After acquiring Nestle’s US confectionery business recently, Ferrero is not ruling out inorganic opportunities in India as well. Despite its presence since 2008, Ferrero India is yet to capture a significant share, compared to Mondelez, which still dominates with a 65 per cent share of the chocolate segment in the country.

“In the past growth used to be organic, but in the last couple of years, Ferrero Group has acquired a few companies in various countries. The group is today open to inorganic growth and this may also apply to our geographies,” said Stefano Pelle, Managing Director, Ferrero India.

Impact in India

Its recent acquisition has already made Ferrero the third largest company in the global chocolate/confectionary market with global sales of over $12 billion, but its impact in India is expected to be negligible since most of Nestle’s confectionery portfolio is absent in India.

“It is still too early to say anything about the specific impact of such acquisitions on the Indian business. Ferrero’s acquisition of Nestle’s confectionery business is currently within the US market and will help increase its overall footprint in this market,” he added.

Retailing

However, Ferrero is not planning to take advantage of the relaxed FDI norms for single brand retailing. “We do not see an immediate interest in getting into retailing in India. Apart from a few exceptions, we prefer manufacturing and selling rather than retailing in India,” he said.

While it manufactures some of its popular brands such as Kinder Joy and Tic Tac, its flagship, Ferrero Rocher, continues to get imported despite steep import duties. “Ferrero Rocher is imported and re-packaged in India. There are no plans for local production of the brand in the immediate future,” he added.

The largest selling brand in its portfolio in India, Kinder Joy and its toys, are manufactured at its base in Baramati near Pune. Infact, India has emerged as the second largest manufacturing hub for its Kinder Joy Toys. The facility is also used to export to its other markets.

Nutella is another imported brand which dominates with a 90 per cent share in the chocolate spread category, and of late, has seen another MNC – Hershey – entering its turf. Hitherto a premium player, Ferrero is now considering rationalising its portfolio.

“So far we have been operating in a premium space with brands like Nutella and Tic Tac. But in future, we may evolve a higher penetration strategy with appropriate products and formats,” he said.

Going forward, Ferrero is optimistic about the Indian market despite not enjoying a leadership stance. The Indian market is now one of the world’s fastest growing chocolate confectionery markets with a strong CAGR of 18 per cent.

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