Brand Selected: Cadbury’s India (Only Chocolates)

Limitations of the study:

• There are no financials of Cadbury India available and hence they have not
been included.
• The order has been tweaked so as to maintain the flow.
•

1. Industry Analysis (Confectionary Industry)

The confectionary industry is divided into

Chocolates
Hard boiled candies
Toffees and Éclairs
Chewing Gums
Lollipops
Bubble Gums
Mints & Lozenges

The total confectionery market is valued at Rupees 41 billion with a volume turnover of about
223500 tonnes per annum. The category is largely consumed in urban areas with a 73% skew to
urban markets and a 27% to rural markets.

Hard boiled candy accounts for 18%, Eclairs and Toffees accounts for 18%, Gums and Mints
and lozenges are at par and account for 13%. Digestive Candies and Lollipops account for 2.0%
share respectively.

Overall industry growth is estimated at 23% in the chocolates segment for year 2009-10 and
sugar confectionery segment has declined by 19%

Per capita consumption of chocolates in India is minuscule at 20gms in India as compared

to around 5-8 kgs and 8-10 kgs respectively in most European countries. Awareness about
chocolates is very high in urban areas at over 95%.

Low priced unit packs, increased distribution reach and new product launches can be
said to have fuelled this growth.

The launch of lower-priced, smaller bars of chocolate in the last two years and
positioning of chocolate as a substitute to traditional sweets during festivals, have boosted
consumption. This is also because chocolate, which was considered to be an elitist food, has
caught the fancy of buyers looking for a lifestyle item at affordable cost.
This trend has been led by Nestle Munch, Cadbury Perk and the most recent entrant CDM
shots which have immense potential to tap the rural market. The Rs.5 price point accounts for
more than half of chocolate sales.

There is a change in perception for chocolates as a snack. It is no longer for a niche but for the
entire classes.

Major Players:

• Cadbury
• Nestle
• Amul
• Perfetti

2. Company Analysis (Inclusive of Current Marketing Techniques)

• Main Product Portfolio:

Cadbury Dairy Milk

Category Brand Variants
Bars Dairy Milk
Plain
Fruit n Nuts
Double Decker
Roasted Almond
Chunky
5-Star
5 Star
Count Lines 5 Star Cruchie
Milk Treat Chocolate
Orange
Wafer Chocolate Perk Perk
Perk XL
Premium/ Gift Chocolates Temptation Rum, Cashew, Almond & Orange
Celebrations Various Gift Packs

Cadbury’s Dairy Milk (CDM): Flagship Brand

Cadbury’s Dairy Milk is the flagship brand of Cadbury’s not only in India but world wide.
CDM is the single largest selling unit in India. It has annual sales to the tune of Rs 200 crore.
CDM not only accounts for 30 per cent of the total chocolate market in value, but commands
nearly 26 per cent in volume terms and close to 30 per cent of Cadbury’s annual turnover.
Moving from a predominantly adult positioning in the days of the legendary dancing girl ad, to
the teens and the tweens, when the Cyrus Broacha ads hit the airwaves, CDM has made a long
sweet journey. In spite of the new categories being explored by Cadbury, its star brand remains
Cadbury Dairy Milk (CDM) which continues to corner almost 30 per cent of the chocolate
market.

Cadbury’s Temptation:

Cadbury’s Temptation is premium chocolate brand aimed for high value consumption. Various
variants available are Almond, Rum, Cashew & Orange. Cadbury’s temptation is priced at Rs. 40

Cadbury’s Celebrations:

Cadbury India launched its premium Celebrations range, which contains traditional Indian dry
fruits wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving
away dry
fruits — which Indians traditionally consider a premium, healthy gift — with chocolate.
Cadbury now has 90 per cent market share in this profitable segment.

Nestle and Amul are struggling to gain acceptance in this particular segment.

Line Extensions:

5 STAR:
Consumer feedback suggested that the old 5 Star was too chewy, and people complained of it
sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5 Star
Crunchy.

5 star Fruit & Nut also received moderate response from the target market.

PERK:

Perk was made much lighter and the size of the bar increased to match Nestle’s Munch. Perk
had been under fire from Nestle’s deadly duo of KitKat and Munch, but after the relaunch, its
marketshare is two per cent more than KitKat’s. And, the five-year-old brand is now almost as
big as the decades-old 5 Star in size, both in the region of Rs 50-55 crore.

HEROES:
Packaging innovation has played a vital role in revamping of various Cadbury’s brands.
Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a single
outer case.
New Product Launches:

Rich Dry Fruit Collection

(For Gifting Festive Season)

Cadbury Celebrations’ Rich Dry Fruit

Collection – a range of premium
chocolate gift boxes.
Available in attractive packs, the Collection caters to a premium gifting consumer and is an ideal
festive gift. It is a unique combination of the best Cadbury chocolate and premium dry fruits and
comes in four different formats each of which is a mix of select premium dry fruits enrobed in
rich Cadbury Dairy Milk chocolate.

Cadbury Desserts

“for sweet moments after dinner”

Rs. 20/- per packet of 44 gms

Cadbury Dairy Milk (CDM) Desserts – with rich indulgent crème center, in exotic & traditional
flavors of Tiramisu and Kalakand. CDM Desserts offer the perfect rounding off taste, after meal
that adds special ‘Meetha' moments to the family. The rich tastes of CDM combined with the
unique crème center in exotic flavors provide a special chocolate experience. CDM Desserts add
delight to the after-meal moments, especially with the consumers whose current choice of sweets
range from home made delicacies to fruits to meethai.

CDM Shots

TG: Rural India

Rs.2 for a small pack

CDM shots were introduced with a single objective: To penetrate the rural market.
Priced at rupees two these products explore the happiness experienced in everyday thus
providing the reason to have chocolates every day.

 Pricing:

After the roaring success of Nestle’s Munch and Chocostick, Cadbury’s empire struck back hard.
The Rs 5 price point accounts for more than half of all chocolate sales.
Nestle had seized the initiative at this price point, with its launch of Munch, now a roaring
success (and the largest selling product at that price point). Today, Cadbury has four products at
this price point: CDM, Perk, 5 star and Gems — and the five-rupee CDM bar is its single
largest-selling SKU.

“This is a potent price point in India, because the average purchasing power is abysmally
Low” Industry Analyst.

Nestle kicked off one of the biggest success — the liquid chocolate category with its brand
Chocostick priced at Rs.2 three months ahead of competition. Cadbury did react with Chocki,
priced at Rs 2, expanding the concept of sachetisation to new frontiers. Chocki has been the
single biggest growth driver for Cadbury as well as the entire chocolate category. The
novelty of the format endeared itself to the existing customer. In less than one year, it constituted
nearly 10 per cent of the total chocolate market, split equally between Cadbury and Nestle.

CDM shots which was recently released in March has again taken a sizeable market share.

Volume led growth strategy

Cadbury has followed a well-planned strategy of fuelling volume growth by introducing smaller
unit packs at lower price points. Simultaneously, the company seems to have astutely juggled
with the larger pack sizes and raised prices to a degree higher than what appears at face. The
strategy has driven volumes in the last two years and we expect the volume growth to continue in
the next two years.

 Distribution:

Chocolate needs to be distributed directly, unlike other FMCG products like soaps and
detergents, which can be sold through a wholesale network. 90% of chocolate products are sold
directly to retailers.

Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has
to be kept cool in summer and also has to be adapted to suit local tropical conditions.

Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers.
The company has a total consumer base of over 65 million. Besides use of IT to improve
distribution logistics, Cadbury is also attempting to improve distribution quality. To address the
issues of product stability, it has installed coolers at several outlets. This helps in maintaining
consumption in summer, when sales usually dip due to the fact that the heat affects product
quality and thereby offtake.

To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is
setting up two separate distribution channels – one for Classes & other for Masses,
with different stockists, wholesalers and retailers. One set will be dedicated to Cadbury’s high-
end products and traditional chocolates.

 Promotion:

Typically it is said that chocolates are being eaten when everyone is happy. And this is
something advertising has always portrayed. But it is found chocolates are eaten under diverse
conditions and moods - when people are anxious, when they are sad, when happy - a whole
range of emotions. Condensing these views & thoughts, it can be said chocolate is a true soul
mate. Someone who is with you through the ups and downs of life, helping you bounce back.

And that's what Cadbury's Dairy Milk (CDM) positioned itself as - a special friend.

 Branding

% Share of various Brands Ad spending of Cadbury

Here, the 6 Cadbury brands shown in the graph comprise 85% of the advertising pie, whereas,
rest of the 9 brands advertised by Cadbury comprise 15% of the advertising. Cadbury Dairy Milk
Chocolate is the most advertised brand (with 22%).

RE-INVENTING CABDURY

“Kya Swad Hai Zindagi Mein” redefined the way Indians looked at Cadbury
Chocolates. (The commercial showed a beautiful young lady overcoming all obstacles on the
cricket ground, crossing boundary, watchman, securities and embracing her lover who won the
game by hitting a six). This theme introduced in around mid 90’s bought instant growth to
Cadbury’s Dairy Milk. The Ad campaign ran successful for about four years and immersed
deeper inside hearts of Indians.

The advertisement aimed at conveying the idea that no specific occasion is required for
consuming CDM. This was a significant departure from CIL's strategy of appealing to adults in
India, who sought a rational justification for indulging in chocolate consumption.

The amazing divergence of advertising can be seen in Cadbury. The ironic part is that the
advertisements have catered to every segment without tarnishing its brand image.
It reminds of the glory days of General Motors.

The best example would be the recent ads of Bourneville for Higher class and the ad depicting a
simple middle class person to have chocolate on every 1st day of the month for Dairy Milk.

Cadbury’s advertising has, over the past few years, aptly reflected India’s passion for
chocolates.
SWOT Analysis of Cadbury

Strengths:

• India’s largest chocolate manufacturer with 70% market share

• Constant Brand innovations
• Cautious line extensions without hampering the main brand
• Brand Equity
• Reach

Weaknesses:

• The taint of 2003 refuses to clear

• Addition of Nickel may lead to certain ramifications
• Too much reliance on flagship brand ie Dairy Milk

Opportunities:

• Growing spending power

• Untapped rural market
• Creation of New Categories (Blue Ocean Strategy: Pioneers Nestle, Cadbury)
• Gaining acceptance of chocolates (behavioral change)
• Improving infrastructural facilities and reach

Threats:

• Local Cocoa suppliers shifting towards more lucrative vanilla farming

• New entrants in Indian Markets like Lindt
• Rising raw material costs

 Strategy Recommendations(brand building process):

• Opening of an exclusive store for Cadbury’s catering to top segment having entire range
of premium chocolates of Cadbury.
• Independent branding in case of Bourneville as it might affect the image of Cadbury in
the long run.
• Backward integration in terms of cocoa farming so as to maintain playing with price
points in the future.