Ferrero India Moves Ahead Of Nestle India In Revenues

Nestle’s chocolate business, which registered three times more revenue than Ferrero India over the past three years, has dropped down behind the Italian chocolate maker. Ferrero India, which sells products such as Ferrero Rocher, Kinder Joy and Nutella hazelnut chocolate spread, registered Rs. 929 crore in revenue over a period of 7 months – September to March 2015. During its fiscal year – January to December 2015 – Nestle India posted revenue of Rs. 1,110 crore, over a period of 12 months. 

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Ferrero India’s Presence

The gradual rise of Ferrero India’s revenue in the country could be attributed to the company’s differentiation strategy, according to several industry experts. The chocolate maker has shifted its focus on premium products, establishing a presence in the niche market. Speaking about it strategy, Devendra Chawla, President of FMCG and Brand at Future Group, said, “Brands like Ferrero with no historic baggage has discovered and led the top down approach of premiumising through innovation versus old school thinking of focusing mainly on low priced products. Ferrero has shown that there is a large market even at the top end.” 

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Nestle India’s Decline

In the emerging chocolate category in the country, Nestle India has lost market share to brands like Ferrero Rocher due to failure to innovate its product portfolio at a time when consumer’s tastes are constantly changing. Nestle’s market share in the chocolate category has drastically reduced from 29 percent in 2006 to 14 percent this year, according to data provided by Euromonitor. Based on a report released by Nomura, Nestle’s “growth in the chocolate and confectionery business for the company has been in decline since calendar 2010, but revenue has declined from calendar 2013 onwards. Reasons for this decline are portfolio optimisation in chocolates, as well as seeking premiumisation at a time when demand was slowing. That apart, the failure to innovate beyond the wafer segment when consumer tastes were evolving is also blamed for the growth decline.” 

Investing In Expansion

Ferrero India has also invested in establishing its brand in the country with the company shelling out nearly Rs. 375 crore in its Indian arm. The company has also doubled its authorised capital to Rs. 1,500 crore, according to the latest regulatory filing submitted by the company recently.