Lotte India Invests Rs 185 Crore To Expand Manufacturing Capacity

Lotte India Corporation Ltd. has pumped in Rs 185 crore to raise its Choco Pie-making capacity at its existing plant in Nemam, Tamil Nadu.

The expansion was initiated last year in October in order to cater to the growing demand for Choco Pie products and sustain the company's growth trajectory, Lotte India's Managing Director Milan Wahi said on Wednesday.

The local arm of South Korea's Lotte Wellfood Co. is investing in capacity augmentation, eight years after it set up its second plant in Rohtak in 2015.

With an additional 85,562 square feet, the Nemam facility becomes Lotte's largest manufacturing plant in India, spanning 5.16 lakh square feet.

Its monthly production capacity will rise nearly three times to 1,420 tonnes.

Chocolates as a category dominate India's Rs 23,000-crore confectionery market, with nearly 60% share at Rs 13,800 crore. The fresh investment will play a key role in strengthening Lotte’s leadership in the domestic confectionery market, where it enjoys a near monopoly status in the choco pie category. The only other competitor in the segment is Orion.

Nine out of ten choco pie treats consumed are Lotte Choco Pie, said the company, which reaches a million retail outlets through 2,000 distributors.

Recent Bizom data pointed out that sales of fast-moving consumer goods fell 8.4% in August, even as confectionery and packaged foods were the only categories to buck the trend, driven mainly by gift packs. The data showed that the confectionary category grew 15% in August over July.

The company is hopeful of a "strong" festive season and expects to capitalise on the demand surge with the help of this additional capacity.

The increase in capacity also equips Lotte India to support potential export opportunities in the future, according to the confectionary major.

Wahi said the investment comes "at an exciting time," indicating its strong financials. In the fiscal year 2023, Lotte India's annual sales rose 32.4% over the previous year to Rs 657.2 crore. The annual sales are four times higher than those of 2007–2008, when the company was still studying the market.

Lotte entered India after taking over Chennai-headquartered Murugappa Group’s confectionery business, Parry’s Confectionery Ltd., in 2004.

The global parent has also recently outlined India as a key market for the rest of 2023. In fact, Lotte Wellfood CEO Paul Yi went on record stating that the parent will "continue to focus on increasing market share dominance and pursuing continued growth in India via brands such as Choco Pie."

Other than Choco Pie, Lotte's key confectionary brands in India include Coffy Bite, Coconut Punch, Caramilk, Lacto King, Jellies, Fruitz, and Eclairs.

Lotte also entered the ice cream category as part of its expansion plans in India after acquiring Havmor in 2017.