Exploratory Market Research Report On Hummingbird Chocolates Expansion In The Indian Market

Market Intelligence

Hummingbird chocolates is an Ontario based chocolate company. It is one of the artisan chocolate makers in Canada. The company has taken over the chocolate world with modern approaches to old-fashioned techniques. The product category includes bars, confections and artisan chocolates. It also includes gift cards and gift boxes. The company has award winning chocolate which is made from ethically sourced cacao beans. The steps of the chocolate making process can be seen from the windows and taste samples every day. The tours of the full factory are offered on every Saturday. As an international business researcher, I have been hired by Hummingbird chocolates to expand internationally. The company has decided to expand in the Indian market so the investigation has been conducted on the particular market.

The report includes the three sections such as market intelligence, customer intelligence, and competitive intelligence. The market intelligence comprises political stability, currency risk, ease of doing business and trade relationship with Canada. The customer intelligence includes the demographics of the market which also comprises potential market size. The third section of competitive intelligence comprises local industry description along with the SWOT analysis of the two major competitors.  Finally, the recommendations are also given for the export market strategy in order to enter the Indian market.

The Indian market can be analyzed on the basis of the four factors such as political stability, ease of doing business, currency risk and trade relationships. These factors are explained below:

India has emerged as one of the fastest growing economies. The political stability in India helps in making economic decisions and reducing the risk of imbalance in the economy. The political stability has a positive effect on the economic growth. It results in empowering new initiatives and participates in the growing prosperity. Apart from the impressive growth rate, the growth has been stable which a positive aspect for Hummingbird chocolates. As the increasing growth rate of the country is going to be an equally contributing factor in the revenues of the company (Sahoo & Garg, 2012).

The power distribution in India has shifted from centralized command to the leaders at the local level. It enhances the opportunity to address local aspirations at the international level. The awareness is also rising of the market forces which has a role in the development of the new projects.

The Indian economy has attained on the world stage. Recently, the government has taken 109 new initiatives which are going to contribute to the growth of the company. There are simplified structure and governance frameworks in India. The government has simplified framework for the foreign direct investment which is a positive aspect for the Hummingbird chocolates to set up in the country. In the past years, the country has been successful in attracting foreign companies. The introduction of GST in India has made easier for the companies to establish a business. It ensures an uninterrupted flow of cash for the businesses (Barrientos, 2014). The country has lowered regulatory barriers in the case of international best practices. The number of the stages have been reduced which lowered barriers and simp0lified regulatory regimes. All these reliefs are sufficient enough for the Hummingbird chocolates to conduct business in India.

Customer Intelligence

India is less harmed by the currency strength because it buys U.S.dollar to keep its local currency cheap. The trade has an important role in the currency war. The country has controlled its currency by outlining foreign exchange policies. The freedom of rupee is managed by the U.S. Treasury. The Reserve Bank of India looks to reduce foreign exchange purchases in order to avoid the designation. When the capital flows are strong, the domestic currency becomes expensive.

India and Canada have longstanding bilateral relations which are an advantage for the Hummingbird chocolates. The commercial significances of Canada in India are targeted at India’s policy objectives and sectors where Canada has a competitive advantage. As per the bilateral trade agreement between both countries, the trade is expected to double in the next 3 years. India’s imports from Canada stood at USD 3.65 billion in 2016 and Canada’s import stood at USD 1.97 billion in 2016. The investments are expected to increase further in food, agriculture, and technology in India. Both the countries are also taking initiative to become strategic partners.

Demographics of market 

The changing preferences, lifestyle and eating habits of the consumers have provided exposure to the international brands (Rehman, 2018). The customers on the basis of demographics can be divided into the age and lifecycle, gender and income.

• On the basis of age and lifecycle, the customers of the age group of 2 to 50 are included.
• On the basis of gender, chocolates are meant for males as well as females. Kids are fonder of chocolates.
• The chocolates are affordable for every income group depending on the range. The chocolate products can also be divided into the premium and basic products.

Potential market

India is the world’s fastest growing market for chocolates. The country has registered 15% annual growth from 2008-2012. Almost 400 Kgs of chocolate is consumed per minute in India. The Indian chocolate market has shown tremendous growth in the terms of both volume and value. The domination of the market is maintained by international companies through franchisee and expansion into the new markets. All these factors are leading to the growth of the chocolate industry in India (Park, Ungson & Cosgrove, 2015). The Indian market has huge opportunities and it will constantly grow at a healthy rate in the coming years. The urban people of the country are becoming more aware and conscious about the chocolate brands and these brands have an influence on the chocolate consumption. The urban consumers have become demanded the premium and artisan chocolates which are costly than the regular ones. Hummingbird chocolates can keen tap on the urban people and introduce its premium and artisan chocolates in the Indian market. There is also a growing awareness of the ingredients which takes care of wellness. So, the company can also make available chocolates on the basis of health benefits such as milk, white and dark. The preferences of the Indian consumers are evolving and accustomed to the artisan and dark chocolates (Chakraborty & Sur, 2015).

Competitive Intelligence

Local industry description

Indian chocolate industry grew at the CAGR 23% by volume in the last five years and reach 3, 41,609 tons. The milk chocolates held for the majority of the revenues in the industry. However, this share is likely to reduce due to the popularity of the dark chocolates (Noble, 2017). In the past few years, the purchasing power and the disposable income of the people have increased. There are three leading players in the Indian chocolate industry such as Cadbury, Nestle, and Ferrero. Cadbury and Nestle account for the majority of the revenue in the chocolate market.

The entry into the chocolate market of India requires huge investment for the branding and production. The government supports to the foreign investors

Strength

• Cadbury is the world leader in chocolates and it is renowned to have the best quality with the wide distribution channel. The company has a presence in more than 200 countries.
• Cadbury has a strong portfolio of products such as dairy milk, five stars, Oreo and more.
• Cadbury is blessed to have brand loyalty. The marketing and strong branding have created high brand equity (Chokshi, Shah, Arora & Agrawal, 2016).
• Cadbury has a well-established market in India with a wide variety of the products.

Weakness

• Cadbury has not covered rural areas. There is scope for the rural distribution which can be considered. So, it has a lack of penetration in the rural market.
• The products of the Cadbury are not suitable for the people suffering from diabetes, cholesterol disorders and more.

Opportunity

• The weakness can become opportunity by penetrating the rural market. The distribution in the rural market can be a huge opportunity for the company.
• Indian consumers have a sweet tooth and they prefer to have chocolates as well as bars. So, the company can make a variation in the taste and can launch new flavors on the regular basis (Clarence-Smith, 2016).

Threats

• The cost of the Cadbury has grown up due to the increase in the cost of the fuel and transportation. The cost of procurement and manufacturing has also caused the increased cost of the chocolates (Fernandes, Gupta & Vidyasagar, 2016).
• Health consciousness is one of the important concerns nowadays. People prefer to have healthy products like fruits and juices than having chocolates. Parents also stopped to give chocolates to the kids in order to save them from the adverse effects.

Strength

• Nestle is a renowned brand and is the world’s largest food company in terms of the revenue. The company does individual branding of its food brands which helps in creating awareness.
• Along with the diversified portfolio, the company has been successful in penetrating both urban as well as rural markets.
• Nestle has over 800 brands. The company has been able to satisfy customers having different needs and wants (Das, 2017).
• Nestle has the largest food and nutrition research organization with the involvement of 5000 people. The company has 21 research centers globally.

Weakness

• Nestle has a wide brand category under the same umbrella which is sometimes typical to manage such a large number of brands. It can create a conflict of interest.
• Although Nestle is a world famous brand, it has faced controversies over the years. it caused negative word of mouth.

Opportunity

• Nestle is expanding into other markets and penetrating more in the rural areas. It can make use of a robust supply chain in order to spot an unorganized business into organized.
• Nestle is engaged with various companies such as Coca-Cola and more has many opportunities in the future associations as well (Dubey & Patel, 2004).
• The company is focusing on the research and development in order to tackle ethical issues. It will help the company to lead and enhance the growth of the company.

Threats

• The increased number of local and international players has caused competition in the market. In such a scenario, Nestle faces the problem of differentiating itself from others.
• The increasing price of the commodities results in an increased price of the products of the company (Kaul & Desai, 2017). It further causes a decrease in sales and margins. It can also lead to the brand switching by the customers.
• There are various brands of chocolates available in the Indian market. In such a scenario, customers can not stick to a particular brand. Hence they switch to other brands on the basis of the new variety and quality.

Hummingbird can make use of export market strategy in order to enter the Indian market. The traditional marketing can be used by the company to promote products in the Indian market. The common forms of the traditional marketing are a business card, banners, pamphlets, print advertising and more. The company needs to understand the culture of India before tailoring messages for the target market (Balaji, Londhe & Shukla, 2016).

The online marketing is more effective nowadays as people in India are more accessibility to the Internet. The trend of the online shopping is growing which includes websites, online ads, and e-mail marketing. Facebook, Instagram and Google ads are trending online marketing strategies. Hummingbird can also purchase advertising on the specific websites (Mishra, 2017). The ad appears when the user searches word similar to the company’s ad in a search or navigates to the similar sites.

References 

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Barrientos, S. (2014). Gendered global production networks: Analysis of cocoa–chocolate sourcing. Regional Studies, 48(5), 791-803.

Chakraborty, K., & Sur, D. (2015). Financial Performance of Select FMCG Companies in India During the Post-Liberalization Period: A Study. IUP Journal of Management Research, 14(1).

Chokshi, P., Shah, H., Arora, R., & Agrawal, N. (2016). Perception of Consumers towards Cadbury and Nestle. Asian Journal of Research in Marketing, 5(6), 8-27.

Clarence-Smith, W. (2016). Chocolate consumption from the sixteenth century to the great chocolate boom. M. Squicciarini, y J. Swinnen (Edits.), The Economics of Chocolate, 43-70.

Das, R. (2017). Postmodern consumption in India: a conceptualisation and case synthesis. International Journal of Indian Culture and Business Management, 15(2), 170-182.

Dubey, J., & Patel, R. P. (2004). Small wonders of the Indian market. Journal of Consumer Behaviour: An International Research Review, 4(2), 145-151.

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Kaul, A., & Desai, A. (2017). Building Reputational Bridges Over Crises Situations. In The English Paradigm in India (pp. 265-284). Palgrave Macmillan, Singapore.

Mishra, V. (2017). Creating Brand Success through a Niche Marketing Strategy: A Case Study of ‘LuvIt’Brand of Chocolates. Siddhant-A Journal of Decision Making, 17(2), 123-127.

Noble, M. D. (2017). Chocolate and The Consumption of Forests: A Cross-National Examination of Ecologically Unequal Exchange in Cocoa Exports. Journal of World-Systems Research, 23(2), 236-268.

Park, S. H., Ungson, G. R., & Cosgrove, A. (2015). Defining the Drivers of Profitable Growth. In Scaling the Tail: Managing Profitable Growth in Emerging Markets (pp. 67-90). Palgrave Pivot, New York.

Rehman, V. (2018). Attitudinal change in children: An insight from three decade of advertising campaigns in India. Journal of Marketing Communications, 1-30.

Sahoo, D., & Garg, S. (2012). Buying Motives in the purchase of Cadbury Chocolate among Young Indians. Romanian Journal of Marketing, (4).