Ferrero may bring brands it acquired from Nestle’s US unit to India


Ferrero India Pvt. Ltd, the local unit of Italy-headquartered Ferrero Group, may expand its product offerings for the Indian market with the launch of 20 new confectionery brands, which it had acquired from the US unit of Swiss packaged goods company Nestle SA in January.

“We are exploring synergies of the sugar confectionery brands that we had acquired earlier this year. We may bring some of them to India. We want to expand our reach, go mass market with lower price points. There will be more variants of our existing brand, Tic Tac, and some more brands in the sugar confectionery space,” Ferrero India managing director Stefano Pelle told Mint.

Ferrero had acquired the US confectionery business from Nestle for $2.8 billion in cash. As part of the transaction, it had bought the exclusive rights for the Crunch confectionery brand, besides picking up sugar brands such as SweeTarts, LaffyTaffy and Nerds, and chocolate brands Butterfinger, BabyRuth, 100Grand, Raisinets and Wonka.

“We are yet to finalize the brands and products that we would launch in India,” said Pelle. The company is also working on doubling its distribution network to one million retail outlets within 18-24 months.

“That is our immediate goal. In the long-term, say, 10 years or more, we aim to cross $1 billion in sales from India,” he added. While the family-owned group does not disclose revenue numbers, Pelle said Ferrero had already crossed sales of Rs 1,000 crore in India.

The Italian maker of KinderJoy candies, Nutella spread and Tic Tac breath mints, is also firming up plans to invest Rs2,000 crore over the next three years to make India a product development and export hub to feed its West Asian, Africa and South-East Asian markets. The company has invested about Rs1,500 crore since entering the Indian market in 2007.

As part of its plans to add new segments to its product portfolio, the company has tied up with London and Rotterdam-headquartered Unilever to make ice cream under its flagship Kinder brand for European markets. Unilever sells ice cream under Wall’s brand in India.

Ferrero, which has so far played in the premium segment, will now look to build a portfolio which would cater to the masses. “We have Tic Tac in Rs10 and Rs5 price points. But we need more products in Rs10 and Rs20. We may not have chocolates at these price points. But we will have products at Rs10 and Rs20 in sugar confectionery. At present, we do not cover a big part of the market in India. Sooner or later, that has to be addressed,” said Pelle.

India’s chocolate confectionary market is projected to grow at 8% per annum between 2016 and 2021 to reach Rs16,200 crore (on constant value) from Rs11,256 crore in 2016, primarily on the back of better retailing across rural areas, shows a study by consulting firm Euromonitor International. In 2016, Mondelez India dominated the market with a 48.6% share, followed by Nestle India (12.8%) and Ferroro India (7.8%).