Confectionary

Ajay

Balaji Ann

Anupama

Apeksha

CONFECTIONERIES

GROUP 1

CURRENT ECONOMIC TRENDS •U.S. and world economies in recession •Stock market declines 30% plus •Retail sales decline in second half of 2008 •Housing market bubble burst •Unstable oil prices •Year ends with historically low interest rates •Difficult to borrow – credit crunch •Consumer spending declines •Commodity prices higher

INDUSTRY OVERVIEW Confectionery includes chocolate, candy, gum and biscuits. It is set of foods that are not only enjoyable and gifting, but also functional in their use. More than 18,000 companies around the globe manufacturer non-chocolate candy, chocolate and gum. These companies provide employment for nearly 600,000 people including those whose specialties range from product development to hand making chocolates to sales and marketing. The worldwide market for all confectionery

COCOA PRICES Cocoa price per ton

2003

2004

2005

2006

2007

2008

SUGAR PRICES U.S. Cents per pound

2003

2004

2005

2006

2007

2008

COMPANIES & PRODUCT LINE

HERSHYS Type Founded Headquarters

Key people

Industry

Products

Revenue Net income Employees Website

Public (NYSE: HSY) February 9, 1894[1] Hershey, Pennsylvania, USA Milton S. Hershey, founder; David J. West,[2] current CEO Chocolate and candy manufacturer See list of products manufactured by The Hershey Company ▲ $4.947 billion USD (2007)[3] ▲ $214 million USD (2007)[3] 11,000 (2008)[3] hersheys.com

■Milk Dud ■U.S. licensingLINE of Nestle's Kit Kat PRODUCT

Premium Chocolates: ■Cacao Reserve ■Joseph Schmidt ■Dagoba

Refreshment products: ■Ice Breakers ■Breath Savers ■Bubble Yum

MARKETING STRATEGY o

In- store Marketing

o Advertising only for new products o Importance to local preferences

BUSINESS FINANCIALS •Hershey's sales have stagnated since 2005 as competitor Mars has eaten into Hershey's share of the US chocolate market. •In 2008, the company posted $5.13 billion in revenue, a 3.8% increase from 2007. •Hershey expects annual savings of $190 million by the time the project is completed in 2010.  

PRODUCT SALES •The U.S. accounts for the lion's share of Hershey's sales •With 90% of its sales in North America, Hershey's production facilities are primarily located in the U.S., Mexico and Canada. •The McLane Company, distributor to WalMart Hershey's largest customer, accounting for 26% of sales in 2007.

•Rising Commodity Costs Pressuring Margins •Growing Global Demand Makes International Expansion Attractive •Premium and Dark Chocolates are Fast Growing Segments •Competitive Pressure Calls for Higher Ad Spending •Restructuring Initiative Promises Increased Savings

Type Founded

Public (LSE: CBRY, NYSE: CBY) 1889

Headquarters

London, England, UK

Key people

Roger Carr, Chairman Todd Stitzer, CEO

Industry

Confectionery and Soft drinks

Products

See products

Market cap

£8.8bn (as of 11/5/2008) [1]

Revenue

▲ £7,971 million (2007)

Operating income

▲ £1,050 million (2007)

Net income

▲ £407 million (2007)

Employees

71,657 (2008)[2]

Website

www.cadbury.com

PRODUCT LINE o

Chocolates: • Dairy Milk •5- Star • Éclairs • 5- Star Crunchy • Perk • Picnic • Bournville • Fruit and Nut • Flakes

o Candy, gums and mint: • Clorets • Halls •Bubbaloo

MARKETING STRATEGY o

The Idea- “For the kid in all of us”

oThe Communication- The real taste of life o Localization of the brand oProduct packaging with the aim of serving specific wants

COMMITMENT TO BRAND INDIA 8%

Bonding

68%

Advantage

84%

64%

Performance

85%

77%

Relevance

89%

84%

Presence

100%

99%

   

BUSINESS TRENDS

•Cadbury Schweppes PLC (CSG) is a leading global company in the confectionery and beverage market. •The acquisition of Adams Confectionery for $4.2 billion from Pfizer on March 30, 2003 was a major strategic move. •Cadbury Schweppes is leveraging the combined operations and routes-to-market in order to drive down costs. •In North America, the company integrated its systems with Adams. •The acquisition of Adams resulted in management rescinding its performance goal of at least 10% earnings per share growth annually due to the dilution of the acquisition. •On June 19, 2007, management announced the Board's decision to divest the company's Americas Beverages business, leaving Cadbury almost entirely a confectionery company with minimal beverage

Type Founded Founder(s) Headquarters

Public (SWX: NESN) Vevey, Switzerland (1866) Henri Nestlé Vevey, Switzerland

Area served

Worldwide

Key people

Peter Brabeck-Letmathe (Chairman ) Paul Bulcke (CEO)

Industry

Food processing

Products

Baby food, coffee, dairy products, breakfast cereals, confectionery, bottled water, ice cream, pet foods, more...

Revenue

▲ US$ 121.103 Billion (2007)

Operating income

▲ US$ 16.917 Billion (2007)

Profit

▲ US$ 11.990 Billion (2007)

Total assets

▲ US$ 129.106 Billion (2007)

Total equity

▲ US$ 61.067 Billion (2007)

Employees

276,050 (2007)

Website

Nestle.com

BUSINESS OVERVIEW •Nestle SA is the world's largest food and beverage company, with 2007 sales of over 107 billion CHF ($89.9 billion). •Nestle owns several major consumer brands such as Stouffers, Nescafe, Kit-Kat, Carnation, Nestle Water, and many others. •Nestle is one of the most geographically diverse of the major food and beverage companies. •Although it already occupies the top spot in terms of sales, Nestle is attempting to continue sales and margin growth by increasing the nutritional value of its products- most recently it has promoted the health benefits of its chocolate. •To this end, Nestle created the largest research and development network in the industry, employing over 5,000 scientists and technicians. As retailers push private label products, the ability to earn and maintain shelf space at groceries, convenience stores, and other

PRODUCT LINE o Milk

Chocolate

o KITKAT o KITKAT Crunchy o Munch o Munch Pop choc o Milky Bar o Bar- One o Polo

MARKETING STRATEGY Branding Strategy: Localization and Regiocentric management orientation o

o Integrate with the cultural and tradition of place oProduct Positioning: Earn consumer confidence o Pricing: Keep the price per unit almost same across the countries o Promotion: Advertising as well as packaging play a major role

TRENDS AND FORCES •Changes in Raw Food Prices put Nestle's Margins at Risk •Consumers Demanding Healthier Foods •Strong Swiss Franc Hurts Nestle's Sales •Melamine Contamination Scandal Drives Down

Type Founded Headquarters Key people

Public (NYSE: KFT) 1903, Chicago, IL Northfield, Illinois, USA Irene Rosenfeld, CEO

Industry

Food Processing [1]

Products

See brands listing.

Revenue

▲ $37.241 Billion USD (2007)

Net income

▲ $2.590 Billion (2007) 7.0% profit margin

Employees

103,000 (December 13, 2007 )

Website

www.kraft.com

BUSINESS OVERVIEW •The company is now the largest North America-based food and beverage company and the second largest in the world after Nestle. •From 1988 to March of 2007, tobacco giant Phillip Morris Company, now Altria Group and grew Kraft Foods, merging the food company with Nabisco and General Foods. Altria Grouptook Kraft public in 2001, maintaining an 88.1% stake in the stock until the completion of the spin off in 2007. •Kraft conducts business in two main segments: Kraft North America Commercial and Kraft International Commercial •Kraft manufactures and markets packaged food products, consisting principally of beverages, cheese, snacks, convenient meals and various packaged grocery products.

TRENDS AND FORCES •Detrimental Supermarket Consolidation •Increasing Raw Materials Prices Hurt Earnings •Strengthening Dollar Benefits Earnings •Product Recalls Hurt Both Reputation & Earnings •Growth in Emerging Markets Stimulates Demand •Rising Demand for Organic Foods Hurts Kraft

Type Founded

Headquarters

Private 1911 in Tacoma, Washington, USA 1920 in Minneapolis, Minnesota , USA 6885 Elm Street, McLean, Virginia, USA

Key people

Frank C. Mars (founder) John Mars (chairman) Mars family (owners)

Industry

Confectionery manufacturing

Products

Mars · M&M's · Milky Way · Bounty · Snickers · Twix ·  · Pedigree · Uncle Ben's  · Skittles

Revenue

US$25 billion (2007)[1]

Employees

48,000 (2007)[1]

Website

mars.com

PRODUCT LINE Mars Bar o Bounty oSnickers oTwix oM&M’s oDove oSkittels o3 Musketeers oBalisto oFlyte oKudos oLockets oMalteser oM-Azing oMilky Way oMinstrels o

MARKETING STRATEGY o

Localizing the product

oLocalizing the packaging decision oLocalizing advertising and promotion oLocalizing and strengthening the brands o Positioning of chocolates as good for health

Type Founded Headquarters Key people

Private March, 2001 Italy, Netherland Ambrogio and Edigio, founders

Industry

Confectionery manufacturer

Products

See list of products manufactured by The Perfetti Van Melle

Revenue

€ 1,832 million

Employees

14,000 (2008)

Website

perfettivanmelle.com

PRODUCT LINE •Alpenliebe •Center fresh •Center shock •Fruitella •Chloromint •Happydent •Protex •Marbles •Mentos

BUSINESS OVERVIEW Perfetti Van Melle is a European global manufacturer of confectionery and gum. It was formed by the 2001 merger of Perfetti of Italy with Van Melle of the Netherlands, having its corporate headquarters in Lainate, Italy and in Breda, Netherlands. Perfetti Van Melle bills itself as the third largest confectionery manufacturer in the world after Cadbury plc and Wrigley. It employs 14,000 people via 30 subsidiary companies and distributes its products in over 130 countries. The company owns a major subsidiary in the United States (Perfetti Van Melle USA) as also in several other large

STRENGTH •Quality •Innovation

MARKETING STRATEGY •Understanding of the market and its trends •Ability to identify and anticipate consumer tastes and demands •Innovative and attractive initiatives

MARKET DRIVERS •Individualism in FMCG  •Exploitation of the adult audience  •Competition with snacks  •Changes in the retail environment 

"Kuch Meetha Ho Jaaye..?? "