Confectionery Preparation
Key raw materials for sugar confectionery are sugar (60-65% of the raw material volume), glucose, citric acid and flavoured essences. For chewing/ bubble gums, most leading MNC players import gum base. Other key raw materials include sugar, glucose and emulsifying agents.
All the ingredients are mixed in a mixer and heated. An extruder converts the mixture into a long rope, which is then cooled and flattened. The gum is cut into pieces and wrapped.
World over, confectionery products contain animal gelatin, use of which is banned in India. This has prevented development of categories such as jellies and superior chewing gums.
Sugar Confectionery
In confectionery products, retailer margin varies from 15% to 30%, including trade discount and incentive schemes. Distributor margin varies from 5% to 10%. Sales tax averages at around 10%.
Freight, handling and distribution cost is minor at about 2%. Excise duty on sugar confectionery is 8%, whereas gums and chocolates attract 16% excise duty.
Contribution margins vary between 30% and 60% depending upon the product. Advertisement and promotion costs are very high
Organized market for sugar confectionery/gums is estimated to be 139,000 ton pa. Hard boiled confectionery and toffees account for 69%, 5% by eclairs, 18% contributed by gums (chewing gums/ bubble gums) and rest by mints, lozenges etc.
The confectionery market has undergone a metamorphosis, during the last 3-4 years. From a commodity market controlled by local players, it is changing to a branded products market with strong presence of MNC players.
These MNCs
• Offer superior product ingredients with support of global technology
• Offer better packaging and ensure better distribution
• Invest heavily in building brands. New MNC players are trying to create
• Customer pull by advertisements and retail displays.
• Dealers push incentives by higher margins, promotional schemes, etc, on which local brands relied upon
earlier, still remains the main form of marketing in the confectionery market dominated by the unorganized segment.
Key raw materials for sugar confectionery are sugar (60-65% of the raw material volume), glucose, citric acid and flavoured essences. For chewing/ bubble gums, most leading MNC players import gum base. Other key raw materials include sugar, glucose and emulsifying agents.
All the ingredients are mixed in a mixer and heated. An extruder converts the mixture into a long rope, which is then cooled and flattened. The gum is cut into pieces and wrapped.
World over, confectionery products contain animal gelatin, use of which is banned in India. This has prevented development of categories such as jellies and superior chewing gums.
Sugar Confectionery
In confectionery products, retailer margin varies from 15% to 30%, including trade discount and incentive schemes. Distributor margin varies from 5% to 10%. Sales tax averages at around 10%.
Freight, handling and distribution cost is minor at about 2%. Excise duty on sugar confectionery is 8%, whereas gums and chocolates attract 16% excise duty.
Contribution margins vary between 30% and 60% depending upon the product. Advertisement and promotion costs are very high
Organized market for sugar confectionery/gums is estimated to be 139,000 ton pa. Hard boiled confectionery and toffees account for 69%, 5% by eclairs, 18% contributed by gums (chewing gums/ bubble gums) and rest by mints, lozenges etc.
The confectionery market has undergone a metamorphosis, during the last 3-4 years. From a commodity market controlled by local players, it is changing to a branded products market with strong presence of MNC players.
These MNCs
• Offer superior product ingredients with support of global technology
• Offer better packaging and ensure better distribution
• Invest heavily in building brands. New MNC players are trying to create
• Customer pull by advertisements and retail displays.
• Dealers push incentives by higher margins, promotional schemes, etc, on which local brands relied upon
earlier, still remains the main form of marketing in the confectionery market dominated by the unorganized segment.