Product Strategy

Chocalate as a product and developing into confectionary

Product

Eating Chocolate Is Inconsistent With A Healthy Diet

With so much going for it, it's unfortunate that chocolate is often surrounded by myths and
misconceptions that result in its unjustified reputation as an 'unhealthy' food. Scientists are
beginning to dispel common myths about the concerns of eating chocolate, demonstrating
the ways in which chocolate can make us feel good when enjoyed in moderation. One
example of this would be the high levels of cardiovascular friendly antioxidants contained in
chocolate - in fact, dark chocolate in particular contains more antioxidants by volume than
red wine11 12. There is no need to exclude chocolate from a healthy diet as long as it is
consumed responsibly and in the context of the dietary needs of the individual and their
energy balance.

Chocolate causes Tooth Decay

Chocolate has sometimes been blamed for tooth decay but there is research showing that
chocolate isn't as bad for your teeth as people think. Research has indicated that naturally
occurring substances in cocoa, such as tannins, may play a role in inhibiting plaque
formation.

Eating Chocolate gives you spots

Despite the persistence of this myth, research by the Pennsylvania School of Medicine and
also by the U.S. Naval academy13 found no link between acne and chocolate consumption.

Chocolate has no nutritional value

Few people know that chocolate actually contains a number of important nutrients. Milk
chocolate is a source of potassium, calcium and magnesium, while being low in sodium. It
also provides us with vitamins - including B1, B2 and E.

Chocolate is Aphrodisiac
Though not definitively proven, recent research has indicated that this might not be a myth
after all! A study conducted by San Raffaele hospital, Milan14 has found greater levels of
sexual desire in the group that reported daily chocolate intake as opposed to those who did
not eat chocolate.

Some more facts

The calcium in a 49g milk chocolate bar provides over 15% of your daily Reference Nutrient
Intake (RNI).
The magnesium in a 45g bar of dark chocolate provides 13% of a female's and 15% of a
male's daily RNI.
One 45g dark chocolate bar provides you with up to 12% of your daily iron RNI.
The copper in a 45g dark chocolate bar provides 27% of your RNI.
As much as 22% of your RNI of riboflavin can come from a single 49g bar of milk chocolate.
A 49g milk chocolate bar provides you with 33% of your recommended daily vitamin B12
intake

How Cadbury Leveraged the Chocolate as a

product and strategized its entry into
confectionary market

Analysis of consumer behaviour

Cadbury India's main source of revenue is its 70% bite of the 23,000 tonnes Indian
chocolate market. It is also present in the malted food market (Bournvita enjoys a 24
percent share of the 20,000 tonnes brown drinks market). Of late, the company has
ventured into the 120,000 tonnes sugar confectionery market ('Googly') and has gained
about 5% market share there. The revenue break up of its different business segments is
as follows:

Despite the fact that Indians have strong affinity for sweets, the size of domestic
confectionery market is small on account of traditional consumer tastes and habits. The
Chocolate market in India is a niche market penetrated largely in urban areas and per
capita consumption is low as compared to those in developed countries of the West. But
future prospects of the chocolate category looks good as the company plans to move into
the arena of snack foods, as it has done in the Western markets.

The market for Malted food drinks is large and is characterized by a few large players.
The market can be broadly segmented into white malted food drinks which dominates in
the Southern and the Eastern parts of the country and Brown Malted food drinks which
dominate in the North and the West. Large brands like Bournvita and Horlicks dominate in
Malted food drinks sector and the growth has been steady in the last five years.

The future mission of Cadbury India is 'A Cadbury in Every Pocket'. The company's
business strategy hinges on following for driving its future growth:

• Increase the width of chocolate consumption, through low price point packs and
distribution focus.
• Increase depth of consumption, targeting regular chocolate consumers through
generating impulse and a dominant presence at Point of Sale.

• Maintain image leadership through a superior marketing mix.

• Be a significant player in the gifting segment, through occasion linked gift packs.

• Build critical mass in the sugar business by introducing value-added sugar

confectionery products.

Future revenue growth will be through increasingly higher volumes rather than price
increases. The management believes that price increase can only be a short term
objective. It is volumes, which are very important to achieve the long-term goal of having
a wide consumer base.

The company sees its growth in future in market expansion and new product launches.
Increased reach, new launches, higher marketing spend and intensive promotions - the
mix, Cadbury is looking at to fuel its future growth. The company is also looking for
acquisition of brands, and its huge cash reserves might be utilized for the purpose.

Performance of segments

Items Sales Value (Rs.Lakhs)

12/2008 12/2009 %Change
Malted Foods 11436.90 13144.75 14.93%
Cocoa Powder and Drinking
747.22 723.94 -3.12%
Chocolates
Chocolates, Coated Wafer
Biscuits and Sugar 38923.60 43245.03 11.10%
Confectionery.
 Products

The company manufactures and sells

• Chocolates
• Sugar confectionery
• Malted foods,
• Cocoa powder,
• Drinking chocolate and malt extract
• Candy
• Gum

Established brands of the company in the Chocolate segment includes Dairy Milk, Perk,
Crackle, 5 Star, Eclairs and Gems.

The other brands in sugar confectionery category are Googly, Frutus and Gollaum ; which
are yet to get a foothold in india and making an effort to gain a major market share

In the malted health category, Cadbury has a strong brand in Bournvita.

Other food drinks offered by the company are Cadbury’s Drinking Chocolate and
Cadbury’s Cocoa powder. The company is also into the business of Soft drink and has
drinks like Canada Dry and Crush.

Few Examples of how Cadbury has defined its product

Cadbury Milk Chocolate

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K., but the
journey with chocolate lovers in India began in 1948.

The pure taste of Cadbury Dairy Milk is the taste most Indians crave for when they think
of Cadbury Dairy Milk.

The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of Cadbury
Dairy Milk with a variety of ingredients and are very popular amongst teens & adults

Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk Wowie, chocolate
with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a delightful
combination of milk chocolate and white chocolate. Giving consumers an exciting reason
to keep coming back into the fun filled world of Cadbury

Snack –segment – Cadbury Byte

Cadbury Bytes was launched in 2004-05 as Cadbury's foray into the rapidly growing
packaged snack market.
Cadbury Bytes is a one of a kind snack, in that it is sweet and not salty, as compared to
most of the other snacks. It's a bite sized snack with a crunchy wafer and rich Choco
cream filling. There are three variants of Bytes available in the market - Regular, Coffee
and Strawberry, at two price points- Rs 5 and Rs 10.

Cadbury Bytes is targeted at teens as they are the largest consuming segment of
packaged snack category. They are also the gateway to the family, especially for a new
sweet snack

Beverages – Segment – Bournvita

Cadbury was incorporated in India on July 19th, 1948 as a private limited company under
the name of Cadbury-Fry (India). Cadbury Bournvita was launched during the same year.

It is among the oldest brands in the Malt Based Food / Malt Food category with a rich
heritage and has always been known to provide the best nutrition to aid growth and all
round development.

Throughout it's history, Cadbury Bournvita has continuously re-invented itself in terms of
product, packaging, promotion & distribution. The Cadbury lineage and rich brand
heritage has helped the brand maintain its leadership position and image over the last 50
years.

Therapeutic Candy – Segment - Halls

Halls was first launched in India in 1968 & soon established itself as
a ‘therapeutic’ candy competing in the cough lozenge market. Halls has been sold in India
as part of the Pfizer & Warner Lambert networks before it came into the Cadbury fold in
2003 as part of a global merger with Adams Confectionery.

Gum – Chewing –Segment - Bubbaloo

Cadbury India has expanded its confectionary portfolio in 2007 by foraying into the
Bubble gum category with the launch of “Bubbaloo Bubblegum”- a successful bubblegum
brand from its international portfolio.

Bubbaloo is an innovative soft bubblegum with a centre filled liquid.

It is filled with a high level of a great tasting fruit flavoured liquid that floods your mouth
instantly.

Bubaloo is currently available in two yummy flavors- Strawberry and Mixed Fruit.