ITC looks to grab share from Mondelez, Amul and Nestle with Fabelle

FMCG giant ITC's premium chocolate range Fabelle made it to the Guinness Book of World records last year by introducing the world's costliest chocolate, priced at a whopping Rs 4.3 lakh per kilogram. The company entered the chocolate market in 2016 with Fabelle, a luxury offering. In 2018, the brand entered the fast moving mass premium space with Centre Filled Chocolate and Choco Deck. The variants are sold in the bar format. While the luxury ranges were priced upwards of Rs 350, the 'mass premium' layered chocolate bars are priced between Rs 70 and Rs 200. The new variants are Fabelle Choco Deck Milk and Ruby Chocolate (Rs 85 for 55gm and Rs 200 for 121.5 gm).

The steep pricing is only part of the move. A significant portion is dedicated to the luxury chocolate experience. Fabelle's luxury offerings are sold in boutique stores located in ITC's luxury hotels. Reports suggest that the Indian chocolate market is valued at Rs 11,700 crore and is led by Mondelez's Cadbury - Dairy Milk line of offerings. Recent reports peg Cadbury's share at 66 per cent, with Dairy Milk alone accounting for 40 per cent of the market.

On the premium plank, Fabelle would match with players like Lindt and Guylian. With the new massy launches, ITC is making a move on Mondelez's share, especially with the pricing close to the rival's mass premium offering Dairy Milk Silk. The brand would also be grappling with players like Amul and Nestle. 'Ruby Chocolate' was introduced to the Indian market by ITC as Ruby Gianduja cubes (at Rs 1,295 for 150 gm) and was previously limited to the luxury segment. The pink chocolate is also a key differentiator in a market of milk, dark and white chocolates.

The new offerings have been launched in six cities - Mumbai, Delhi, Hyderabad, Chennai, Kolkata and Bengaluru and will sell in upmarket modern-trade retail outlets (like Foodhall, Spencer's, More, etc.) The brand also offers chocolate making courses priced at Rs 2,500 per person and are conducted at Fabelle boutiques.

Anuj Rustagi, chief operating officer - Chocolates, Coffee and New Categories - Food Division, ITC, says, “The chocolates market is segmented by varied price points to meet diverse consumer needs. For instance, an affluent consumer would like an offering from Fabelle’s dessert collection but a college student would have preference for a Fabelle Chocolate bar.”

“We entered the market by catering to the demands of the luxury chocolate consumers, a segment that operates at higher price points. However, our objective is to be present across consumer price points and deliver to the diverse needs and taste preferences of all consumers,” he adds.

He explains that the brand’s presence in the six major cities through the boutiques and expanding retail touch points in the luxury segment makes Fabelle a brand with wider national presence. “After establishing Fabelle as a credible chocolate maker in the luxury segment, entering the premium FMCG segment to bring Fabelle’s experience to a larger consumer base was natural progression,” Rustagi signs off.

The brand has also launched its first TVC for the massy offerings. The campaign has been crafted by Dentsu India.

Industry speak:

Jyothsna Yallapalli - strategic planner ( worked with JWT, Lowe Worldwide, Havas Worldwide, The Womb and McCann)

ITC Fabelle’s downward extension is an effort to create ‘accessible premium/luxurious sensorial experiences' in the category, and yes, sans the 'chocolate elitism'. Today’s India, a young/youthful society of discerning tastes and constant upgrades, does offer a segment that is willing to pay premium for a 'sensorially absorbing experience' (not just a product, in this case, a chocolate) or 'an experience that transports them to the world of luxury, indulgence, inspiration and pampering' (from a spa session in Taj luxury hotels to Saffron Risotto for dinner, to super wholesome salad priced at Rs 575, delivered by Swiggy).

Most of us are experience seekers (small or big). If we look at the chocolate category, we see a base level chocolate that fills you with joy and sharing intent; above this, we have a rich/smoother/creamier chocolate that lets you slip into an unabashed innocent, joyful attitude, which others get drawn to. And far above, we have exquisite chocolates crafted by chocolatiers, a discreet, choco-snob elitism and can-be-attainable luxury. The huge gap between the extremes is now being filled by this new range of affordable yet sensorially luxurious chocolate experiences. What would this lead to? A good degree of scale for the niche brand, intense textural experiences for chocolate lovers. This is democratisation!

N Chandramouli, chief executive officer, Trust Research Advisory

Fabelle has established itself in the premium chocolate space quite nicely, plus the outlets are limited to specific areas including ITC hotels for now. It is easier to go from premium to a mass or a mass premium market. To launch in the mass premium space like that of Dairy Milk Silk helps Fabelle become massy. Also, ITC is capitalising on the fact that they have already specialised themselves on the chocolate front. It will definitely pose as a tough competition once it reaches the mouth of the consumer.

Also, ITC has a preset distribution network with their biscuits and other products - only that chocolates need to be cooled. ITC has that refrigerated range of products too. They would not require any extra investment in this particular area. ITC is known for that - for example Wills Lifestyle. The transition from Wills cigarettes to a massy apparel brand is an extraordinary move. ITC will be able to garner more advantage from the new move.

Vidur Vyas, founder of NorthSide, a strategy and execution company

The consumer in India is ready to pay a premium for better experiences, especially when it comes to indulgence. In chocolates and other premium macro-snacks, there is space at the premium end of the market, and ITC Fabelle is addressing that opportunity with a distinct product offering.

The market is growing and there are less than a handful of players today. ITC will need to make sustained investments behind improving their product experience and establish their brand before some of the other well known global brands enter the country. It'll be an exciting space to watch.