Can India become the next big hub in Global Cocoa Production?

Cocoa Market Overview in India:

Cocoa farming was introduced in India during 1960s for the first time. Since then it has become popular in certain parts of southern India, mainly as an intercrop, grown in coconut, banana or areca nut farms. Cocoa needs humid and warm weather with yearlong raining, which has mainly restricted its farming to Kerala alongside certain parts of Andhra Pradesh, Tamil Nadu and Karnataka. However, what is noteworthy is rise in Cocoa plantation in India since 2015, as many farmers are finding it a lucrative option. 

Cocoa powder and Cocoa butter are staples in chocolates, confectionary and bakery industry due to their signature flavour. Due to its rich flavour and texture it is used as an add-on to numerus food items such as ice creams, health drinks, breakfast cereals, porridges, yoghurt, etc. Rich in antioxidants, they also find application in moisturizers, emulsifiers, lotions, balms, scrubs, etc. India today has a modest ~ 1% share in the global cocoa industry. International market is largely run by West Africa, holding ~ 50% footprint. Despite growth in indigenous production, the industry is reliant on imports, as domestic production still falls short of the total demand. 

This however means, there is plenty of scope for cocoa plantation in India. Another silver line is average yield in India is much higher than the global average. The global average of cocoa beans production per tree per acre is 0.25 kgs. In India it is close to 2.5 kgs under traditional farming. Under hybrid farming the yield can reach 4-5 kgs of beans per tree per acre or even higher. 

 Market Size:

In India cocoa beans production has reached 27,600 tonnes in 2024, rising significantly from 2017, when it is pegged at 19,000 tonnes, indicative of a CAGR growth of 4.8% During the same period there has been a notable rise in cocoa plantation. In 2024, over 110,000 hectares of land has been dedicated to cocoa production, rising up from 83,000 hectares in 2017, growing at a CAGR of 3.6%. Andhra Pradesh is the biggest producer of cocoa beans with a market share of 40.3%, which is closely followed by Kerala with a share of 35.4%. 

 Cocoa Production Process:

Mentioned below are the various steps involved in cocoa production in India:

 

 Government-Backed Initiatives and Key Collaborations for Cocoa Production in India:

l India's cocoa business is thriving, supported by several government projects focused on making India a major hub for cocoa production. Initiatives Directorate of Cashew and Cocoa Development (DCCD) and Mission for Integrated Development of Horticulture (MIDH) have been functional to boost the cultivation of cocoa in India. 

l MIDH focuses on financing programs for promoting the comprehensive expansion of horticulture. The program offers significant financial support for growing cocoa plants, paying for drip systems and planting supplies. This program encourages quality improvement and widespread adoption by offering up to 40-50% subsidy.

l DCCD plays an essential role as a planning and execution entity. The initiative is crucial for establishment of nurseries for high-quality planting material and the development of farmer skills through workshops and seminars. To further support the primary processing units and spread recent advances to the grassroots level, the DCCD's actions are critical.

l These initiatives are further reinforced by the Rashtriya Krishi Vikas Yojana (RKVY). This provides the flexibility to adapt to local demands by concentrating on expanding cocoa areas for planting and improving production techniques. By increasing domestic supply and empowering farmers, such programs together aim to reduce India's significant reliance on cocoa imports.

l Public-private partnerships have extensively expedited the growth of the cocoa market in India. For instance, Cadbury's "Cocoa Life Community Development Program" seeks to improve farmer income, empower communities, and establish sustainable cocoa supply chains. 

Latest Investments made in the Cocoa Plantation Value Chain of India:

l In 2023, Reliance Consumer Products solidified its presence in the Indian confectionery business by investing ₹74 crore to purchase a majority 51% stake in Lotus Chocolate Company.  

l Mondelez, an American brand, is investing in cocoa research and production to expand its territory by 5,000 hectares. Furthermore, to enhance farming methods and produce cocoa seedlings, Mondelez is also collaborating with research organizations such as Kerala Agriculture University and CPCRI. 

l With an investment of INR 425 crore in India, the Barry Callebaut Group aims to establish its third largest chocolate manufacturing plant in Asia-Pacific in Neemrana, Rajasthan by 2024.  

l ITC Limited made an initial investment of ₹100 crore to develop a fresh chocolate production facility in Haridwar. Also, the brand plans to establish a distinctive factory in Bengaluru for its luxury Fabelle Chocolates.

l PE and venture capital firms are making aggressive investments in India's snack and FMCG industries. Prominent deals include Rebel Foods' INR 426 crores (USD 50 million) acquisition of Smoor and LIL' Goodness' INR 25.7 crores fundraising campaign for organic cocoa-based treats. These investments demonstrate the significant amount of investor interest in cocoa related food brands.

How Cocoa Decline in Central Africa will Drive India's Growth:

The cocoa industry is undergoing a major transformation. West and Central African countries, including Ivory Coast and Ghana, account for more than 50% of global cocoa production. Recently, production has been negatively impacted by climate change due to rising temperatures and unpredictable rainfall. According to reports, by 2050, almost half of these regions will no longer be suitable for cocoa-growing lands. This might result in a 12% drop in production within their northern belts. There will be an increased attraction towards the Indian cocoa market, since the declining supply from Africa will spike the cocoa prices globally. The domestic market is expected to benefit from a trend towards sourcing cocoa from India as companies look for diversified supply chains.

India stands in an ideal position to capitalize on this opportunity. For instance, the humid climate in South India is perfect for growing cocoa. Through financial assistance and knowledge transfer, government programs such as the DCCD and MIDH are actively encouraging the expansion of the landscape. Indian cocoa production increased by 47% between 2017 and 2022. 

Furthermore, the production is expected to reach close to 30,000 metric tons by 2026. In conclusion, India is poised to play a pivotal role in stabilizing the global cocoa supply chain by boosting domestic production and emphasizing value-added products.

 India’s Growing Cocoa Export Potential: 

Although India is a major importer of cocoa products, the country is gradually establishing an identity in the global market for the export vertical. While playing a comparatively smaller role compared to West African giants, the nation is experiencing an upward trajectory in its cocoa exports. India, being the 43rd largest exporter in the world, shipped cocoa powder worth USD 1.4 million in 2023. The major destinations were Nepal, Kenya, the UAE, Cameroon, and Ethiopia. Additionally, Germany, the United States, and the Netherlands are important markets for cocoa beans.  Recent data shows a 20% increase in India's cocoa exports, which further supports the ongoing expansion. Growing domestic cocoa production, led by regions like Andhra Pradesh and Kerala with notable yearly yields, is the foundation of this burgeoning potential.

 India's export prospects are expected to be further enhanced by the anticipated global cocoa crisis. India's expanding production and steady quality will draw more attention since major chocolate companies want to diversify their supply chains away from climate-vulnerable regions. Rising global cocoa prices will encourage local growers to increase their production, making the landscape competitive. Additionally, by improving the cocoa ecosystem, India's expanding chocolate market is expected to reach USD 4.9 billion by 2032. 

The country is well-positioned to become a significant source of cocoa both on the national and international stage. 

 How can The India Watch Help?

For businesses looking to successfully navigate and thrive within the dynamic and rapidly evolving Indian cocoa landscape, The India Watch can offer specialized market research, feasibility studies and strategic consulting. Our insights ensure you make informed decisions and achieve sustainable growth. 

Through our tailor-made research and consulting advisory, we are active throughout the cocoa value chain, comprising organized Agri plantation, processing and confectionary industry. In addition to business houses, govt. backed programs and non-profits can also avail our market research services. 

Our bespoke feasibility studies and comprehensive market insights provide crucial data, including:

l Cocoa Market Sizing & Growth Projections

l Detailed Competitive Landscape Analysis

l Recent Investments & Key Industry Developments

l Consumer Behaviour Analysis

l Consumer demand analysis across key B2B segment

l Distribution Channel & Supply Chain Analysis

l Go-to-Market Strategies

l Sales & Marketing Strategies for Cocoa Brands

l In-depth Regulatory & Policy Insights Relevant to Cocoa Processing

l Site suitability analysis

l Financial Projections & Risk Assessment for Cocoa Ventures

l Market potential assessment

l Addressable Market Size Estimation for Specific Cocoa Categories

l Future Growth Roadmap for Cocoa Businesses

To explore how our expertise can empower your venture in the Indian cocoa market, please reach out to us at info@theindiawatch.com