Hi Mohit,
Thankyou for your builds. Few pointers-
- Mondelez, Nestle & Mars have their own sources of cocoa because they own the farms hence they procure it a better price than the likes of Amul who rely on a third party to source the cocoa – in this case Lotus
- Agree with you that the recipes are different across brands – Silk & Galaxy are 100% pure chocolate while Dairy Milk , Amul etc are mix recipes – chocolate + compound (dry mix). This is exactly why you can buy a chocolate for Rs 10 in India while a chocolate costs > Rs 50 in the UK. India is a value for money market.
- Amul has increased prices by 30%. Pls don’t go by articles , pls look at the back of pack before and after.
- To your point on why prices have gone up in UK – simply because you can afford to pass on cost escalations to the consumer in that country/region as per capita chocolate consumption is 5kgs in UK but only 450gms in India. Why? – because consumers have many alternatives in India to satiate their indulgence cravings – traditional sweets – which are not available to the British. If you increase prices in India consumers will stop eating chocolates and switch to other alternatives. Hence most companies are happier taking a hit on their margins vs losing consumers altogether.
Question to answer is how long will companies like Amul be willing to take the margin hit and how will lotus make margins given escalating costs of cocoa & customer concentration risk – majorly Amul ?
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