently targeted.
It has introduced cheaper, smaller units for its existing brands in a bid to expand sales in rural areas.
Data sourced from Livemint; additional content by Warc staff