Cadbury 2

A 51% subsidiary of the Cadbury Schweppes UK, Cadbury India enjoys leadership position in Chocolate segment in India. The brand name 'Cadbury' is synonymous with chocolates in India. The company has leading brands in all segments viz. 5 star (countlines), Dairy Milk (bars), Gems (panned confectionery), Eclairs (toffees) and Perk (wafer chocolates).

Shareholding Pattern

The share capital of the company is Rs. 35.7 crore and the number of total shares outstanding amount to 3.57 crore. The face value per share is Rs.10. The share is currently trading at Rs. 418, as on May 22, 2001. The market capitalization of the company is Rs.1990.52 crore. The parent Cadbury Schweppes holds 51% stake in the company.

Board of Directors C Y Pal - Chairman Matthew Cadbury - Managing Director Rajiv Wahi - Vice Chairman Jaithirth Rao - Director S N Talwar - Director Rajeev Bakshi - Director Harsh Mariwala - Director N V Iyer - Director David Kappler - Director B Puri - Executive Director P Chhaya - Executive Director J Strydom - Executive Director G Sridhar - Executive Director G M Bhat - Executive Director Business Overview 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.

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Maintain image leadership through a superior marketing mix.

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

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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) 12/1999 12/2000 %Change

Malted Foods Cocoa Powder and Drinking Chocolates Chocolates, Coated Wafer Biscuits and Sugar Confectionery.

11436.90 13144.75 747.22

14.93%

723.94

-3.12%

38923.60 43245.03

11.10%

Products The company manufactures and sells • • • • •

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

Established brands of the company in the Chocolate segment includes Dairy Milk, Perk, Crackle, 5 Star, Eclairs and Gems. The main brands in sugar confectionery category are Googly, Frutus and Gollaum. 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. SWOT Analysis Strengths: Strong brand names like Cadbury Dairy Milk, Five star and Eclairs. Rich product mix. Support from the parent Cadbury Schweppes. Weaknesses: Lack of launch of new brands in Chocolates segment. Opportunities: The Indian market and more specifically the urban areas where the penetration of Chocolates is low can be developed as a future market through affordability and availability. Using information and technology to bring efficiency in logistics and distribution. Threats: Stiff competition in Confectionery segment. The company has large exposure to foreign currency exchange rate risk, mainly on account of imported cocoa beans and cocoa butter in US Dollar and Pound Sterling.

Branding strategies: Cadbury Bourn vita 5 star

Cadburys Bourn vita was launched in the year 1948 that continuously reinventing itself till date in terms of product, packages, promotion and distribution. The communication of the brand also changes according to the changing customers and their preferences. During 1970s, "Goodness that grows with you" was the campaign which focused upon “good upbringing”. In 1980s, "Brought up right, Bournvita bright" campaign was used. During 1990s all the brands in the category, concentrated upon physical benefits, whereas Bourn vita focuses upon both physical and mental benefits. 'Real Achievers who have grown up on Bourn vita' was one of the successful campaign. Branding Strategy: As a consumer of the product, children will be expecting more taste and as a customer, mothers will give importance to the nourishment. In order to fulfill the desires, Cadburys had found a new way of branding strategy. The idea is combining the two most powerful brands of the company, five star and Bourn vita. This will further enhance the strength of both the brands, in terms of taste and energy. These two brands will be grabbing a distinct place in the mind of the customers. This new variant of Bourn vita 5 Star is positioned as a unique

magical treat that offers the goodness of malt food drink and exciting caramelized taste. This is one of the new marketing strategies used to boost the presence of brand. Dairy milk is also a good brand from Cadburys. Then why they didn’t use that brand. They would have associated dairy milk, like “Bourn vita dairy milk” by saying enrichment of the milk. By doing this, they would have got triple advantage, the brand value of two brands and the milk shakti. I think 5 star brand name is more catchier, so they decided to do so. Do you know any other brands did like this before….?