Abstract:

The global confectionery industry is currently navigating a period of profound instability, precipitated by a catastrophic supply shock in the Turkish hazelnut sector, which accounts for approximately 70% of the world's production capacity.¹ For Monk Foods, an emerging Indian player in the chocolate spread category, this macroeconomic volatility has manifested as an acute existential crisis. The company operates across three distinct verticals—HORECA (under the brand Nutmania), Industrial B2B (Bulk 25kg packs), and Private Label manufacturing—spanning a diverse pan-India geography.

The core challenge facing an MSME Monk Foods is a decoupling of input costs from pricing power, driven by a 78% surge in raw hazelnut prices between April and December 2025.² This inflation has eroded gross margins to unsustainable levels, particularly in the highly price-sensitive Southern Indian market, where the company is currently selling its flagship 1kg HORECA pack at a price below its marginal cost of production.² While Central and Western markets have demonstrated some elasticity, accepting price hikes from INR 390 to INR 435, the Southern market has stagnated at INR 385 against a cost base of INR 429.45.²

This report aims to deconstruct the "Margin-Volume-Quality" trilemma facing Monk Foods. It utilizes a multi-disciplinary approach, integrating quantitative cost analysis, competitive benchmarking based on import data, and strategic pricing frameworks (Economic Value to Customer and Price Sensitivity Measurement). The analysis reveals that a monolithic pricing strategy is no longer viable in a fragmented Indian market. The report recommends a Tiered Portfolio Strategy: introducing a value-engineered "Professional" variant for cost-conscious Southern HORECA clients while positioning the original recipe as a premium "Classic" offering for the Central/West markets, supported by a transparent commodity surcharge mechanism for B2B contracts.

Please choose your submission type: Developmental Paper

Primary Track: Strategy-as-Practice

Keywords: Business models;Start-ups and SMEs;Strategic challenges;Strategy activities

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Mr. Jayen Shah