Chocolates taste bitter within the impulse market - Views on News from Equitymaster

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Chocolates taste bitter within the impulse market

Apr 24, 2000

The branded impulse market has seen a great deal of innovation and activity over the last year both locally manufactured and imported. The impulse market comprises ice cream, top of the line biscuits (excluding the glucose segment), crisp wafers, soft drinks and chocolates. Though Cadbury has retained its 70% share in the chocolate market, the fact remains that the other segments (apart from chocolates) have been growing much faster. The share of chocolates has declined to 6% (from 8% last year) of the total impulse market.

Once a specific category start enjoying a higher share of the impulse market their propensity to spend on advertising, publicity, sales promotion etc is much higher. In the recent past we’ve seen this happen with soft drink and crisp wafers whose share of voice (read marketing expenses) has been actually increasing thus setting of a virtuous cycle.

The reverse is equally true viz. once the category starts losing the share of the market, the propensity to spend declines quite dramatically which reduces the share of voice and actually leads to a declining market share.

The conclusions are inescapable. It is not only important to maintain a share within the respective category but also ensure that the market for that sub–segment of the impulse market itself expands. Thus what the chocolate manufacturers would have to do is to increase their share of voice which seems difficult at this point in time.

While Nestle has been directing ad spend towards milk and mineral water, Parry and Nutrine have been hit by the doubling of excise duty on hard boiled sugar confectionery. Cadbury seems destined to remain the king in the chocolate market for quite sometime to come, though it needs to worry about the size of its kingdom.

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