Summary

An Analytical Study of Chocolate Industry in India with Special Reference to Cadburys India is a sweet CHOCOLATE story of chocolates in the hot and humid plains of INDIA, which enlightens us a out the si!e " status of chocolate industry in India# The pro$ect gi%es information a out the competitors, their mar&et share, and their product as&et and highlights success features# The pro$ect also presents data on types " categories of chocolates, a rief study of chocolate manufacturing process The pro$ect also co%ers a rief study of Cad ury's India Limited ( the iggest player in the Indian Chocolate Industry with reference to its presence, mar&et share, product offerings, mar&eting strategies, strengths " wea&nesses, success factors and )orm Contro%ersy *anagement# Also, the implication of pricing, distri ution strategies and impact of e+ternal en%ironment has een recorded# The pro$ect throws light on pro lems and challenges of the Indian Chocolate Industry, growth opportunities and strategies to e adopted for growth in this industry# ,inally, the pro$ect gi%es information a out home-made chocolates and Chocolate .outi/ues and the ways in which Indian consumers and Chocolate players are e+perimenting and inno%ating chocolates and gi%ing the Indian Chocolate Industry a new sweetness#

Table of contents
Sr. No Topic Page No
0 1ro$ect O $ecti%e 2 3 An O%er%iew of Chocolate Industry in India 4 5 Types of Chocolates 03 6 Categories of Chocolates " ,orm of Consumption 06 7 Chocolate *anufacturing 1rocess 07 2 *ar&et 8i!e 9 y %alue " y %olume: 02 ; *a$or 1layers " their *ar&et 8hare 0; 4 Cad ury's India Limited ( A 8tudy 04 < Cad ury " The )orm Contro%ersy 5; 0= *A>?ETIN@ - 1>O*OTION of CHOCOLATE8 in INDIA 62 00 Nestle India 7= 03 Amul 9@C**,: 75 05 CA*1CO 7< 06 Home-made Chocolates 23 07 Interesting Chocolate ,acts 25 02 1ro lems " Challenges in Indian Chocolate Industry 26 0; E+ternal ,actors affecting @rowth of Chocolate Industry in INDIA 22 04 @rowth Opportunities in Indian Chocolate Industry 2; 0< 8trategies for @rowth " 8uccess in India 2< 3= Chocolate .outi/ues " Designer Chocolates ;= 30 Conclusion ;3 33 .i liography ;5

Project Objective
This pro$ect aims at understanding the o%erall Chocolate Industry in India, the product portfolios of different players in the mar&et, %arious factors affecting the growth and success of chocolate industry in India, the challenges and opportunities which the mar&et offers and the changing trends in the Indian Chocolate Industry# The pro$ect also co%ers a rief study of Cad ury's India with reference to a o%e points#

An Overview of Chocolate In ustry in In ia

The chocolate industry in India as it stands today is dominated y two companies, oth multinationals# The mar!et lea er is Ca bury with a lionAs share of ;= percent# The companyAs rands 9,i%e 8tar, @ems, Eclairs, 1er&, Dairy *il&: are leaders their segments# Till the early <=s, Cad ury had a mar&et share of o%er 4= percent, ut its party was spoiled when Nestle appeared on the scene# The latter has introduced its international rands in the country 9?it ?at, Lions:, and now commands appro+imately 07 percent mar&et share# The @u$arat Co-operati%e *il& *ar&eting ,ederation 9@C**,: and Central Arecanut and Cocoa *anufactures and 1rocessors Cooperati%e 9CA*1CO: are the other companies operating in this segment# Competition in the segment will get

&eener as o%erseas chocolate giants HersheyAs and *ars consolidate to gra a ite of the Indian chocolate pie# Per Capita Chocolate Consumption "in lb# of first $% countries of the worl >an& Countries 1er Capita Consumption 9in l : $ 8wit!erland 33#52 & Austria 3=#05 ' Ireland 0<#6; ( @ermany 04#=6 % Norway 0;#<5 ) Denmar& 0;#22 * Bnited ?ingdom 0;#6< + .elgium 05#02 , Australia 03#<< $- 8weden 03#<= $$ Bnited 8tates 00#26 $& ,rance 00#54 $' Netherlands 0=#72 $( ,inland 0=#67 $% Italy 2#05 INDIA, stands nowhere e%en near to these countries when compared in terms of 1er Capita Chocolate Consumption# The In ian chocolate in ustry is e.tremely fragmente with a range of pro ucts catering to a variety of consumers# )e ha%e the arsCsla s, $ellies, lollipops, toffees and sugar candies# @i%en IndiaAs mammoth population, it comes as a surprise that per capita chocolate consumption in the country is dismally low - a mere &- gms per In ian# Compare this to over * !gs in most evelope nations# /owever0 In ians swallowe &&0--- tonnes of chocolate last year an consumption is growing at $-1$& percent annually. The mar&et si!e of chocolates was estimated to e around 02,=== tonnes, %alued around >s# 6#02 illion in 0<<4# Dolume growth which was o%er 3=E pa in the 5 years preceding 0<<4, slowed down thereafter# .oth chocolate and sugar confectioneries ha%e a ysmally low penetration le%els, in fact, e%en lower than iscuits, which reach 72 per cent of the households# *ar&et growth in the chocolate segment has ho%ered etween 0= to 3=E# In the last fi%e years, the category has grown y 0607E on an a%erage and will e+pect it to continue growing at a similar rate in the ne+t fi%e years# The mar!et presently has close to )-mn consumers an they are mainly locate in the urban areas. @rowth will mainly come through an increase in penetration as income le%els impro%e# /owever0 almost all of this consumption is in the cities0 an rural In ia is nearly

2chocolate1free3. .ut the fact is that three /uarters of Indians li%e in >ural Areas# Average summertime temperatures reach 4 degrees Celsius in India! Chocolate melts at body temperature of " degrees! Per capita consumption of chocolates in In ia is minuscule at &-gms in In ia as compare to aroun %1+ !gs an +1$- !gs respectively in most 4uropean countries. ... Awareness about chocolates is very high in urban areas at over ,%5. ... 6rowth of other lifestyle foo s such as malte beverages an mil! foo have actually ecline by '.* per cent an $$.* per cent0 however the C/OCO7AT4S continue to grow at the rate of $&.)5. 7ow price unit pac!s0 increase istribution reach an new pro uct launches can be sai to have fuelle this growth. The launch of lower1price 0 smaller bars of chocolate in the last two years an positioning of chocolate as a substitute to tra itional sweets uring festivals0 have booste consumption. This is also ecause chocolate, which was considered to e an elitist food, has caught the fancy of uyers loo&ing for a lifestyle item at afforda le cost# Till recently, chocolate consumption had een restricted y low purchasing power in the mar&et# Chocolates and other cocoa- ased snac& foods were loo&ed upon as food suita le only for the well-off# After economic li erali!ation in 0<<0, ma$or changes ha%e occurred in food ha its, partly on account of rise in gross domestic product 9@D1: growth and higher purchasing power in the hands of the middle-class representing a third of the total population# A%aila ility of chocolate products has also e+ploded# A study had pro$ected that sales of the Indian chocolate industry would rise from F037CF05= million in 0<<4 to F0;7CF04= million y the year 3=== and to F67= million y the year 3==7 which ACTBALLG happened irrespecti%e of %arious negati%e factors# Per capita chocolate consumption continues to be low at about 200g per person, eing mainly consumed in ur an areas# In the middle and higher income groups, ;= per cent of children, 65 per cent of young adults and 02 per cent of adults consume chocolate#
Chocolate Consumption Structure - 2004
Children 55% Adults 12% Young Adults 33%

Chocolate & Confectionery Market of India - 2004

Chocolate Counts Rs. 250 Cr. 10% Chocolate Bar

Rs. 350 Cr. 14% Mints & Chew ing gu s Rs. 325 Cr. 13% !ugar Boiled Con"ectioner# Rs. 1$00 Cr. $3%

AC Nielsen O86 9arg report estimates the In ian Chocolate In ustry3 worth at 8s &0---1crore "8s &- billion#

Types of Chocolates
Depending on what is added to 9or remo%ed from: the chocolate li/uor, different fla%ors and %arieties of chocolate are produced# Each has a different chemical ma&e-up, the differences are not solely in the taste# 0# :nsweetene or ;a!ing chocolate is simply cooled, hardened chocolate li/uor# It is used primarily as an ingredient in recipes, or as a garnish# 3# Semi1sweet chocolate is also used primarily in recipes# It has e+tra cocoa utter and sugar added# 8weet coo&ing chocolate is asically the same, with more sugar for taste# 5# 9il! chocolate is chocolate li/uor with e+tra cocoa utter, sugar, mil& and %anilla added# This is the most popular form for chocolate# It is primarily an eating chocolate# Cocoa is chocolate li/uor with much of the cocoa utter remo%ed, creating a fine powder# It can pic& up moisture and odors from other products, so you should &eep cocoa in a cool, dry place, tightly co%ered# There are several !in s of cocoa % 7ow1fat cocoa has the most fat remo%ed# It typically has less than ten percent cocoa utter remaining# % 9e ium1fat cocoa has anywhere from ten to twenty-two percent cocoa utter in it# % <rin!ing or ;rea!fast cocoa has o%er twenty-two percent left in it# This is the cocoa used in chocolate mil& powders li&e NestleAs Hui&# % <utch process cocoa is cocoa which has een specially processed to neutrali!e the natural acids in the chocolate# It is slightly dar&er and has a much different taste than regular cocoa# Decorator's chocolate or confectioner's chocolate isnAt really chocolate at all, ut a sort of chocolate fla%ored candy used for things such as co%ering straw erries# It was created to melt easily and harden /uic&ly, ut it isnAt chocolate#

Categories of Chocolates
Commercial Chocolates are a%aila le in the following formsI 0# .ars or *oulded Chocolates 3# Counts 5# 1anned Chocolates 9@ems: 6# Jclairs 7# Assorted Chocolates .ars or moulded chocolates 9li&e Dairy *il&, Truffle, Amul *il& Chocolate, Nestle 1remium, and

Nestle *il&y .ar: comprise the largest segment, accounting for 5;E of the total chocolate mar&et in %olume terms# ### )afer chocolates such as ?it-?at and 1er& also elong to this segment# 1anned chocolates accounts for 0=E of the total chocolate mar&et# ### )afer chocolates such as ?it-?at and 1er& also elong to this segment# ##

=orm of Consumption
a# 1ure Chocolates # Toffees c# Ca&es " 1astries d# *alted .e%erages e# )afer .iscuits " .a&ed .iscuits f# Chocolate Desserts

Chocolate 9anufacturing Process

)or&ers cut the fruit of the cacao tree, or pods open and scoop out the eans# These eans are allowed to ferment and then dry# Then they are cleaned, roasted and hulled# Once the shells ha%e een remo%ed they are called ni s# Ni s are lended much li&e coffee eans, to produce different colors and fla%ors# Then they are ground up and the cocoa utter is released# The heat from the grinding process causes this mi+ture of cocoa utter and finely ground ni s to melt and form a freeflowing su stance &nown as chocolate li/uor# ,rom there, different %arieties of chocolate are produced#

>hat is conching?
>aw unprocessed chocolate is gritty, grainy and really not suita le for eating# 8wiss chocolate manufacturer >udolph Lindt disco%ered a process of rolling and &neading chocolate that gi%es it the smoother and richer /uality that eating chocolate is &nown for today# The name AconchingA comes from the shell-li&e shape of the rollers used# The longer chocolate is conched, the more lu+urious it will feel on your tongue#

9ar!et Si@e "by value A by volume#

The Indian chocolate mar&et is %alued at >s# 27= crores 9i#e# >s# 2#7= illion: a year# The Indian chocolate a!aar is estimated to e in the region of 33,===-36,=== tonnes per annum, and is %alued in e+cess of B8F 4= million# Chocolate penetration in the country is a little o%er 6 percent, with IndiaAs metros pro%ing to e the ig draw cloc&ing penetration in e+cess of 07 percent# Ne+t, comes the relati%ely smaller citiesCtowns where consumption lags at a out 4 percent# Chocolates are a lu+ury in the rural segment, which e+plains the mere 3 percent penetration in %illages# The mar!et presently has close to )-mn consumers an they are mainly locate in the urban areas.

9ajor Players A their 9ar!et Share

The ma$or players in the Indian Chocolate Industry areI

0# Cad ury's India Limited 3# Nestle India 5# The @u$arat Co-operati%e *il& *ar&eting ,ederation 9@C**,: ( A*BL 6# Cocoa *anufactures and 1rocessors Co-operati%e 9CA*1CO: ;ars Count 7ines >afer Panne Premium Ca bury3s Dairy *il& " Dariants 7-8tar, *il& Treat 1er& @ems, Tiffins Temptation " Cele rations Nestle *il&y .ar .ar One, Crunch ?it ?at, *unch Nutties Amul *il& Chocolate ,ruit Kn' Nut ,BNDOO .indaa! Almond .ar Campco Campco .ar, Cream ?rust, Tur o Treat

Ca bury3s In ia 7imite B A Stu y

CA<;:8C3S INT48NATIONA7 Cad ury is a %ery old trusted name# It all started in .irmingham in England when Lohn Cad ury started his family grocery shop with side usiness of cocoa and chocolate products in around 0436# His two sons, >ichard and @eorge, e+panded their family usiness of cocoa and chocolate# .ourn%ille, a town near .irmingham, was uild y them as a part of e+pansion of their usiness# Cad ury family is also &nown for their contri ution in social reforms and considered as li erals# This family was in the forefront of adult education mo%ement in England# CA<;:8C3S IN<IA 7I9IT4< Cad ury was originally incorporated as a wholly owned su sidiary of Cad ury 8chweppes O%erseas Ltd 9C8OL: in 0<64# The company's original name was Cad ury ,ry 9India: Ltd# In 0<;4, C8OL diluted its e/uity sta&e to 6=E to comply with ,E>A guidelines# In 0<43, the name was changed to Hindustan Cocoa 1roducts# C8OL's shareholding was increased to 70E in Lan '45 through a preferential rights issue of >s;==mm# The current name was restored in Dec '4<# In 3==0, Cad ury 8chweppes made an open offer to ac/uire the 6<E pu lic holding in the company# The

parent holds o%er <=E of the e/uity capital after the first open offer# A second open offer has een made to uy ac& the alance shareholding, after which the company would operate as a 0==E su sidiary of Cad ury 8chweppes 1lc E%er since the Cad ury is in India in 0<6;, Cad ury chocolates ha%e ruled the hearts of Indians with their fa ulous taste# The company today employs nearly 3=== people across India# Its one of the oldest and strongest players in the Indian confectionary industry with an estimated 24 per cent %alue share and 23 per cent %olume share of the total chocolate mar&et# It has e+hi ited continuously strong re%enue growth of 56 per cent and net profit growth of 36 per cent throughout the 0<<='s# Cad ury is &nown for its e+ceptional capa ilities in product inno%ation, distri ution and mar&eting# )ith rands li&e Dairy *il&, @ems, 7 8tar, .ourn%ita, 1er&, Cele rations, .ytes, Choc&i, Delite and Temptations, there is a Cad ury offering to suit all occasions and moods# To ay0 the company reaches millions of loyal customers through a istribution networ! of %.% la!hs outlets across the country an this number is increasing every ay.

O;D4CTIE4S AN< EA7:4S

Our objective is to
@row shareholder %alueMo%er the long term

Cadbury in every pocket

Our marketing strategy is aimed at achieving this vision by growing the market, by appropriate pricing strategy that will create a mass market and to have offerings in every category to widen the market

Our 9anaging =or Ealue Process incorporates

8etting stretched financial o $ecti%es# Adopting Dalue .ased *anagement for ma$or strategic and operational decisions and usiness systems# Creating an outstanding leadership capa ility within our management# 8harpening our company culture to reflect accounta ility, aggressi%eness and adapta ility# Aligning our management rewards structure with the interests of our shareowners#

!"!O# $ife %ull Of Cadbury

Ca bury is an organisation which impacts an interacts with the consumers. Cad ury is present in most happy occasions in the life of our consumer# Our rands e+cite our consumer# Cad ury is an e+pression of a consumerAs life#

Cadbury %ull Of $ife

Cad ury as a company is %i rant# Cad ury ia a fun and energising wor&place# Cad ury is ro ust and ali%e#

;usiness
Cad ury dominates the Indian chocolate mar&et with a o%e 27 ( ;= E mar&et share# .esides, it has a

6E mar&et share in the organi!ed sugar confectionery mar&et and a 07E mar&et share in mil&C malted foods segment# Changing pro uct mi. Contri ution to turno%er $,,( Contri ution to turno%er &--$ Chocolate 7<E 27E 8ugar Confectionery <E 0=E ,ood Drin&s 53E 36E CategoriesC .rands Chocolate .ars , Count lines , 1anned confectionery , )afer chocolates, Assorted Chocolates " @ift Chocolates 8ugar Confectionery @oogly , *oc&a, @ollum, ,rutus " Nice Cream ,ood Drin&s .ourn%ita, Delite " Drin&ing Chocolate Ca buryFs In ian operations are not just the largest in Asia but also the cheapest. In In ia0 Ca bury has the largest mar!et share anywhere in the worl an has been the fastest growing =9C6 Company in the last three years with a compoun annual growth rate of $&.% per cent.

Plant locations
Cad ury's manufacturing operations started in *um ai in 0<62, which was su se/uently transferred to Thane# In 0<26, Induri ,arm at Talegaon, near 1une was set up with a %iew to promote modern methods as well as impro%e mil& yield# In 0<40-43, a new chocolate manufacturing unit was set up at the same location in Talegaon# The company, way ac& in 0<26, pioneered cocoa farming in India to reduce dependence on imported cocoa eans# The parent company pro%ided cocoa seeds and clonal materials free of cost for the first 4 years of operations# Cocoa farming is done in ?arnata&a, ?erala and Tamil Nadu# In 0<;;, the company also too& steps to promote higher production of mil& y setting up a su sidiary Induri ,arms Ltd near 1une# In 0<4<, the company set up a new plant at *alanpur, *1, to deri%e enefits a%aila le to the ac&ward area# In 0<<7, Cad ury e+panded *alanpur plant in a ma$or way# The *alanpur plant has moderni!ed facilities for #ems$ %clairs$ &er' etc# Cad ury also operates third party operations at 1halton, )arana and Nashi& in *aharashtra#

These factories churn out close to 4,=== tonnes of chocolate annually#

8aw 9aterial Composition in &--(

Pro uct Name Guantity "in Hgs# Cost "8s# I :t

Total Cost "in 8s.# *il& 1owder C Li/uid *il& C Cream 3235320= 07#;< 606303<00#< Dry ,ruits 65356= 023#2 ;=3<4646 Edi le Oil 302;67= 70#;3 0030==706 @lucose-Li/uid 3;=20=<= 05#0; 5725<6777#5 Cocoa .eans C .utterC 1owder 46;462= 0=<#<7 <533=22;; *alt E+tract 42;<2<= 3=#5< 0;2<;44;<#0 Total &-)&$,&-&$

Cadbury's India Limited a! Material Composition in 2004 "in s#$

Malt &'tract (% Cocoa Beans) Butter)*owder 4$% &di+le ,il 5% -r# .ruits 3% Mil/ *owder) 0i1uid Mil/) Crea 20% 2lucose30i1uid 14%

=INIS/4< P8O<:CTS <4TAI7S "as on &--(#

%roduct &ame Stock "'$ %roduction "units$ Sales (nty "units$ Sales " s# Cr#$ Chocolates ) Coated 5a"er & Con"ectioner# 56.54 23610343 220$4(12 516.51 Malt .oods 78ar)Re"ill)9in: 22.02 320$253 303054( 1(4.(4 &'cise dut# 13.$( 3 3 121.23 Con"ectioner#3 ;ard Boiled 4.04 4425456 402324$ 35.4( Cocoa <owder 79in)Bags: 1.$4 33312 2((04 14.46 )otal **#** +,4-./*/ 2*,40/-, 00.#20

Cadbury's India Limited 1inished %roducts - Sales "in s# Crores$

Cocoa <owder 79in)Bags: 2% Con"ectioner#3

e2enue - 2004

;ard Boiled 4% &'cise dut# 14% Chocolates) Coated 5a"er) Con"ectioner# 56% Malt .oods 78ar)Re"ill)9in: 22%

Ca bury3s In ia 7imite Sales in 8s. 9illion Cears $,,+ $,,, &--- &--$ Sales ''%( '+,& ('&( (*$)

Sales
3354 36(2 4324 441$

0 1000 2000 3000 4000 5000

(6 (( 00 01 3ears s# Million

P8O<:CT 9IJ 1 C/OCO7AT4S P8O<:CT ;ASH4T

Category .rand Dariants .ars Dairy *il& 1lain ,ruit n Nuts Dou le Dec&er >oasted Almond Chun&y 7-8tar 7 8tar Count Lines 7 8tar Chrunchie *il& Treat Chocolate Orange )afer Chocolate 1er& 1er& 1er& NL Other Choc&i *int, 8traw erry " Chocolate 1remiumC @ift Chocolates Temptation >um, Cashew, Almond " Orange Cele rations Darious @ift 1ac&s

Ca bury3s <airy 9il! "C<9#K

Cad ury's <airy 9il! is the flagship rand of Cad ury's not only in India ut world wide# CD* is the single largest selling unit in India# It has annual sales to the tune of >s 3== crore# CD* not only accounts for 5= per cent of the total chocolate mar&et in %alue, ut commands nearly 32 per cent in %olume terms and close to '- per cent of Ca bury3s annual turnover# *o%ing from a predominantly adult positioning in the days of the legendary dancing girl ad, to the teens and the tweens, when the Cyrus .roacha ads hit the airwa%es, CD* has made a long sweet $ourney# In spite of the new categories eing e+plored y Cad ury, its star rand remains Cad ury Dairy *il& 9CD*: which continues to corner almost 5= per cent of the chocolate mar&et#

Ca bury3s TemptationK
Cad ury's Temptation is premium chocolate rand aimed for high %alue consumption# Darious %ariants a%aila le are Almond, >um, Cashew " Orange# Cad ury's temptation is priced at >s# 6=

Ca bury3s Celebration
Cad ury India launched its premium Celebrations range, which contains traditional Indian dry fruits wrapped in Dairy *il& chocolate# This gifting option com ines the pleasure of gi%ing away dry fruits O which Indians traditionally consider a premium, healthy gift O with chocolate# Ca bury now has ,- per cent mar!et share in this profitable segment.

P8O<:CT 84EA9PIN6 A INNOEATIONS

Cad ury's chocolate rands registered dou le-digit growth in 3==3, touching an astounding 0< per cent in the second half of that calendar year# @etting the power rands right was the first priority, so genuine re-launches of the products were made# Howe%er, the growth rate was declining after that# The growth went down from 0< per cent in 0<<< to 03 per cent in 3=== to single-digits, with se%en per cent in 3==0# If it staged a smart reco%ery to nearly 0= per cent in 3==3, it was largely on the ac& of Choc&i and the re%amped power rands# P8O<:CT INNOEATIONSK

% % STA8K
Consumer feed ac& suggested that the ol % Star was too chewy, and people complained of it stic&ing to their teeth# It was made softer and melted easily in the mouth " introduced as % Star Crunchy

% P48HK
1er& was made much lighter and the si!e of the ar increased to match Nestle's *unch# 1er& had een under fire from Nestle's deadly duo of ?it?at and *unch, ut after the relaunch, its mar&etshare is two per cent more than ?it?at's# And, the fi%e-year-old rand is now almost as ig as the decades-old 7 8tar in si!e, oth in the region of >s 7=-77 crore#

% /48O4SK
1ac&aging inno%ation has played a %ital role in re%amping of %arious Cad ury's rands#

/eroes bran is simply a multi-pac& with miniatures of all its most popular rands in a single outer case#

N4> P8O<:CT 7A:NC/4S

8ich <ry =ruit Collection
=or 6ifting =estive Season Cad ury Cele rations' >ich Dry ,ruit Collection ( a range of premium chocolate gift o+es# A%aila le in attracti%e pac&s, the Collection caters to a premium gifting consumer and is an ideal festi%e gift# It is a uni/ue com ination of the est Cad ury chocolate and premium dry fruits and comes in four different formats each of which is a mi+ of select premium dry fruits enro ed in rich Cad ury Dairy *il& chocolate#

Ca buryFs Creative 7aunch

A new 2after innerF segment

Cad ury Desserts

Pfor sweet moments after dinnerQ

P?haane ?e aad ?uch *eetha Ho LayeQ# >s# 3=C- per pac&et of 66 gms
Cad ury Dairy *il& 9CD*: Desserts ( with rich indulgent crRme center, in e+otic " traditional fla%ors of Tiramisu and ?ala&and# CD* Desserts offer the perfect rounding off taste, after meal that adds special K9eethaF moments to the family# The rich tastes of CD* com ined with the uni/ue crRme center in e+otic fla%ors pro%ide a special chocolate e+perience# CD& 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#

P8ICIN6
After the roaring success of Nestle's *unch and Chocostic&, Cad ury's empire struc& ac& hard# The 8s % price point accounts for more than half of all chocolate sales# Nestle had sei!ed the initiati%e at this price point, with its launch of *unch, now a roaring success 9and the largest selling product at that price point:# Today, Cad ury has four products at this price pointI CD*, 1er&, 7 star and @ems O and the five1rupee C<9 bar is its single largest1selling SH:. LThis is a potent price point in In ia0 because the average purchasing power is abysmally low0M is what industry analyst ha%e to say# Nestle &ic&ed off one of the iggest success O the li/uid chocolate category with its rand Chocostic& priced at >s#3 O three months ahead of competition# Cad ury did react with Choc&i, priced at >s 3, e+panding the concept of sachetisation to new frontiers# Choc!i has been the single biggest growth river for Ca bury as well as the entire chocolate category# The no%elty of the

format endeared itself to the e+isting customer# In less than one year, it constituted nearly 0= per cent of the total chocolate mar&et, split e/ually etween Cad ury and Nestle#

Eolume le growth strategy

Cad ury has followed a well-planned strategy of fuelling %olume growth y introducing smaller unit pac&s at lower price points# 8imultaneously, the company seems to ha%e astutely $uggled with the larger pac& si!es and raised prices to a degree higher than what appears at face# The strategy has dri%en %olumes in the last two years and we e+pect the %olume growth to continue in the ne+t two years# P8IC4 >O4S Choc&i, selling at a potent price point of >s 3, was ideal for smaller towns, especially since it did not need refrigeration# .ut Choc&i started to canni alise other higher-priced chocolates in larger mar&ets# The stu ents of ;ombay Scottish "an upmar!et school in 9umbai# are not suppose to eat Choc!i0 they shoul not have even hear of the pro uct.

<istribution
Chocolate nee s to be istribute irectly0 unli!e other =9C6 pro ucts li!e soaps an etergents0 which can be sol through a wholesale networ!. ,-5 of chocolate pro ucts are sol irectly to retailers. Distri ution, in the case of chocolates, is a ma$or deterrent to new entrants as the product has to e &ept cool in summer and also has to e adapted to suit local tropical conditions# Cad uryAs distri ution networ& used to encompasses 30== distri utors and 67=,=== retailers# The company has a total consumer ase of o%er 27 million# .esides use of IT to impro%e distri ution logistics, Cad ury is also attempting to impro%e distri ution /uality# To address the issues of product sta ility, it has installed EISI coolers at se%eral outlets# This helps in maintaining consumption in summer, when sales usually dip due to the fact that the heat affects product /uality and there y offta&e# To a%oid canni ali!ation of its higher priced products from lower priced ones, Cad ury is setting up two separate distri ution channels ( one for CO84 usiness " other for 9ASS mar&ets, with different stoc&ists, wholesalers and retailers# One set will e dedicated to Cad ury's highend products and traditional chocolates# The other will cater to the mass mar&et rands namely Choc&i, Halls, Eclairs et al O all products priced elow >s 5# .ut today, Cad uryAs distri ution networ& reaches out to si. la!h outlets each for its chocolate " confectionery rands "i.e. total reaching$& la!h outlets#.

Promotion

Typically it is said that chocolates are eing eaten when e%eryone is happy# And this is something ad%ertising has always portrayed# .ut it is found chocolates are eaten under di%erse conditions and moods - when people are an+ious, when they are sad, when happy - a whole range of emotions# Condensing these %iews " thoughts, it can e said chocolate is a true soul mate# 8omeone who is with you through the ups and downs of life, helping you ounce ac&# And thatAs what Cad uryAs Dairy *il& 9CD*: positioned itself as - a special friend#

5 Share of various ;ran s A spen ing of Ca bury

Here, the 2 Cad ury rands shown in the graph comprise 47E of the ad%ertising pie, whereas, rest of the < rands ad%ertised y Cad ury comprise 07E of the ad%ertising# Cad ury Dairy *il& Chocolate is the most ad%ertised rand 9with 33E:#

841INE4NTIN6 CA;<:8C
()ya "wad *ai +indagi &ein, redefined the way Indians loo&ed at Cad ury
Chocolates# 9The commercial showed a eautiful young lady o%ercoming all o stacles on the cric&et ground, crossing oundary, watchman, securities and em racing her lo%er who won the game y hitting a si+:# This theme introduced in around mid <='s ought instant growth to Cad ury's Dairy *il&# The Ad campaign ran successful for a out four years and immersed deeper inside hearts of Indians# In *arch 3==3, Cad ury launched its ne+t ad%ertisement campaign for its flagship chocolate rand, Cad uryAs Dairy *il& 9CD*:# The campaign featured a tele%ision 9TD: commercial that was significantly different from the companyAs earlier commercials for the rand# It featured Cyrus .roacha inter%iewing college students and as&ing why they li&ed to eat CD*# This was followed y college students AsingingA their e+cuses for eating CD*# Lust as the commercial seems all set to end with the students and Cyrus singing the famous CD* theme, ')hane -alon )o )hane )a .ahaana Chaahiye' 9those who want to eat, will find e+cuses:, a student comes up and /uestions Cyrus, The a vertisement aime at conveying the i ea that no specific occasion is reNuire for consuming C<9. This was a significant eparture from CI7Fs strategy of appealing to a ults in In ia0 who sought a rational justification for in ulging in chocolate consumption. Ca bury rope in Preity Ointa for its P48H bran . 1reity Sinta's angelic dimples laid the foundation for what would ecome the Indian teenager's fa%orite snac&# After this campaign, 1E>?'8 sale surged Ca bury3s a vertising has0 over the past few years0 aptly reflecte In ia3s passion for chocolates.

CA<;:8C A<E48TIS494NTS

Dil &o $a &ushi choo $aye###T###&uch meetha $o $aye##T A&hir ar%i pass ho hi gaya#T &uch meetha $o $aye## Log Cad ury ?yon ?hate HaiM#?haane waalon &o &haane &a ahaana#T Cad ury's Dairy *il&M##Asli swad !indagi &a CA<;:8C <4S48TS
khaane ke baad kuch meetha ho jaaye#4

CA<;:8C C474;8ATIONS
Loo&ing wistfully at a photograph, *r# .achchan thin&s, he recollects the photo-shoot when he had thrown the cap off his friendAs head# Aa( dil ne socha yun$ 'issi apne 'o 'ya doonU )o usse 'ahe tum apne ho, #(o apne aap mein 'haas ho, (o sirf taufa nahin ehsaas ho )isme rishto 'i mithas ho*! Ca bury3s Celebrations

/ishto ki &ithas

Ca bury An The >orm Controversy

The disco%ery of worms in some samples of Cad ury's Chocolate in early Octo er 3==5 created one of the iggest contro%ersies in India against a *ulti National reputed for eing a enchmar& of HBALITG# The contro%ersy created an deep ad%erse impact on the company with their sales not only drastically dipping down, ut at the same time allowing the competitors to esta lish their foothold and ta&ing ma+imum ad%antage of Cad ury's misfortune# The contro%ersy, and the ad%erse pu licity recei%ed in se%eral countries, set ac& its plan of outsourcing model which would ha%e resulted in significant re%enue generation, se%eral months ac&# The Pworms3 controversyP came at the worst timeQ.the ne.t few months were the pea! season of <iwali0 4i A Christmas. Ca bury sells almost $0--- tonnes of chocolates uring <iwali. In that year0 the sales uring festival season roppe by '- per cent. The company saw its value share melt from *' per cent in October &--' to ),.( per cent in Danuary &--(. In 9ay0 however0 it inche up to *$ per cent. C<9 sales volumes ecline from )+ per cent in October 3-' to )( per cent in Danuary &--( Clearly0 the worm controversy too! a toll on Ca buryFs bottom1line. =or the year en e <ecember &--'0 its net profit fell '* per cent to 8s (%.) crore "8s (%) million# as compare with a &$ per cent increase in the previous year. Howe%er, Cad ury's reiterated that all through the 77 years of leadership in India, that it has remained synonymous with chocolates and ha%e remained committed to high /uality and consumer satisfaction#T

CA;<;:8C3S =I6/T1;ACH

FProject EishwasF
LSteps to ensure Nuality A regain the confi enceM
,ollowing the contro%ersy o%er infestation in its chocolates, Cad ury India Ltd un%eiled FProject EishwasF, a plan in%ol%ing distri ution and retail channels to ensure the /uality of its products# The companyAs team of /uality control managers, along with around 5== sales staff, chec&ed o%er 7=,=== retail outlets in *aharashtra and replaced all /uestiona le stoc&s with immediate effect# The Dishwas programme was intended to uild awareness among retailers on storage re/uirements for chocolates, pro%ide assistance in impro%ing storage conditions and strengthen pac&aging of the companyAs range of products# Cad ury reduced the num er of chocolates in its ul& pac&ets to 33 ars from the present 2= ars# These helped stoc&ists display and sell the products Tsafely and hygienicallyT $,-0--retailers in !ey states were covere un er this awareness programme.

The ;ig 2;3 =ACTO8

The ig factor that has pushed up CD* sales is the Amita h .achchan campaign# It helped restore consumersA faith in the /uality of the product# In early Lanuary, Cad ury appointed Amitabh ;achchan as its rand am assador for a period of two years# The company elie%ed that the reputation he has uilt up o%er the last three decades complements their own, which was uilt o%er a period of 7= years# Get, the entire credit of reco%ery could not e attri uted to the rand mascot# Incisi%e action ta&en y the company also helped# 8ome of which wereI $. >esponded to consumers concern o%er the issue rapidly# Also, the communication campaign wor&ed effecti%ely in gi%ing out the central message# &. The pac&aging was changed to include a sealed plastic wrapper inside the outside foil# Cad ury's launched a new Apurity-sealedA pac&aging for its flagship product, Cadbury +airy ,il'# The pac&aging is in response to foreign odies, nota ly worms, eing found in its products# Over the ne.t few wee!s Ca bury will wor! towar s intro ucing either a heatseale or a flow1pac! pac!aging that offers a high level of resistance to infestation from improper storage. '. New ad%ertising " promotion campaigns were in place which accounted for an Ad spend of nearly >s 6= crore 9>s 6== million: Ca bury investe nearly 8s &% crore "8s &%- million# this year on new machinery for the improve pac!aging.
Addressing his audience, Mr. Bachchan says, "Mujhe aapse kuch kehna hai, jis kaam mein manushya ki antar aatma uske saath na ho, uss kaam ko karne se usse sab kuch mil sakta hai... man ki shaanti nahin mil sakti. Isliye jab Cadbury walon ne mujhe kaha ki unki baat main aap tak pahunchaoon, to pachpan saalon se Cadbury khaane wala main bhi thoda sa hitchkichaya.... ...Maine unse ek sawaal poocha,ki kya iske baad main chain ki neend so paoonga ya nahin, to jawaab mein voh mujhe apni factory le gaye." Walking into the Cadbury factory, he takes a look at their complete manufacturing process and continues,

"Aur mujhe apni international technology apne kade !uality controls aur double protection packaging dikhayi " "aying which he takes a bite of the chocolate #inally giving his personal assurance and approval he says, "Aaj kal mein badi chain ki neend so raha hoon " "Ab aapki favourite Cadbury $airy Milk naye purity seal pack mein "

CA<;:8C3S SIN6IN6 S>44T7C A6AIN

All is well that en s well. An for Ca bury3s In ia0 nothing can be sweeter than 8egaining ;ac! the Consumer Confi ence.
Than&s to /uic& action ta&en to reco%er the damage done y the worm contro%ersy li&e Operaion Dishwas, adopting new pac&aging " massi%e ad%ertising with *r# Amita h .achchan as their rand am assador, Cad ury's regained its mar&et share# The sur%ey conducted y the company says that consumers ha%e long forgotten the contro%ersy and are ac& to their merry chocolate-chomping ways# 8ales were ac& to the precontro%ersy le%els# Consumer confidence in the product was ac& and there was a steady progression in sales #The company posted a high dou le digit sales growth in that year end# The recovery began in 9ay &--( when Ca buryFs value share went up to *$ per cent.

/ires AT Hearney to curb costs

Cad ury India appointed management consultancy firm AT ?earney to draw up a strategy to control costs in se%eral areas, including sourcing of raw materials and pac&aging# This was partly an outcome of the worms' contro%ersy more than a year ago# Among other things, it changed the wrappers for its Cad ury Dairy *il& rand and introduced etter coolers# The consultancy firm will also loo& at the sourcing of direct and indirect materials li&e renegotiating with suppliers for longer term contracts and %endor management# Other costs 9indirect e+penses: li&e tra%el costs and hotels were also eing studied# In other words, Cad ury is trying to reduce the cost per stoc& &eeping unit 98?Bs, or pac&s:# The aim is to impro%e efficiencies#

4arnings sensitivity factors

Cocoa bean prices0 +omestic as well as international prices of 'ey raw material - cocoa have significant impact on margins! 12cise duties 0 Changes in e.cise levied on malt and chocolate influences end product prices and thereby volume growth as well as margins! Changes in custom duties and foreign e2change fluctuation0 As /01 of raw material is imported$ changes in custom duties 2 foreign e.change fluctuations have significant impact on the final cost of the product!

Competition from &#Cs li'e 3estle as well as imported brands! Increasing competition puts pressure on advertisement budget and margins! 4owever on the positive side$ it helps in e.panding the mar'et!

Success factors of Ca bury3s In ia 7imite

$. 6lobal management processesK India occupies a high profile position in the glo al organi!ation, with ad%ocates in regional and glo al head/uarters# @lo al management has allowed the local operation a high degree of fle+i ility in growing the usiness, understanding that asset utili!ation may e lower and returns slower to arri%e, ut e+pecting %olume share to compensate for lower margins in the long run# &. 7ocal management processesK The Cad ury India team is all-Indian and has a deep understanding of local mar&et dynamics# The usiness is set in a way that highlights locali!ation across all facets ( dri%ing the elief that the only way to succeed in India is y de%eloping locali!ed usiness models# ,or e+ample, the company tailored the chocolate formula in India to pre%ent melting in the country's open-air high fre/uency store en%ironment# '. Customi@e business mo elsK Local management has set up systems to test and de%elop products from the ground up with speciali!ed interlin&ed cells that e+ecute inno%ation and mar&et testing hand-in-hand# Cad ury India is &nown as a &ey product inno%ator# .esides Dairy *il&, the entire Cad ury product portfolio in India has een de%eloped locally to suit Indian consumer tastes# 1ac&aging, mar&eting and distri ution ha%e all een tailored to local mar&et conditions# (. 8oyalty StructureK >oyalty to Cad ury 8chweppes 1lc#, is around 0 per cent of the turno%er# .ut with that, the company gets unlimited access to latest technology, new products and so on# They can also introduce new products from the parent, if it is suita le for Indian mar&et# %. Subtle reengineering of raw material mi. le to cost savingsK Cad ury has reduced its dependence on cocoa, thus lowering its e+posure to %olatile raw material prices as well as cutting costs# It appears that they ha%e su tly altered its recipe y using less of costlier cocoa and more of mil& and sugar# Ca buryFs launch of Per! has also contribute significantly in re ucing the proportion of cocoa in the overall raw material mi.. ConseNuently0 Ca bury save about 8s.,(mn "$.+ percent of net sales# in =C$,,,.

9A8H4TIN6 1 P8O9OTION of C/OCO7AT4S in IN<IA

Traditionally, chocolates were always targeted at children# .ut stagnancy in growth rates made the companies re-thin& their strategies# Cad ury was the first chocolate company that too& the mar&et y storm y repositioning rands at adults, as opposed to children#

I ;:CIN6 ;4/AEIO:8
Chocolates are consumed as indulgence and not as snac& food, as pre%alent in western countries# Almost ;7E chocolates are impulse purchases# Chocolates are ought predominantly y adults and gifted to children# On an average the wholesalers sells 8s%----Imonth of Chocolates "all bran s inclu e #. Also the wholesaler usually deals in all &inds of ,*C@ goods, ,oodstuff in addition to the chocolates# The items li!e chocolates are place near the counter. Chocolates are &ept in card oard o+es and are also deli%ered in the same# ### In a few of the cases the chocolates were &ept separately 9as per e/uipment pro%ided y the manufacturer ( e.g. EISI Coolers:, In addition to mar&eting promotions companies ha%e een focusing e+tensi%ely on the promotions y the sales staff# Also the companies can de%ise there mar&eting strategies that are catering to specific segments and are thus more effecti%e#

II NAT:84 O= 84TAI7 O:T74T

Chocolates are primarily sold through ?irana 8tores, @ift stores, *edical 8tores, canteens, 1an-.idi stores, .a&eries, 8weet 8hops etc# This is true for chocolates also# The space allocated for the chocolates was less when compared to the total area of the shop# Of the space allocated for chocolates, Cad ury rands occupied more than Nestle rands# The chocolates category thrives on e.citement. ItFs all about giving the consumer a choice an taste which they enjoy.

III
STOCHIN6 O= T/4 P8O<:CTS
In most of the cases, %arious rands of chocolates are &ept together# In some of the cases the chocolates are stoc&ed depending on the manufacturer's pro%ision# The chocolates are &ept in @lass Lars and o+es ( These are pro%ided y the respecti%e companies along with the product# The chocolates are &ept there# .ut in most of the cases chocolates are stoc&ed near the counter# Ideally the shop&eeper tries to &eep chocolates within the reacha le 9sitting on the counter: distance# Chocolates are !ept at or below the eye level. This is to facilitate %isi ility of the chocolates for the customer who is %isiting the store# 9e ium si@e retailers sell chocolates of about 8s. (-- B 8s. +-- per wee! while big retailers sell chocolate worth 8s$--- or more per wee!.

C/OCO7AT4 A<E48TISIN6 IN IN<IA

6rowth of Chocolate A vertising on TelevisionK Cear &--' 1 &--(
Company1wise A Spen ing
The graph shows that Ca buryFs In ia 7t . tops with %&5 share of the a vertising pie on

television. Nestle In ia 7imite grabs the &n position with '(5 share0 whereas0 Parle Pro ucts gets the 'r position with +5 of the a vertising share.

Chocolate A s shift focus from HI<S to CO:T/

Indian chocolate mar&et is almost totally depended on purchases of &ids# In recent times, the chocolate ma$ors, Cad urys and Nestle too& ma$or initiati%es to ring in grown-ups into this mar&et# )hile Cad ury is trying to sell indulgence to adults, ?it ?at is selling AritualisticA rea& to teenagersC young adults# This is reflected in the changing ad%ertising patterns across different channels# Out of $-- channels0 eight channels account for (- per cent of chocolate a vertising. This pac! of eight is hea e by Cartoon Networ!0 which is obvious0 since the main buyers of this pro uct category are chil ren. .ut hea%y ad%ertising on channels li&e *TD, *AN, 8tar 1lus, See, See Cinema, Disco%ery and Channel VDW pro%es the changing profile of the potential consumer for the ad%ertisers, in this category, from children to teenagersCyoung adults as well as adults#

N4ST74 IN<IA
;ac!groun
Nestle India was promoted y Nestle Alimentana, 8wit!erland, a wholly owned su sidiary of Nestle Holdings Ltd#, Nassau, .ahama Islands# Nestle is one of the oldest food *NC operating in India, with a presence of o%er a century Nestle has a presence in 45 countries worldwide# It has a total num er of 7=< factories out of which 33= are located in Europe, 075 in America and 052 in Africa, Asia and Oceania The Swiss foo giant has been in In ia for ,- years0 with si. manufacturing plants0 '0%-- employees an almost R%-- million in sales in &--&.

;usiness
Nestle has a presence in the following categories - .a y ,ood, *il& products, .e%erages 9Coffee, malted e%erage:, Chocolates " confectionery and other processed food products#

Chocolates A Confectionery
Nestle forayed into chocolates " confectionery in 0<<= and has cornered a fourth share of the chocolate mar&et in the country# Chocolates contributes $(5 to Nestle3s turnover# It has e+panded its products range to all segments of the mar&et# In fact0 Nestle is the fastest growing company in chocolates in In ia. The )itkat rand is the largest selling chocolate rand in the world# Other rands include ,il'y 5ar$ ,arbles$ Crunch$ 3estle Rich +ar'$ 5ar-6ne$ ,unch etc# New launches such as 3estle Choco Stic' and ,il'y 5ar Choo were made at attracti%e price points to woo new consumers# The company introduced two new rands, Charge and Crunch, in 0<<4# The company has discontinued products Chocostic&, as it did not add %alue to the its portfolio# Nestle achie%ed roaring success by

grabbing the 8s % price point. =rom Dan B Sep 3-%0 Nestle chocolates witnesse a growth of $(.+ per cent.

New Pro uct Intro uction A Innovations

The Company sustained momentum during the year y dri%ing distri ution through inno%ati%e consumer promotions and trade offerings and supporting &ey price points# /igh temperatures are a typical characteristic of Indian su continent# Chocolate starts melting at such high temperatures thus ma&ing chocolate unfit for consumption# Hence, Nestle introduced an inno%ati%e 7IG:I< C/OCO7AT4 B C/OCO STICH at a price tag of >s# 3Cwhich was in instant hit# N4ST74 9:NC/0 which is the largest selling unit in the wafer segment an the most wi ely istribute 0 continue to gain in volumes. NE8TLE CHOTB *BNCH, which was launched at >s# 3C- price point, was well recei%ed# A range of other inno%ati%e and reno%ated products were launched which included NE8TLE *il& Chocolate, NE8TLE ,ruit " Nut, NE8TLE ?runchy, NE8TLE *IL?G.A> 8TA>S, NE8TLE CHOO, NE8TLE Chocolate Eclairs, NE8TLE Coffee Eclairs and %arious fla%ours for CHOCO8TIC?, N4ST74 C/OCO7AT4 P8O<:CT PO8T=O7IO N4ST74 9A/A9:NC/ A 8OA8IN6 S:CC4SS NE8TLE *AHA *BNCH

>u& Na 1ayeMM >u& Na 1aye Nestle *AHA *unchMonly >s# 7

Amul "6C99=#
The >s 3,;64-crore @C**, is in chocolate segment since /uite some time# Howe%er, its mar&et share is $ust 7E and the company did not loo& aggressi%e till recently# Amul chocolates used to come in not so attracti%e pac&ages and %ery little mar&eting effort was seen# .ut things ha%e changed and for good# Amul is now an important player in this growing chocolate industry# It has firmed up its measures with mar&eting and new product launches and re%amping its pac&aging# Amul $ust recently launched new chocolate rands in the mar&et - >e$oice, ?ite .ite and Nuts X out Gou#

Ca bury3s >orm Controversy A A9:7

The brea!up of Ca bury3s worms3 controversy accelerate A facilitate Amul3s mar!eting efforts. The irect impact of Ca bury3s loss was Amul3s 6AIN. In *um ai, which accounts for almost 0= per cent of the >s 27= crore 9>s 2#7= illion: a year chocolate mar&et in India, the company raised its mar&et share from 3 per cent in the eginning of Octo er 3==5 3time when worm controversy broke4 to 07 per cent y the end of the month# The company sol nearly &- tonnes in Oct &--' in 9umbai0 against only & tonnes in Oct &--& 3= E o%erall growth of Amul's chocolate share can e purely contri uted to the Cad ury's worm contro%ersy# In an attempt to boost sales0 the company launche three new chocolates in 9umbai un er the bran s =un oo0 ;in aas an Almon ;ar.

)hile the first two were een priced at >s 0= for a 5= gm stic&, Almond .ar carried a price tag of >s 0= for a 57 gm chocolate#

7aunch of Coo!ing Chocolate

Though, coo&ing chocolate is a%aila le in the mar&et, it is offered only as a commodity, not as a randed product# The @u$arat Co-operati%e *il& *ar&eting ,ederation 9@C**,:, owner of the rand Amul, is strategi!ed to capture a lionAs share in the chocolate segment y tapping the hitherto untouched su -segments with the launch of its new rand Amul Chef in Luly 3==5, ma&ing it the first e%er randed coo&ing chocolate to e made a%aila le in the Indian mar&et# The XpremiumA %ariant of the coo&ing chocolate was priced at >s 00= for 7== grams and the XclassicA %ariant was priced at >s 0== for 7== grams# Amul targete various segments with its new pro uct0 inclu ing housewives from S4C A an ; househol s0 caterers0 ba!eries0 restaurants0 biscuit manufacturers0 ice1cream parlours0 an confectioners. Amul also aimed to capture a mar&et share of 3= per cent in the first two months in Delhi and *um ai# The mar!et si@e of coo!ing chocolate in 9umbai an <elhi alone is estimate at %tonnes per month.

;ran New Pro ucts A Pac!aging to push Chocolate ;usiness

Amul re%i%ed its chocolate usiness with new products and renewed pac&aging# The company launched Choco5oo rand of chocolates in Decem er 3==6, to target the age group of four to 06 years# .esides introducing new products in the chocolate segment, Amul also re%amped its pac&aging with the help of T9A0 which is an international agency. Amul also launched occasion1relate sub1bran s. Its Nuts 2bout : bran was launche on the eve of Ealentine3s <ay0 while the Hite ;ite bran was unveile uring the !ite1flying festival in Ahme aba . Amul has decided to segment the mar&et with rands catering to the Ximpulse' and Xteen' segments, as well as ha%ing rands catering to different occasions# Amul, which reaches out to o%er five la!h retail outlets, has o%er &0)-- istributors under its fold# @C**, has also drawn up plans to ma&e its chocolate usiness a separate di%ision of the company#

CA9PCO
Central Arecanut an Cocoa 9anufactures an Processors Co1operative
A sudden withdrawal y the uyers of cocoa from the procurement operations due to crash in the international mar&et came as a shoc& to cocoa culti%ators in India# ?arnata&a and ?erala @o%ernments enthused, at this stage, the CA*1CO to enter on the scene to rescue the farmers

from distress# CA*1CO willingly too& up the responsi ility to enter the cocoa mar&et and performed a sa%iorAs role# As a strategy for sur%i%al in the International scene the CA*1CO played a ma$or role in esta lishing a name for Indian Cocoa, which hitherto had not een achie%ed# It procured cocoa pods from growers and adopting scientific processing methods to mar&et standards, released dry cocoa eans matching in /uality in the world mar&et e/ual to that of @hana, .ra!il and other cocoa culti%ation nations# After entering into the Cocoa mar&et, the Co-operati%e was a le to e+port Cocoa .eans worth >s 6= million to European countries in the initial phase of operations# India was not &nown as a Cocoa producer in the international Trading Community, since yearly production was hardly 7 to 2 thousand tonnes which is not e%en =#5E of the total world consumption# Through sustained efforts CA*1CO has een a le to ensure reasona le prices to Cocoa growers# The Co-operati%e had to face the pro lem of a limited internal mar&et and unremunerati%e e+port mar&et# )ith the setting up of the chocolate manufacturing factory at 1uttur, 7=?* from *angalore, the Co-operati%e has een a le to increase local consumption of cocoa ased products and to e+port %alue added semi-finished products# >ith a view to creating a permanent eman an a stea y mar!et for the beans0 CA9PCO establishe a Chocolate 9anufacturing =actory at Hemminje village in Puttur Talu! in <a!shina Hanna a istrict0 a opting foreign technical a vancement in chocolate ma!ing. The =actory was set up in $,+) at an initial investment of 8s.$$).* 9illions.

CA9PCO C/OCO7AT4S C:884NT STAT:S of CA9PCO

Howe%er, the company does not ha%e much %isi ility in the Indian mar&et# No ad%ertising are seen eing aired on TDMat least not on the prime channels# The company seems to ha%e restricted its mar&eting efforts in south India only# Campco, eing a co-operati%e is functioning under pressures from %arious political parties and is surrounded y %arious contro%ersies all of which arising out of internal disputes#

/ome1ma e Chocolates
Another area of chocolate industry in India is /O9419A<4 C/OCO7AT4S. This segment is highly fragmented and operates independently# They are more pronounced for manufacturing distinct fla%ors and %arieties of chocolates in %arious shapes and si!e# .ut, these chocolates are usually priced at a higher price than that a%aila le for randed products for the same /uantity# Housewi%es from elite class usually indulge in this &ind of usiness# They usually operate in local area and through their contact networ&# 8ome home-made chocolate manufacturers manufacture really

attracti%e @I,T CHOCOLATE8#

Interesting Chocolate =acts

>hy is Chocolate in In ia ifferent than most 4uropean chocolates? The temperatures in India are much higher than that of the European countries# To pre%ent the chocolate from melting and to ena le shape retention under such high temperatures the recipe of the chocolate is adapted to the Indian climate# Therefore the mil& fat content in Indian chocolates is lesser than that of European chocolates and hence they taste different# Sometimes0 white spots appear on Chocolates sometimes. Is that safe? )hen a chocolate gets e+posed to temperature %ariances from a hot day to a cold night 9which is %ery common all across India:, the fat e+pression happens on the surface of the chocolate#A This means white spots emerge on the surface of the chocolate# This phenomenon is called Ffat bloomF# It is entirely safe to consume chocolates howe%er the feel and the taste of the chocolate may not e the same as is originally intended to# Are chocolates available for iabetics? Currently in India no manufacturer produces chocolates for dia etics, as the go%ernment regulations do not permit manufacture of such chocolates# The industry ma$ors are liaising with the go%ernment authorities to ena le manufacture of such chocolates in India# Chocolates for dia etics, though, are a%aila le in certain parts of the world# ChocolateK the new solution for bloo pressure? Cocoa eans ha%e antio+idant compounds called fla%anols, and scientific research suggests they do good things to lood %essels# <ar! chocolate contains flavanoi s0 an antio.i ant which helps the bo y by neutralising potentially cell1 amaging substances !nown as o.ygen1free ra icals0 a normal bypro uct of metabolism.

Problems A Challenges in In ian Chocolate In ustry

$. T49P48AT:84K A peculiar pro lem that hinders the distri ution to far-off places is the tendency of chocolates to melt under e%en moderate heat# The temperatures can reach as high as (+ egrees in summers, whereas chocolate starts melting at bo y temperature "about '*1'+ egrees# #*anufacturers ha%e to ta&e precautionary measures to ensure the preser%ation of chocolates especially in summer# &. :NAEAI7A;I7ITC O= CONT8O774< 84=8I648ATIONK India does not ha%e controlled refrigerated distri ution# Air-condition supermar&ets are rare# Ca bury loses $.% percent of annual sales of 8s. ).+ billion to heat amage. Companies re%ise ingredients to ma&e chocolate withstand heat, and so Indian chocolates are more resilient to heat than

Eurupean chocolates y a factor of 3 degrees# Ironically, the chocolate mar&et has grown recently ecause smaller retailers ha%e stuffed fridges and coolers supplied y the cola companies Co&e and 1epsi with chocolates# Nestle and Cad ury ha%e tried to pro%ide loans for retailers to uy fridges, ut to hold down power costs the shop&eepers switch off the fridges at night# As a result the cocoa fat melts and migrates to the main ody of the chocolate ar# )hen the cooling is switched on in the morning, the cocoa fat solidifies and turns white, presenting a i!arre, un-sella le white on lac& form# Nestle trie to provi e fri ges with see1through oors0 but was appalle to see its chocolates san wiche between ea chic!en0 butter an vegetables. 8mall coolers were pro%ided to retailers to &eep the chocolate from melting, ut that didnAt /uite do the tric&# 4lectricity costs money an is not provi e in a uniform way0 so on an off the electricity goes an the pro uct may suffer sometimes '. 8A> 9AT48IA7SK Cocoa is the !ey raw material an accounts for aroun '%5 of the total material cost "inclu ing pac!aging# of chocolates. The price of cocoa has een hitting a new high of late# Cocoa prices are at a near 3=-year high at F3574 per ton, up from F<== a year ac&# India does not produce cocoa to any noteworthy e+tent ut is a large consumer of chocolates# Consumption of chocolates and other cocoa- ased products, especially among the middle class, has een growing# (. T8ANSPO8TATIONK Chocolate needs to e distri uted directly, unli&e other ,*C@ products# <=E of our products are sold directly to retailers# .uilding such a direct networ& in rural areas is a daunting tas& since the infrastructure is poor in India in rural areas# %. T/84AT =8O9 I9PO8T4< ;8AN<SK ,ree a%aila ility of imported rands ought through illegal routes pose a threat to the domestic chocolate industry# Bsually, these imported chocolates taste etter than domestic chocolate due to recipe difference# Hence consumers who are willing to spend a little more, prefer these imported chocolates# Howe%er, the premium rands, which come through official channels, do not pose a threat to the mar&et, as these cater to a small niche mar&et# Howe%er there is a lot of dumping from neigh oring countries li&e Du ai, Nepal, etc of inferior rand of imported chocolates# These are not only of low /uality, ut are rought %ery near to their e+piry dates# *ost of the cheap chocolate rands that are a%aila le do not meet Indian ,ood >egulations#

4.ternal =actors affecting 6rowth of Chocolate In ustry in IN<IA

% 6ood monsoon ensures ade/uate a%aila ility of raw materials, which are mainly agricultural in nature# >aw material prices ha%e significant influence on margins#

% 6overnment policies in terms of licensing, duties, mo%ement of agricultural commodities etc# also affect the introduction of products, time lag for a product launches, ta+es, e+cise, etc all influence the usiness# % &arket growth dri%en y o%erall economic growth and ur ani!ation also contri utes# An o%erall ooming economy will consume tonnes of chocolates ecause consumer spending increases# Also, the a solute num er of consumers in middle class " upper middle class increases# % /upee depreciation impro%es e+port reali!ations, howe%er it also ma&es import of raw material 9esp# cocoa: e+pensi%e#

6rowth Opportunities in In ian Chocolate In ustry

:ntappe 9ar!et A 7imite ConsumptionK
The fact that chocolate is not a traditional food, high prices and domestic production pro lems will pro%ide the main pro lems to mar&et growth# As these mar&ets de%elop, prices will fall ma&ing these products more accessi le to the wider population# Howe%er the Indian mar&et is still untapped and pro%ides immense scope for growth, oth geographically as well as product as&et wise# Chocolates right now reaches a out ;=mn to ;7mn consumers# It is estimated that chocolates ha%e a potential mar&et of a out 002mn consumers# Chocolate consumption in India is e+tremely low# 1er capita consumption is around 02=gms in the ur an areas, compared to 4-0=&g in the de%eloped countries# The per capita chocolate consumption in India is still much elow the East Asian standards# Hence per capita consumption has a immense scope for impro%ement# In rural areas, it is e%en lower# Chocolates in India are consumed as indulgence and not as a snac& food# A strong %olume growth was witnessed in the early <=As when Cad ury repositioned chocolates from children to adult consumption# The iggest opportunity is li&ely to stem from increasing the consumer ase# Leading players li&e Cad ury and Nestle ha%e een attempting to do this y %alue for money offerings, which are afforda le to the masses# )e also elie%e that the near term opportunity lies in increasing penetration rather than increasing intensity of consumption# In the past five years0 the chocolate business grown by $(1$%5 on an average an is e.pecte to grow further for at least ne.t five years.

Changing Attitu es A Consumption patternK

In the past, chocolate consumption had een restricted y low purchasing power in the mar&et# Chocolates and other cocoa- ased snac& foods were loo&ed upon as food suita le only for elitist consumption till recently# .ut with the launch of lower-priced, smaller ars of chocolate in the last two years and positioning of chocolate as a su stitute to traditional sweets during festi%als, ha%e oosted consumption# Chocolates which were considered to e an elitist food hit the fancy of masses loo&ing for a

change in life style at afforda le cost#

8ural e.pansionK
>ural mar&et and small town mar&ets are seen as the &ey to spurring dou le-digit growth# 1roducts such as li/uid chocolate pac&s from the e+isting portfolio are e+pected to ena le rapid acceptance# 7everage In ia for offshoringI India is eing le%eraged for e+port of finished goods, as a superior destination for manufacturing est practices, and for .1O opportunities# All the a o%e points ring us to a conclusion that there's an immense scope for growth of chocolate industry in India not only in its offering pattern ut also for increment in its total consumption %alue and si!e#

Strategies for 6rowth A Success in In ia

0# 8evamp the product to &eep the e+citement ali%e# 3# Companies should loo& at new avenues, while e+panding the reach of its products# <istribution will hold the &ey# Companies need to reach out to smaller towns, where three-fourths of the population does not e%en &now the product# 5# 9erger A AcNuisitionsK *ergers " Ac/uisitions with companies that match the product portfolio " o%erall growth strategy should e considered which will not only strengthen the company to esta lish a stronger hold in the country ut also ward off possi le competition in the select category# 8uch colla orations will also facilitate companies to use each other's distri ution networ&s#

Chocolate ;outiNues A <esigner Chocolates

They call it Achoco feverF# Chocolate .outi7ues are a complete chocoholic e+perience# 8urrounded on all sides y scrumptious chocolates wrapped neatly in colourful foil and paper, any one will e gripped y this fe%er# It's a world of chocolates where the fla%our of Lamaican rum truffle melts in your mouth e%en as your hand reaches out greedily for a &iwi-fla%oured concoction or where roasted almonds are a delight to eat while your mind flirts with ha!elnut praline# *anufacturers are finding an increasing num er of curious customers whoAre pampering their taste- uds to apricot and peach chocolate, straw erry chocolate or etter still wild erry in cognac fla%oured chocolate# *anufacturers are now luring their patrons with chocolates in geometric shapes, animal figurines coloured in metallic hues and glitter# ,or the more ad%enturous, there are also chocolates with pan-supari, cardamom fla%ours and li/ueur filling# 1roducts li&e nut- ased praline chocolates, some uni/ue fla%ors li&e tamarind and chilli chocolates, and champagne and Lamaican rum truffles are also demanded in the mar&et# These manufacturers also cater to the older and the health-conscious choco-lo%ers, the high fi re, low fat and sugar ones are /uite popular# Apart from the festi%e season, weddings and a y

announcements also see hea%y offta&e of premium sweet delicacies# ,or those who are health conscious there is also a special range of sugar-free and diet chocolates# These are usually ought y corporates or indi%iduals who want to ma&e a special statement# E+tensi%e range of .a y chocolates are a%aila le which are eautifully wrapped in pin&s and lues and em ellished with decorations li&e a y ottles, satin ri ons, sil& flowers, i s and ows are also a%aila le and are getting %ery popular in elite classes# Designer chocolates are tailored for customers whoAre loo&ing at gifting chocolates with a personali!ed touch# Em ossing of names, logos of companies and personali!ed message on the chocolates are fast ecoming popular# There are 0,=== %arieties of designs to choose from -- ranging from good luc& charms, NAmas figurines and animals -- and nearly 7= &inds of gift pac&aging a%aila le to suit any particular occasion# ,rom festi%e occasions to personal cele rations to corporate gifting, made-to-order chocolates are most sought after# And we are not tal&ing a out the oring old rectangular sla s of cocoa These designer chocolates focus a lot of attention on pac&aging# The pac&aging of these products includes materials li&e imported mesh, gold foils and rocade, lace and satin-draped o+es eing in hea%y demand# )ith the rise in disposa le incomes, people do not mind spending on designer chocolates, most of which costs etween >s 7== and >s 3,7== per &g# ,ew chocolate ma&ers cater only to corporate clients for festi%e occasions, product launches, new employee $oinings and management training programmes# ,rom logos to company names eing em ossed in chocolates of different shapes and colours, these are all in demand#

CONC7:SION
The Indian Chocolate Industry is a uni/ue mi+ with e+treme consumption patterns, attitudes, eliefs, income le%el and spending# At one hand, we ha%e designer chocolates that are consumed when priced at e%en >s 37==C&g while there are places in India where people ha%e ne%er e%en tasted chocolates once# Bnderstanding the consumer demands and maintaining the /uality will e essential# Companies will ha%e to &eep themsel%es a reast with the de%elopments in other parts of the world# P8ICIN6 is the &ey for companies to ma&e their product reach consumers' poc&ets# >ight pricing will ma&e or rea& the product 8BCCE88# 4conomical istribution of the products will also e e/ually important# The companies3 strategies shoul focus on riving sales through a right pro uct mi.0 efficient materials procurement0 re uce wastages0 increase factory efficiencies an improve supply chain management. There's an immense scope for growth of chocolate industry in India - geographically as well as in the product offering#

The In ian Chocolate In ustry is estine to grow an will o so in the future.

;ibliography
www#rediff#com www#indiainfoline#com www# usiness-standard#com www#India-stats#com www#Agencyfa/s#com www#E/uitymaster#com www#indiantele%ision#com www#myiris#com www#i ef#org www#thehindu usinessline#com