This document provides a market analysis of the bakery industry in India and a launch plan for Lotte India's new product, Lotte Fluffies cupcakes. It outlines key trends in the industry such as the growth of bakery cafes and changing dessert preferences. It also discusses challenges in launching Lotte Fluffies in India given preferences for vegetarian and egg-less products. Three concepts for marketing Lotte Fluffies focusing on it as a snack, dessert, or product with "sign value" are proposed for further research.

1. (Oct, 2014)
Lotte India Corporation Limited
Lotte Fluffies: Launch Plan

2. Bakery Industry: Market Construct
• Bakery Industry: Segments
o Biscuits, Breads, Other Products (Cakes, Rusks, Pastries, Buns)
• Cakes Market Size: Rs. 1700 Cr, 3 yr CAGR: 8%
o 60% of market unorganized; 77.5% Urban, 22.5% Rural
o Key Branded Players: Britannia (16% MS), Monginis, Elite, Milka, Bisk Farm etc
o 70%+ Business from 6 States - TN, AP, Karnataka, Kerala, Maharashtra, W. Bengal
• Key Competencies:
o Unorganized Players: Freshness
o Organized Players: Hygiene, Quality, Brand Strength, R&D
• Key Growth Drivers:
o Changing Consumer Perceptions, Lifestyles
o Market Premiumization
o Rising Urbanization
o Product Innovation
o Easy Availability
• Emerging Trends:
o Organized Bakery Retailing
o E-Retailing
o Technological Advancements, Improved Packaging Solutions
o Innovation in Ingredients

3. Trend #1: Emergence of Bakery Cafes (QSR Space)
Rising Disposable Incomes,
Growing health-conscious young people willing to try out new products and cuisines,
Growth of consumers in higher and middle income groups,
Increased propensity for eating outside the home,
Increasing time-paucity, Love for snacking, Need to hang out or socialize.
• Bakery Cafes gaining popularity → slowly becoming popular hangout places
o Typical Menu includes Baked Foods (CORE), Beverages (COMPLEMENT)
o Indian, Local Bakeries → Organized, Sit-in Café Formats (ala Restaurants)
o Local Retailers → Hot Breads, French Loaf etc
o International Players: Au Bon Pain, Le Pain Quotidien etc
o Manufacturers → Store Formats e.g. Bisk Farm, Baker Street
o Modern Trade (Chain) → Store-In-Store Formats (Store Brands)
Bakery Cafes, earlier restricted to 5-Star+ Hotels
• Emergence of Newer Product Offerings → In an effort to drive Differentiation
o Premium, Gourmet
o Indulgence/Luxury
o Healthy Foods

4. Emerging Product Concepts

5. Trend # 2: Changing Dessert Scene in India
• Moving beyond Traditional Indian Desserts…
• Growing Health Consciousness
o Low Fat, Sugar Less/Sugar Free Offerings
o Bite sized Desserts
Indian Desserts
International Desserts
Fruit Salads, Ice Creams, Gelatos, Frozen Yogurt/Desserts

6. Trend # 3: Cakes for Gifting/Special Occasions
SPECIAL OCCASIONS:
Wedding
Celebrations
Baby Showers
(For the
would-be mother,
yet-to-be born baby)
Theme Parties/
B’day Parties
Bachelorette
Parties
CAKES
FOR
GIFTING

7. Cupcakes: A Short Note
Carrie Bradshaw and her group of girls
immortalized Magnolia Bakery's
meringue cupcakes in “Sex and the City”
Cupcake Revolution in India
• Single Woman: ‘Independence’, ‘Self Love’
• Teen: ‘Cuteness’
• Adolescent Lover: ‘So Sweet’
• Man in Love: ‘Symbol of Love’
• Distributing cupcakes in school on birthdays
• Corporate Gifting
• Gifting (Valentine’s Day, Mother’s Day)
• Special Occasions
‘Cupcake’ equates
What explains its popularity?
o Not messy, can be stored or carried around without any hassle
o Offers a lot of scope for creativity → Toppings, Decorations, Other Value Additions
o Amongst the ones in love, chocolates/greeting cards → cupcakes symbolize ‘love’

8. Rationale for Launch: External
• ‘Fluffies’ cupcakes → attractive market opportunities
o Trends clearly hold promise for the future
o Brand name fits well with ‘cupcakes’
o Provides enough headroom for marketing creativity
 Route 1: Snack Option
 Route 2: Dessert, post meal
 Route 3: Sign Value

9. Key Challenges: Lotte Fluffies
• India has one-third of the world's vegetarians
o Gujarat, Rajasthan, Uttar Pradesh, Delhi, Punjab → Key ‘Veg’ Markets
 Key Consumption Markets → Food FMCG
• Egg-less Cakes, already available in market since 2009 (Britannia)
o Vegetarian mothers feel guilty for denying their children cakes due to egg factor
o Fluffies’ Custard offering is overtly ‘Egg’
• ‘Custard’ ~ Consumer Awareness Poor → Education Required
• Need to check if shelf life claim (~8 months) does not affect key product attributes
o ‘Fluffiness’, ‘Egg Smell’, ‘Taste’, ‘Product Stability’→ Korea to REVERT
• Major Cake markets are Lotte’s strong markets → may work in our favor
• Key Selling Points: (if shelf life claim is VALID)
 Product Hygiene, Convenience, Quality (Standardization)

10. Lotte Chocopie Vs Lotte Fluffies
• Business Cannibalization concerns arise considering: (Ref: AC Nielsen Researches)
o Substitutability of Lotte Chocopie/Fluffies with Biscuits, Cakes
o ‘Chocopie’ not seen as a category of its own; Consumer not sure where to place;
It is therefore imperative that we clearly differentiate Fluffies’ standing Vs Chocopie!
Lotte Chocopie Fluffies
Consumer Need ‘Indulgence’ # 1: ‘Snack for Appeasement’
# 2: ‘Quality Dessert’
# 3: ‘Flaunt & Exhibit’
Rationale:
o Consumer Research clearly highlights ‘Health & Nutrition’ element as being relevant
and important for Fluffies
o Pack graphics for both Lotte Chocopie & Fluffies highlight the difference quite well

11. Concepts

12. Lotte Fluffies: Way Forward
• 3 Concepts shortlisted → to be checked in Research
• Basis feedback, will draw communication plans thereof

13. Lotte Fluffies: Concept #1 (Snack Route)
Consumer Insight:
“I want to feel thoroughly satisfied after eating a snack – both my body and mind must
feel happy”
“Quantity is not important, the snack should have quality filling”
Benefit:
Soft, Delicious Cream filled Cupcakes that:
give you complete satisfaction of having consumed a tasty, yet healthy snack!
Perfect happiness for both body and mind!
Reason to Believe:
Quality Custard Cream Filling inside Soft Custard Cupcakes
Wholesome Goodness of Wheat, Milk & Eggs, packed together in each cupcake!
Other Information:
No MSG, No Artificial Colors, Trans Fat Free
8 Month Shelf Life ~ cakes that stay fresh, fluffy and tasty for long..
Convenient, Hygienic Single Unit Packaging”

14. Lotte Fluffies: Concept # 2 (Dessert Route)
Consumer Insight:
“After my meal, I have to have a dessert; A delicious bite-sized healthy dessert is all
I need – to satisfy my sweet tooth, without the guilt!”
Benefit:
Good things come in small bite-sized packages!
Presenting Lotte Fluffies – Soft, Cream filled Cupcakes that:
deliver the enjoyment of having consumed a full dessert, without weighing you down.
Satisfy that sweet tooth of yours, without the fear of overindulgence!
They only come in convenient , bite sized packages.
Reason to Believe:
Delicious Custard Cream filled Cupcakes in 23g single serves, conveniently packed
Each cupcake you consume, has ~ 100 kcal only
Wholesome Goodness of Wheat, Milk & Eggs, packed together in each cupcake!
Other Information:
No MSG, No Artificial Colors, Trans Fat Free
8 Month Shelf Life ~ cakes that stay fresh, fluffy and tasty for long..

15. Lotte Fluffies: Concept # 3 (‘Sign Value’ Route)
Consumer Insight:
“On special occasions (e.g. Sundays, Birthdays), I like to surprise my family and guests,
serving them unique, delicious, yet healthy treats. After all, they must know only I can
provide something like this.. ”
Benefit:
Soft Cupcakes, with the goodness of wheat, milk and eggs that:
hide a unique, delicious, custard cream surprise inside – with a taste that is guaranteed
to impress!
Reason to Believe:
Unique, Delicious Custard Cream Filling inside Soft Custard Cupcakes
Wholesome Goodness of Wheat + Milk + Eggs in each cupcake
Other Information:
No MSG, No Artificial Colors, Trans Fat Free
8 Month Shelf Life ~ cakes that stay fresh, fluffy and tasty for long..
Convenient, Hygienic Single Unit Packaging