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“Life is like a box of chocolates… you never know what you’re gonna get,” says Tom Hanks in Forrest Gump. But if you become a chocolatier, chances are you will get high returns on your investment.

The domestic chocolate market has been long dominated by Cadbury and Nestle, both international companies (who together hold 90 percent of market share), followed by Amul and Campco. But a new breed of independent chocolatiers are fast creating a niche for themselves making customized chocolates, and reaping sweet benefits in this sector.

Fast growth
“The chocolate industry has grown 18-20 percent in the last three years,” says B.K. Gurbani, President, Indian Confectionery Manufacturers Association. Unlike the rest of the confectionery industry, which comprises hard-boiled candies, gums and toffees, chocolate is expected to continue growing at the same rate.

For chocolatier Rashmi Vaswani of Bengaluru-based Rage Chocolatier, the entrepreneurial opportunity arose from a clear gap in the market. She saw there was no one selling any domestic premium quality chocolates.

Vaswani turned her hobby of chocolate-making into a business by improvising on her recipes. Starting Rage Chocolatier in 2006 with an investment of under Rs.1 lakh sourced from her father, Vaswani’s topline in 2009-’10 was Rs.5.5 million. With production capacity of 70 kg per day, Vaswani’s 11 chocolate flavors are priced between Rs.1,200/kg (regular), Rs.1,500/kg (sugar-free) and Rs.1,800/kg (truffles).

For bulk gifting occasions like weddings, birthdays and baby showers, Rage Chocolatier also customizes to every preference of a customer. Vaswani says that good packaging can increase the cost by 40-200 percent depending on how expensive/detailed the customization/packaging is.

TAKE ON CHOCOLATE: Chenddyna Schae of Jus' Trufs

Similarly, Chenddyna Schae of Bengaluru-based Jus’ Trufs found her passion way back in 1990 when her first job as a confectionery graduate had her just wrapping chocolates in Taj’s pastry kitchen. But she didn’t want to be part of the hotel line. “I had the bug to be an entrepreneur,” says Schae. Her first venture, Black Magic Chocolates, wound up operations soon as it functioned as a home-based business through word-of-mouth sans marketing.

After a 10-year hiatus from work (while raising her kids), Schae launched Jus’ Trufs in 2001, with an initial self-funding of Rs.10,000. Offering 30-40 flavors sold as bulk gifting options, today her topline is Rs.60 lakh. Schae secures 25 percent revenue from each vertical—corporate, retail, e-commerce and individuals. Her price points are Rs.1,200/kg (chocolate-coated biscuits, lollipops, soft centered/crunchy truffles); Rs.3,000/kg (Belgian pralines and sugar-free Belgian); Rs.2,500/kg (dark chocolate).

Fantasie trip
While Vaswani and Schae got into the business to indulge their passion, Zeba Kohli of Mumbai-based Fantasie Fine Chocolates, which was launched 65 years ago by her grandfather as a firm to hire underprivileged women, found the business thrust upon her as no one else in the family was inclined towards it.

From being the official distributors of Lindt in India to producing 500 kgs of chocolate a day, sold across six of its upmarket stores in Mumbai, Kohli’s Fantasie offers consumers the power of choice through a number of flavors and gifting options.

CORPORATE TIES: Zeba Kohli of fantasie Fine Chocolates

Giving people a power of choice is R.B. Mangharam of Mangharam Foods Pvt. Ltd. in Bengaluru, who has been making chocolates for the last 15-17 years. As an initial supplier to supermarkets, Mangharam decided to start the ‘chocolate project’ to encourage people outside Bengaluru to become chocolatiers. This included a kit comprising chocolate-making machines, moulds and a two-day course in the art of making chocolate.

“My machine can produce 10-15 kgs of chocolate a day—it is capable of generating a monthly profit of Rs.30,000 for entrepreneurs,” he claims. So far, over 200 aspirants (mainly homemakers) have sourced machines and know-how from him.

Corporate gifting
Corporate gifting is a vertical almost all chocolatiers have tapped into for sustainability and big profits. “We’ve catered to companies like IBM, GE, Cisco, ICICI Bank and Vijaya Bank,” says Mangharam. “Mithais have become too common and have a shorter shelf life, so these companies prefer chocolates for gifting,” says Mangharam.

Till date, Jus’ Trufs has customized chocolates for 200 corporate firms with a production capacity of 40-80 kg a day, going up to even 80-100 kgs a day during peak gifting season. Schae’s clients range from MNCs, real estate firms, banks and even the airport where she stocks 150-250 gm sized-packets of her sugar-free line.

Vaswani, too, has a set of 8-10 corporate clients, like Honda and Prestige, who place orders every month. Over the last three years, she has catered to about 50-60 companies.

The whole concept of corporate gifting was reportedly introduced by famous U.S. brand Ferrero Rocher, says Schae. “Corporate firms upgraded from Cadbury to Ferrero Rocher, but now even that has become outdated,” she laughs. “Everybody wants something unique today.” Kohli, too, caters to the corporate world with 2-3 airlines, over 12 five-star hotels and more than 50 restaurants to whom she supplies cooking chocolate. In all, Fantasie has 200 corporate clients on its list.

Going online
Chocolate today is being sold online, just like any other commodity, and established chocolatiers didn’t take long to adapt to the new media. In 2004-’05 Jus’ Trufs set up its e-commerce site, with six or seven ranges to create a collection for a season, plus some standard options.

Schae developed her own recipe for a longer shelf life  without preservatives. “Couriering chocolates is an art, and we needed to develop good packaging to protect it,” she says. Rage Chocolatiers generates 10 percent of its orders from its website, which is maintained by an outsourced partner. Though a small portion of its customer base, Vaswani has reached out to 10 cities.

In your neighbourhood
The chocolate industry is still at a very nascent stage in India, given that we’ve had mithai and neighborhood bakeries for generations. But it is growing and will continue to grow with more Indians traveling and living abroad.

Retail success
And here lies the scope for customized chocolatiers to enter the retail market, although difficult to penetrate, given that mass market brands like Cadbury have conquered chunks of shelf space. Vaswani uses hypermarts as selling points for Rage’s chocolates, where they are placed in the premium segment.

“Though we cannot compete with international players like Lindt, we definitely have more experience than other home-made chocolates,” she states.
Schae is certain of one thing: she doesn’t want to compete with Cadbury and Nestle as a mass market brand—she prefers being a customized chocolatier.

Apart from entering other cities like Hyderabad and Chennai, Jus’ Trufs’ first company-owned store will be ready by June 2010, serving chocolate-based beverages and snacks. Once ready, she is aiming to increase production to 100-200 kg a day. Kohli’s strategy is slightly different. She is planning to open Fantasie stores in the south first (Chennai, Bengaluru and Hyderabad). “People in South India are sure of what they want; they don’t take to fads easily,” she feels.

Flip side
Whatever the market potential, this industry is plagued with huge expenses on advertising, low margins and price sensitivity. Indian chocolatiers also need high quality packaging material and a good cold storage distribution system for maximum efficiency, given climatic conditions.

Market share
Given the size of the industry, Gurbani feels everyone will have their own slice of market share over time. Indian brands are now at par with their international counterparts. So, it’s not a tough business to get into, as long as you get your logistics in place and maintain necessary standards of quality. The secret recipe for success is go improvise, go customize!

What you need to be a chocolatier
* 8 moulds: Cost ranges between Rs.500 (basic) to Rs.30,000 (big moulds)
* 1 chocolate making machine: Cost ranges between Rs.10,000 to Rs.1.5 lakh
* Chocolate project course fee: Rs.30,000

The chocolate industry in India
Market value: Rs.3,000 crore
Volume by tonnage: 65,000-70,000 tons
Expected growth: 18-20 percent
Challenges: Perishable product, poor distribution network, rising milk prices

©Entrepreneur May 2010

Tags:
B.K. Gurbani, Black Magic Chocolates, Chenddyna Schae, chocolates, chocolatier, Fantasie Fine Chocolates, Indian Confectionery Manufacturers Association, Jus’ Trufs, Rage Chocolatier, Rashmi Vaswani, Zeba Kohli