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CHOCOLATE MARKET ANALYSIS
NAME :- ARCHANA MANI ROLL NO :- 03 CLASS :- MMS 2008-10 DIVISION :- A
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CONTENTS INTRODUCTION PESTND ANALYSIS 2.1 EXTERNAL ENVIRONMENT 2.2 DEMOGRAPHICS 2.3 SOCIO-CULTURAL 2.4 TECHNOLOGICAL 2.5 LEGAL BIG PLAYERS 3.1 NESTLE INDIA LTD 3.2 SWOT ANALYSIS 3.3 CADBURY INDIA LTD 3.4 SWOT ANALYSIS AMUL LTD CADBURY & NESTLE ANALYSIS 5.1 STRATEGY 5.2 MARKET COMPETITION 5.3 GENERIC COMPETITION 5.4 STRATEGIES TO KILL FAKE BRANDS PRICING TARGET MARKET & POSITIONING ADVERTISING DISTRIBUTION AMUL ANALYSIS 10.1 TARGET MARKET 10.2 MARKET SHARE 10.3 DISTRIBUTION 10.4 PRICING 10.5 ADVERTISING CONCLUSION REFERENCES
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The category is largely consumed in urban areas with a 73% skew to urban markets and a 27% to rural markets. Global Confectionery Market Category Share by US Dollar Value ( percent ) 14 Chocolate Candy 31 55 Gum The organized segment of the Indian confectionery market is dominated by Nutrine confectionery and Parry confectionery. Developed markets account for around 67% of the global market. INTRODUCTION The Confectionery industry in India is approximately divided into: • Chocolates • Hard-boiled candies • Éclairs & toffees • Chewing gums • Lollipops • Bubble gum • Mints and lozenges The global chocolate market is worth $77 billion . Chocolate sales have risen by 15% in 2007 to reach 36000 tonnes. While the chocolate market in India is dominated by Cadbury India and Nestle India 3 .1. The global confectionery market is valued at $141 billion. apart from the Indian arms of MNCs such as Perfetti India and Warner Lambert.The Chocolate market in India is estimated to be around 1500 crores growing at 18-20% per annum. The per capita consumption of Chocolate in India is 300 grams. Thus 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. Over 70% consumption takes place in urban markets.
Thus the organized firms can use this opportunity to penetrate into the untapped markets. the companies will be forced to increase the prices of chocolates. PESTND analysis 2.1 External environment • The prices of cocoa and milk.3 Socio-cultural • Lifestyles of the people need to be assessed continually. 37% are semi. The chocolate and cocoa industry relies on their end product and ingredients across borders in order to offer variety to consumers. More people wanting to get fit and lose weight will probably spend less on chocolates and more on gym membership.. Many places in India are untapped by the chocolate market due to heavy dominance of unorganized sectors and fake chocolate products. If the market price increases. has come down. Thus understanding the buying patterns of the consumers. 30% confectionery products are planned purchases.4 Technological 4 . demand for chocolates being elastic may drive away consumers. The exchange rates are constantly changing and can be unstable. 45% in India are under 20 years of age. thus affecting Cadburys ( or any chocolate companies ) profits.impulse and 33% are pure impulse buys.2 Demographics India scores over several developed markets in terms of demographics connected to youth population. If the prices of the commodities keep increasing. which can be targeted by chocolate companies. There is also the children segment. A brand having strong goodwill can use it for catering to every age group through its products The consumer shopping behaviour should be analyzed. the chief ingredients used in chocolates. Any firm should look out for signs of joint ventures or acquisitions taking place globally that would affect their standing in the market. US. 2. 2. The overall input costs have gone up by almost 20%. There is 9% increase in the per capita disposable income in 2007. another important raw material. have gone up while the price of sugar. The age cycle should be considered while segmenting the market. a sugar free product can be introduced. • • 2. • • • • • 2. Eg.based chocolate maker Hershey’s is mulling a foray to enter into the Indian chocolate market through its joint venture with Godrej.
• • More up to date equipment would mean increase in the company’s capital expenditure but at the same time quicker and cheaper goods produced at lesser time. when it began trading as The Nestle Anglo-Swiss Condensed Milk Company ( Export ) Limited. BIG PLAYERS 3. milk. culinary and it has successfully entered the confectionery market. Nestle is India’s largest process food company. Nestles strong brands are in three main categories i. 3.2 SWOT analysis Strengths • Access to Nestlé’s Proprietary technology brands and expertise • Strong well defined brands • Distribution structure that allows wide reach and coverage in target markets • Diversified portfolio of products thus sharing of risk Weakness 5 . Abiding by the rules and regulations from manufacturing a product to the delivering of it would ensure better brand and company image Thus every company must assess both. environment in order to survive and sustain its business for long term. Nestle offers a list of brands under confectionery segments including chocolates. Milky bar choo • Marbles • Crunch • Rich dark • Bar One • Charge • Pop choc • Milk choc • Choco stick • Polo 3.5 • • Legal Legislation in place would make sure that workplace is safe and employees are better protected.1 Nestle India Limited ( NIL ) Nestlé’s relationship with India dates back to 1912. coffee. Research and development.e. internal and external.keep developing new products to keep up with competition and customer needs 2. They are:• Kit Kat • Munch • Milky bar.
4 SWOT analysis Strengths 6 . Cadbury began its operations in 1948 by importing chocolates and then re-packing them before distributing in the Indian market. India is the rare market where the multinational’s confectionery and the beverages are split into two companies – Cadbury India Ltd and Cadbury Schweppes India Ltd. Cadbury India Limited ( CIL ) CIL. Butterscotch and Caramels which became instant successes and led to rapid growth in chocolate consumption in India. Opportunities • Potential to expand in smaller towns and other geographies • Expand the product line in diversified market segments Threats • Competitive environment with diverse players • Rising prices of commodities 3. a 51% subsidiary of Cadbury Schweppes.3. is the dominant leader in chocolate products in India with around 70% market share. In 1960 CIL launched a range of products like Crackle. The range of products continues as follows:- • • • • • • Cadbury Dairy Milk ( CDM ) Nutties Perk Temptations Celebrations Éclairs 3.• Complex supply chain configurations which hinder in the process of expansion in smaller towns and development of modern retail formats. CIL entered the sugar confectionery market with the launch of Googly in 1996. 5 Star.
Bourn vita and Éclairs to drive growth for the company • Significant opportunities exist to expand into emerging markets of China. cheese.• • • It is a global chocolate brand built upon a reputation for fine products and services High financial strength It is totally focused on chocolate. The brands offered under confectionery and chocolate segment are:- 7 . butter. where raw materials and labour is cheaper • Reduce internal costs by supply chain efficiency. confectionery etc. thus enabling unique understanding of consumer in these segments. UK and India. AMUL Gujarat Cooperative Milk Marketing Federation is a state level apex body of milk cooperatives in Gujarat which is into diversified product segments like dairy. Russia and India where demand for confectionery products is increasing • Benefit of cost cutting by moving production to low cost countries. They need to look for portfolio of countries in order to spread their risk. global sourcing and procurement and wise investment in R&D. Threats • Rise in cost of dairy products and chocolate • Aggressive price and promotion activity by competitors nationally and globally • Rising obesity and rising nutrition and healthier lifestyle affecting demand. 4. ice creams. candy. Opportunities • Cadbury has decided to focus on its cash cows like CDM. Weakness • The organization has a strong presence in the USA. • The company is heavily dependent on confectionery and beverage market.
and by offering lower priced chocolates 8 . year after year. Strategy CIL was present in all major segments of the chocolate segment and many of its brands were market leaders in their respective segments. Cadbury offered brand extensions to keep customers loyal to their umbrella brand. As purchases are made generally on impulse. which stayed in line with changing consumer need. Cadbury and Nestle analysis 5. Analysts attributed its success to its rigorous marketing efforts. Thus nestle intended to build on its global chocolate equity. in addition to regaining an impulse distribution culture.• Chocozoo • Bindaaz • Fundoo • Almond bar • Milk chocolate • Fruit n nut Nuts about you 5. Cadbury believed in visibility and availability. These two companies have prospered by luring consumers with attractively packaged chocolate assortments to replace the traditional dried fruits and sugar confectioneries offered as gifts.1. Nestle believe that the strategies for emerging markets include striving for low cost operation by pursuing and accelerating industrial restructuring and aiming for manufacturing efficiency.
consumers get to choose from a wide range of chocolates. raisins and all sorts of nuts. Competition in the chocolate gifting segment emanates from premium international brands such as Lindt. Both the brands were backed by powerful promotion and advertising campaigns. Munch which contains almonds. Perk ‘Slims ‘. New windows have been opened up by consumers by introduction of 5 Star. Perk. In 2000 Perk was made available in additional flavors like strawberry. Market Competition Due to intense competition. and Cadbury introduced a dessert called Kalakand Crème. Kit Kat orange and Crunch ate into the share of most of CILs new launches. Nestle entered the chocolate segment in India with a range of premium chocolates. Ferrero Rocher and Hershey’s. a much lighter and crispier version of Perk was launched. Picnic and Cadbury gold were eventually discontinued. 9 . In 2005.2. There are also specialty chocolates brand such as Fantasie. New brands such as Sweet World. CILs domination of the Indian chocolate segments was threatened by the entry of Nestle India. Nuts. Candico and Chocolateirs are present. But Nestles aggressive marketing campaign placed threat for perk. Both sold poorly and were discontinued.5. was also launched In the moulded white chocolate segment Nestle launched Milky bar while CIL launched Milk Treat. The chocolate wafer market is around 35% of the total chocolate market and has been growing around 13% annually. A new product. CILs Picnic and Cadbury gold products failed to click with the consumers largely because of their taste. In 1990. In 1994 Nestle introduced Bar One (chocolate bar with peanuts) and soon garnered market share. In the liquid chocolate paste segment CIL launched Chocki to compete with Nestles Choco stick. mango to cater to more consumers. Nestle launched Kit Kat brand under the wafer segment while CIL quickly responded by launching Perk. Relish. based on popular local sweet made of chopped nuts and cheese. In 1995. which initially was limited to Milk chocolates like Dairy milk and Milky bar. These brands are picked up as gifts due to aspirational factors. During the same period ( the 1990s ) Nestles range of snack substituting chocolates such as Charge. Nestle launched a coconutflavored Munch bar.
sisters prefer offering chocolates to their brothers. Convenience over Mithai in terms of packaging and shelf life is making both middle class and rich Indians opt for chocolates. focus on high. But lately there has been a change in the Indian palate which is increasing the avenue of this segment. Consumers in the past were not inclined towards dark chocolates. Designer chocolates are being positioned as status symbol. Home made chocolates are being preferred due to availability of shapes. Instead of buying sweets on Raksha Bandhan. good packaging.end or designer chocolates thereby creating a niche market of their own.3. 10 . and different taste. Generic competition Sweets and Mithai are getting substituted by chocolates.Delhi based Chocolateirs. Candico India US-based chocolate maker Hershey’s is planning to make a foray into the Indian chocolate market through its joint venture with Godrej 5.
2.4. 4.The rural consumers by looking into the ads of leading chocolate companies unknowingly purchase the fake chocolate brands because of their impulses. Dairy Milk Kit Kat Coffee Bite Mango Bite Daily Milk Kir Kat Coffee Toffee Mango ripe and mango bits It has been found out that fake chocolates and toffees are available in more number of small shops for the leading brands. . 3. List of Fake Chocolates/Toffees available in rural areas S. No. Strategies for Chocolate/Toffee Companies in Rural Marketing (to kill fake brands): 11 . 5. Original Product Fake Product 1.
50. Milky choco. Gems was launched in mid-2001 and were offered at low price points Rs. Promotion:. CIL other popular brand 5 Star was also offered at two price points. 6. Rs. a soft chewy fudge in stick format priced at Rs. the leading chocolate companies can follow the strategy of "penetration pricing" by which good quality products can be available at a nominal price.Pricing: As the rural consumers are bothered about economy pricing.1500.200. Through ad campaigns.7. Rs.30. 10.10 and Rs. the companies can create awareness among consumers regarding the evils of fake products. Pricing CILs Cadbury Dairy Milk is its major selling brand. Éclairs was also priced at Re.7. 100. 5.2. Physical Distribution: Sales professionals of the local region who have familiarity in the local (regional) language can be appointed to look after the sales of rural areas.1.2 A four finger Nestle Kit Kat was priced at Rs. They were priced between Rs.2. Celebrations. 1 to aid self. 50 and Rs.5 and Re. .5. 12 .10 to even Rs. CIL also launched special chocolates such as Ice Monds and Kaju Mazza for festive occasions. Rs.15 while its variant Kit Kat life priced at Rs.50. was priced at Rs. thus it focused on making it available at different price range such as Re. The two finger pack is priced at Rs. Nestle Munch was priced at Rs.20 while CDM Chunky was priced at Rs. 85 and Rs. Rs. so that they can easily converse with the retailers and can build goodwill.purchasing by kids. 5 and Rs. 100 and Rs. 15 and Rs.1 while Chocki at Rs.20. Variants of Perk such as Perk XL and Perk XXL were priced at Rs. Rs. The Temptations range was offered at a price of Rs. 5 and Chocostick at Rs.
) Cadbury Dairy 1. Thus CDM was repositioned. Till the mid-nineties. chocolates were positioned as near-meal substitutes by both Nestle and CIL. 22.214.171.124 Chocki 2 Éclairs 1 Temptations 30 Celebrations 50.10 Perk 5. CIL changed its track and the communication campaigns were targeted at adults. CIL offered low price products to cater to different age groups.5. In mid 1990s. The high priced CDM was positioned as ideal gifts for various festivals and family occasions.200 NESTLE Kit Kat Munch Milkychoco Chocostick PRICE 15. to expand the chocolate market and increase the sales. CILs Milk treat was launched to target the kids. CILs marketing communication campaigns for CDM were targeted at kids and developed campaigns that appealed to this segment.100 Milk 5 Star 5.CADBURY PRICE(Rs. CILs policy was to place ‘ a Cadbury in every pocket ‘. Target market and Positioning CDM is Cadbury’s flagship brand with a value share of 30% and average daily sales of 1 million bars. In 1994. They positioned it as a product filled with nutrition and health benefits along with good taste.50 5 5 2 7. 5 Star was targeted 13 .100.2.10.
Celebrations gift range is now also called ‘panned’ chocolate as it contains nuts etc. Temptations range with many flavors – Old Jamaica. Picnic was promoted as a ‘ solid filling and ingredient packed chocolate ‘while Cadbury gold was promoted through an emotional appeal. It was positioned as a gifting option. in advertising for Nestle Charge ). as a light snack in the case of Nestle Bar One. The entire Celebrations range market share is 6. When Nestle launched Munch. Cadbury extended the plank of occasion based gifting to social gifting. Their taglines ‘ non-stop energy ‘ portrayed the inexhaustible energy of the youth. Cadburys initial positioning of Celebrations was concentrated on occasions like Diwali and Raksha Bandhan. Munch was thus light on pocket but a “actual heavy weight in its category”. Roast Almond coffee targeted the premium adult segments Celebrations too was targeted as a premium brand. Cadbury gold promotion aimed at emphasizing self indulgence and mood upliftment. even as it forges a whole new segment around wafer. too is a product targeted towards teenagers and youth. the company chose product lightness as its unique proposition to charm the consumer. The entire Cadbury Celebrations line notched a 25% growth in sales for fiscal year ending March2007. The launch of Munch was its most 14 . .5% While CIL targets the adult segment by stressing ‘ In every adult there is a child” nestle often stresses the energy giving aspect of chocolate ( for example. or on other attributes of the chocolate – taste in case of Nestle Crunch. The brand has emerged as a good gifting proposition for special occasions.towards youth. Nestle had responded to the consumer desire for good value for money by launching munch. Gems was also positioned to cater to kids. The commercial was developed showing Gems as a fun loving children’s product. Perk.
Nestle Funbar was launched in select towns.significant move after Kit Kat. again emphasizing its energy giving properties. positioned as another chocolaty treat at a price point of Rs. Chocolate advertising rose by 30 % during January.November 2007. The company also expanded the core Kitkat brand into gifting with the launch of Nestle Kitkat ‘ Gold pack’. Nestle specifically targets children in the advertising for Milky bar. ‘Cadbury India Ltd’ was the top advertiser under confectioneries sector on TV in 2008 15 . This was targeted towards health conscious people. Nestle launched KitKat lite with 50% less sugar and 100% great taste as its tagline.2.. 8. Advertising ‘Chocolates’ sub category garnered a high advertising share of 42% on TV during 2008.
16 . These commercials mainly aimed at adults by stirring the emotions of self expression and spontaneity. cricinfo. ‘ Kya Swaad Hai Zindagi Mein’ ( Real Taste of Life ). 5 Star has a market share of over 14%. There were also other popular ads like a girl breaking into an impromptu dance on a cricket field after her boyfriend scored winning run. Temptations pack had a card that gave a brief history on Cadbury chocolates.com to target the youth segment. consumer contact activities etc.com and hungama. Ulta Perk saw a multi-media marketing campaign to connect with target consumers. It also provided consumers with a number that enabled them to log on to their website and participate in various contests and win prizes. The company bought out a series of advertisements that carried tagline.com. 5 Star carried on-ground promotional activities and also entered into alliances with websites like indya. The campaign was a mix of TV commercials. These ads depicted people from various backgrounds celebrating life with CDM. outdoor.CIL carried out many successful ad campaigns on TV and other media thus gaining high consumer recognition.
Date of Luck Draw will be decided later. the key differentiator is promotion. Indiatimes. The winners will be picked on the basis of correct answers and random selection thereafter. cancel or discontinue this promotion or any part thereof without giving any reason or prior notice. The company also introduced ‘ Sheet Metal Dispensers’ which were placed at cash counters of retailing shops for dispensing chocolates. Contract Advertising and their relatives are not permitted to enter this Contest. with regards to the contest and the prizes. • Every correct answer is eligible for the lucky draw for which the inlay card has to be sent to the address specified. if any.• • • • Cadbury India Limited reserves the right to extend. arising out of or in connection. 9. • Employees of Cadbury India Limited. It entered into alliances with various portals to offer products during festive seasons and special occasions. In 17 . CIL targeted areas like colleges. • All disputes. Taxes and other levies as applicable. To increase visibility. These dispensers attractively displayed the range of CILs chocolates thus helping the company position its brands strongly in the minds of the consumers. Contest valid only on specially flashed pack • Cadbury being a brand operates in low involvement category. Any entries received thereafter will not be considered as eligible. TDS rules will be applicable as per prevailing laws. Since customers find taste and quality almost same across all chocolate brands. vending machines and jars and placed them at Star outlets and amusement parks. Conditions apply as laid down by Cadbury India Ltd. • The promotion is open only for Resident Indians. damage or claim that may arise out of the use or non-use of any goods or services under this program. cafes and places to entertainment. with or as a result of this Contest shall be subject to the jurisdiction of the competent courts/tribunals at Mumbai. The contest end date is 15th November 2002. Distribution CIL introduced Visicoolers. • Cadbury India Limited shall not be liable for any loss.
10. Cadbury. 10. comic character. 18 . the dairy products major never posed a threat to market leaders such as Cadbury and Nestle Amuls strategy in the chocolate business is to identify the market gaps and try and fill them. aeroplanes. Industry experts say that since the company is present in more than one category.2 Market Share In the overall category. New varieties of chocolates like Bindaas. Nuts about you targeting teenagers. Amul can dominate the segment. AMUL ANALYSIS Dairy major Amul is reworking its strategy in the chocolate category to push its chocolate product sales. CIL strengthened its distribution network to reaching 80000 additional retail outlets every year. the bulk of its sales comes from its dairy products such as milk packets. animals. In Amul’s case. some of its categories have performed better than others. Amul segments the market with brands catering to the ‘ impulse ‘ and ‘ teen ‘ segments. Amul has a market share of roughly 10 per cent compared with 70 per cent share of the market leader. Amul has carved a niche segment for itself where they face no competition. Chocozoo targeting kids. Although the company has maintained a chocolate portfolio for more than 20 years.late 1999. 10. The growth in Amul’s chocolate sales has remained stagnant over the years. Having launched occasion related brand of Nuts ‘bout U for Valentines Day and Kite Bite for the kite flying festival. Amul Rejoice was launched as a gift brand.1 Target market Company executives say that by occupying niche spots such as the shape-based chocolates segment. With the launch of Chocozoo chocolates in shapes of motorcycle. as well as having brands cater to different occasions.
compared to its competitors like Cadbury. The genre of Amul chocolate is considered cheaper substitute for dairy milk. It still remains one of its non-core categories. Conclusion With big foreign brands like Hershey’s and Ferrero and other Indian companies like ITC Foods and GOdrej.50 while Dairy milk at Rs.5 Advertising If a brand’s value is to be judged by the ease with which it can be recalled.4 Pricing The company has also placed its chocolate products at lesser price points compared with its competitors. Amul has also taken the initiative to set up its own brand retail parlours under ‘ Utterly Delicious ‘. current event and cinemas have gone a long way for Amul in terms of brand recalling. Other chocolate brands by Amul include Bindaaz. Economic variants of chocolates priced at Rs1. Yet chocolate has never been a major thrust area for the company. planning to enter the Indian market . Milk chocolate and Fruit-n-nut. Rs3. 10. 20-40 % less than competitors. then Amul’s marketing campaign wins hands down. Almond bar.10. Amul chocolate is priced at Rs. Amul could price low because of economies of large scale. 11.10 10.7. Rs5. an initiative which will give it a retail edge. Hence Amuls penetration is more in rural than in urban areas. The sketches starring Amul baby commenting jovially on the latest news. 19 . It offers discounts for its sugar free chocolate segment.3 Distribution The company is trying to push its chocolate sales through its extensive dairy distribution network. Fundoo. the branded chocolate sector is expected to witness a pitched battle for market share.
p hp http://fmcgmarketers.com/2007/09/09235840/Cadbury-hopes-to-cash-in-onye.thehindubusinessline.org/casestudies/catalogue/marketing%20commun ications/CLMC007.edgaronline.amul.nestle.com/india/storypage.htm • http://msnmoney.htm http://www.in/ChocolatesConf.co.hinduonnet.cadburyindia.brand.php?autono=297576 http://www.com/2002/07/03/stories/20020703007 60600.livemint.cadburyindia.com www.aspx?OB=4&id=101 http://www.asp • • • • • • • • • • • • http://www.scribd.blogspot.htm http://www.com/globalbiz/content/jan2008/gb20080117_69287 6.htm http://www.REFERENCES • http://www.business-standard.businessweek.icmrindia.com/p/articles/mi_m0EIN/is_2007_Oct_9/a i_n27399632 http://www.dll?FetchFilingHTML1?ID=5859162&S essionID=jD3hWZnjVRJFbg9 • http://findarticles.com http://www.nestle.icmrindia.com/EFX_dll/EDGARpro.indiantelevision.in www.htm http://www.html http://www.com/doc/1404803/HDFC20080122NestleIndia www.com 20 .com/businessline/iw/2001/07/22/05h dline.org/casestudies/catalogue/marketing%20communic ations/CLMC007.com/cadtoday/company.in/tamadex/y2k8/aug/tam34.
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