Ferrero India posts 12% increase in net sales during year ended August 2024
Italian chocolate maker Ferrero India posted a 12% increase in sales during the year ended August 2024, while net profit declined 62% due to surging cost of raw materials, especially cocoa.
The maker of Kinder Joy chocolates and Nutella chocolate-hazelnut spread posted revenues of Rs 2172 crore with net profit of Rs81.9 crore during the year to August 2024. A year ago, it had posted a sales increase of 9% to Rs1940 crore with net profit of Rs216.8 crore, which increased due to higher tax rebates and adjustments.
"The company continues to invest in India and strengthen its manufacturing facilities, product offering and distribution. Your directors are continuously looking for avenues for future growth and improved performance in the coming years," it said in its latest annual report.
Ferrero, which is popular for selling egg-shaped Kinder Joy with a toy inside the pack, entered the country two decades ago, and is the second largest confectioner in the country trailing Mondelez that is by far the market leader with 66% share in the $1.5 billion chocolate category. Ferrero's growth was higher last fiscal compared to FY23, bucking the sales growth trend of top companies including Mondelez, Perfetti Van Melle, Hersheys and Mars that saw their sales growth rate taper off during FY24.
After a double-digit growth in FY23, these companies' growth rate has either halved or fallen to low single digit last fiscal, according to latest filing. For instance, Mondelez posted 13% growth in FY24 compared to 22% a year ago. Perfetti's growth slowed down to 11% versus 26% in FY23. Hershey saw sales slide 3%, while Mars International revenue expanded 3%, a sharp drop from 24% a year ago. And the slowdown has continued during the current fiscal too.Chocolate and confectionery combined is a Rs 25,000-crore market, with each category accounting for roughly half the overall industry in value terms. In 2023, sales of impulse categories such as candies, toffees and chocolate bars saw double digit growth, outperforming the overall FMCG market that slowed.Typically, sales of indulgence products such as chocolates or lipstick tend to rise during slowdown as such inexpensive purchases provide comfort to buyers when they turn frugal and cut their overall household budget. But the Indian chocolate industry missed the trend last year after record high cocoa prices forced companies to increase price-tags.Over the past few years, cocoa prices hovered at around $2,500 per metric ton, but it hit an all-time high of more than $11,000 during the year ended March 2024. While it has eased off to $7000, prices have still more-than-doubled compared to a year ago, which could mean higher price-tags.With per capita consumption of chocolate around 200 grams per year in India against more than 10 kg per year in the UK, the headroom is huge.
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