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Form No. TIAS-FRM-75
MINOR PROJECT REPORT
TOPIC CADBURY (INDIA)
Submitted in partial fulfillment Of the requirements for the Award of the degree of
BACHELOR OF BUSINESS ADMINISTRATION To
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, DELHI
Under the guidance of Submitted by
Name of faculty guide: DR. SANDEEP KUMAR Name of student: CHETNA Designation: BBA- III SEM. Enrollment no.:02117001711
CONTENTS LIST OF STATE
INTRODUCTION OF THE CADBURY
Cadbury India ltd. Is a part of Kraft foods. Cadbury India operates in five categories- Chocolate confectionary, Beverages, Biscuits, Gum and Candy. In the chocolate confectionary business, Cadbury has maintained its undisputed leadership over the years.
Some of the key brands are Cadbury dairy milk, Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls, Eclairs, Bubbaloo, Tang and Oreo. Our core purpose “make today delicious” capture the spirit of what we are trying to achieve as a business.
Subsidiary of Kraft Foods
Birmingham, United Kingdom (1824)
Cadbury House, London, United Kingdom
See list of Cadbury products
£5,384 million (2008)
Operating income £388 million (2008)
£364 million (2008)
Cadbury India Ltd.: At a glance
• Cadbury: No.1 confectionery and third largest soft drinks company in the world. Presence across 200 countries. 55,000 employees worldwide. • Cadbury in India: Presence for over 50 years. Market leader in the chocolate confectionery market .• Factors for success: extensive distribution network, strong brands, customization to Indian market. • For Cadbury, India is: huge potential market, source of managerial talent. • Future plans, India: To explore larger portfolio for growth. BHARAT PURI is CEO of CADBURY INDIA.
Cadbury India's five factories in India churn out close to 8,000 tones of chocolate and the company sells a million bars every day. But Bharat Puri, managing director of Cadbury India will never forget the batch of Dairy Milk chocolates numbered 28F311 manufactured last year at the company's plant in Thane, near Mumbai. That was the worm-infested batch that triggered a crisis for the company that had always prided itself on its squeaky clean image. The timing of the controversy couldn't have been worse. Festival season sales (Cadbury sells almost 1,000 tonnes of chocolates during Diwali# plummeted 30 per cent. Until then, in the country's FMCG sector plagued by slow, low single digit top line and bottomline growth, Cadbury was a sweet exception. But its net profit in 2003 dipped 37 per cent to Rs45.6 crore #Rs 456 million) as compared to a 21 per cent increase the previous year. Now, a year later, Cadbury says that consumers have long forgotten the controversy and are back to their merry chocolate-chomping ways
CHAPTER-II VISION, MISSION, OBJECTIVES and DIMENSIONS OF THE CADBURY INDIA Our Vision
The Barrow Cadbury Trust’s vision is of a peaceful, equitable society, free from discrimination and based on the principle of social justice for all.
The Barrow Cadbury Trust’s mission is to promote social justice through grant making, research, influencing public opinion and policy and supporting local communities.
Promotion of social justice – the Trust aims to put fairness and equality at the heart of all its work Empowerment – the Trust seeks to uphold and extend the rights of marginalized groups, to reflect the grassroots experience of local communities and to support them in making their voices heard
Partnership – the Trust works in partnership with other grant-makers and with stakeholders at international, national, regional and local levels Local focus – the Trust values its historic relationship with Birmingham and the West Midlands Relationship with funded groups – the Trust aims to be an approachable, fair and responsive grant-make Valuing learning – the Trust aims to be a learning organisation open to the exchange of information and ideas, with its work grounded in a solid evidence base
Innovation and Independence – as an independent grant-maker, the Trust is alive to emerging needs and new ideas and ways of working and is willing to take risks in pursuit of social justice
Quaker ethos – while there is no requirement for Trustees or staff to be Quakers, and most are not, the Trust values its historical roots within the Quaker ways of working and tradition of social and penal reform.
Grow shareholder value…over the long term.
Create robust and sustainable regional positions in our core categories of confectionery and beverages through organic growth, acquisition and disposal.
The Trust has a particular interest in the following themes across its work:
Supporting the independence and diversity of the voluntary sector Addressing gender-based disadvantage
Addressing disadvantage based on race and ethnicity Funding groups, projects and programmes in Birmingham and the West Midlands.
In India, Cadbury began its operations in 1948 by importing chocolates. After over 60 years of existence, it today has six company-owned manufacturing facilities at thane, induri(Pune) and malanpur(Gwalior), Bangalore and Baddi(Himachal Pradesh), Hyderabad and 4 sales offices (New Delhi, Mumbai, Kolkata and Chennai). The corporate office is in Mumbai. Cadbury India enjoys a value market share of over 70 percent in the chocolate category and our brand Cadbury dairy milk (CDM) is considered the “gold standard “ for chocolate taste for the Indian consumer. \
In the milk food drinks segment our main product is BOURNVITA – the leading malted food drink (MFD) in the country . Similarly in the medicated candy category Halls is the undisputed leader . we recently entered the biscuits category with the launch of the world no. 1 biscuit brand OREO.
CHAPTER-IV SUCCESS PATH/STORY: CURRENT DIMENSIONS OF CADBURY INDIA
Three years back, Cadbury's found itself in the eye of a storm, when a few instances of worms in its Dairy Milk bars were reported in Maharashtra. In less than two weeks, the company launched a PR campaign for the trade. And three months later, came an ad campaign featuring Big B and a revamped poly-flow packaging. Marketing and communications experts brought together by AICAR and the Subhash Ghoshal Foundation say that Cadbury moved quickly to bear the cost of damage. And thanks to its equity with the consumers, Cadbury's won back consumer confidence, with hit on sales notwithstanding. In October 2003, just a month before Diwali .customers in Mumbai complained about finding worms in Cadbury Dairy Milk chocolates. Quick to respond, the Maharashtra Food and Drug Administration seized the chocolate stocks manufactured at Cadbury's Pune plant. In defense, Cadbury issued a statement that the infestation was not possible at the manufacturing stage and poor storage at the retailers was the most likely cause of the reported case of worms. But the FDA didn't buy that. FDA commisioner, Uttam Khobragade told CNBCTV18, "It was presumed that worms got into it at the storage level, but then what about the packing - packaging was not proper or airtight, either ways it's a manufacturing defect with unhygienic conditions or improper packaging."
That was followed by allegations and counter-allegations between Cadbury and FDA. The heat of negative publicity melted Cadbury's sales by 30 per cent, at a time when it sees a festive spike of 15 per cent. For the first time, Cadbury's advertising went off air for a month and a half after Diwali, following the controversy. Consumers seemed to ignore their chocolate cravings.
As a brand under fire, in October itself, Cadbury's launched project 'Vishwas' - a education initiative covering 190,000 retailers in key states. But what the company did in January 2004 is what really helped de-worm the brand. By investing up to Rs 15 crore (Rs 150 million) on imported machinery, Cadbury's revamped the packaging of Dairy Milk. The metallic poly-flow, was costlier by 10-15 per cent, but Cadbury didn't hike the pack price. Bharat Puri, managing director, Cadbury's India says, "While we're talking about a few bars of the 30 million we sell every month - we believe that to be a responsible company, consumers need to have complete faith in products. So even
if it calls for substantial investment and change, one must not let the consumers confidence erode." Simultaneously, Cadbury's roped in brand ambassador Amitabh Bachchan to do some heavy duty endorsement putting his personal equity on the line for the brand. The company upped ad spends for the Jan-March quarter by over 15 per cent. The recovery began in May 2004, and by June, Cadbury's claimed that consumer confidence was back. These experts believe that the reason for Cadbury's success was that it took crisis head-on. And the consumers were more forgiving, because the brand enjoyed an emotional equity in India. Santosh Desai, former president, McCann-Erickson says, "The nature of the relationship that Cadbury's has built with the consumer is responsible for latitude the consumers are giving it. "They are seeing it as a lapse, not a breach of trust - this difference is key. What Cadbury's set out to deliver, it goofed up once but it seemed to be very sincere in its intent to get things right." Even so, other experts felt Cadbury's was itself to blame for the worm crisis. Mahnaz Curmally, PR counsel, explains, "Cadbury's had known for a long time that packaging needed change, so in a sense, they waited for something to happen before they made that change and perhaps in hindsight, they could have made that change voluntarily." Cadbury's could be case study of a sweet recovery from a crisis. It continues to lead the Indian chocolate market with over 70 per cent marketshare. However, the experts feel that today's constantly changing environment should keep the company on guard.
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He is MD of Cadbury
Success factors of Cadbury's India Limited
1. Global management processes:
India occupies a high profile position in the global organization, with advocates in regional and global headquarters. Global management has allowed the local operation a high degree of flexibility in growing the business, understanding that asset utilization may be lower and returns slower to arrive, but expecting volume share to compensate for lower margins in the long run.
2. Local management processes:
The Cadbury India team is all-Indian and has a deep understanding of local market dynamics. The business is set in a way that highlights localization across all facets - driving the belief that the only way to succeed in India is by developing localized business models. For example , the company tailored the chocolate formula in India to prevent melting in the country's open-air high frequency store environment.
3. Customized business models:
Local management has set up systems to test and develop products from the ground up with specialized interlinked cells that execute innovation and market testing hand-in-hand. Cadbury India is known as a key product innovator. Besides Dairy Milk, the entire Cadbury product portfolio in India has been developed locally to suit Indian consumer tastes. Packaging, marketing and distribution have all been tailored to local market conditions.
4. Royalty Structure:
Royalty to Cadbury Schweppes Plc., is around 1 per cent of the turnover. But 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 suitable for Indian market.
5. Subtle reengineering of raw material mix led to cost savings:
Cadbury has reduced its dependence on cocoa, thus lowering its exposure to volatile raw material prices as well as cutting costs.
It appears that they have subtly altered its recipe by using less of costlier cocoa and more of milk and sugar. Cadbury's launch of Perk has also contributed significantly in reducing the proportion of cocoa in the overall raw material mix. Consequently, Cadbury saved aboutRs.94mn (1.8 percent of net sales) in FY1999.
List of Cadbury products
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"Cadbury" branded products
Astros Big Race (Bitesize range)
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Clusters Peanuts Raisins White Chocolate Buttons
Boost (called Moro Gold in New Zealand, with slightly different ingredients)
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Boost (original) Boost with Glucose + Guarana Boost Stix Boost Totally Nuts
Bourneville (original) Bourneville Almond
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Bourneville Caramel Crisp Bourneville Deeply Dark (dark chocolate) Bourneville Deeply Dark (dark chocolate with coffee) Bourneville Hazelnut Bourneville Mint Bourneville Old Jamaica Bourneville Orange Bourneville Raisin & Nut Bourneville Rich Cocoa
Caramilk Caramello Koala (called Caramello Bear in South Africa and shaped as a Bear) Cherry Ripe
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Cherry Ripe (original) Cherry Ripe Cherry Roll Cherry Ripe Dark Cherry Cherry Ripe Double Dipped
Caramel Chew Peppy Chew
Chocolate Fish Chomp Creme Egg
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Creme Egg (original) Creme Egg Twisted Caramel Egg Screme Egg
Crispy Crunch Crunchie
Crunchie (original) Crunchie Rocks
Curly Wurly (original) Curly Wurly Squirlies
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Premium Dark (original) Burnt Almond Dark Fruit & Nut Dark
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Dairy Milk (original) Dairy Milk Apricot Crumble Crunch Dairy Milk Bar of Plenty - Berry Fruit & Vanilla Shortcake Dairy Milk Bar of Plenty - Honey Flakes & Caramelised Pecans Dairy Milk Bar of Plenty - Roast Hazelnut & Honey Roast Cashews Dairy Milk Bar of Plenty - Toffee Apple Dairy Milk Desserts - Lemon Cheesecake Dairy Milk Desserts - Tiramisu Dairy Milk Double Choc Dairy Milk Duo Dairy Milk Fruit & Nut Dairy Milk Golden Crisp
o o o o o o o o o o o o o o o o o
Dairy Milk Hazelnut Dairy Milk Macadamia Dairy Milk Marble Dairy Milk Mousse - Chocolate Dairy Milk Mousse - Caramel Dairy Milk Mousse - Hazelnut Dairy Milk Peanut Butter Dairy Milk Peppermint Dairy Milk with Popping Candy Dairy Milk Roast Almond Dairy Milk Rocky Road Dairy Milk Rum & Raisin Dairy Milk Energy Dairy Milk Energy - Scroggin Dairy Milk Shortcake Biscuit (called Dairy Milk Biscuit in South Africa) Dairy Milk Snack Dairy Milk Whole Nut (spelt Wholenut in South Africa)
Double Decker Dream Éclairs (called Dairy Milk Eclairs in India)
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Eight Moments - Deliciously Dark Eight Moments - Indulgently Praline Eight Moments - Velvety Milk
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Flake (original) Flake Allure Flake Bites Flake Snow (previously called Snowflake)
Freddo (called Dairy Milk Freddo in the UK)
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Freddo (original) Freddo Caramel Freddo Crunchie
CHAPTER-V ROADBLOCKS AND FEASIBLE SOLUTIONS
PROBLEM FACED: Cadbury and the worm controversy:
The discovery of worms in some samples of Cadbury’s chocolates in early October 2003 created one of the biggest controversies in India against a multinational reputed for being a benchmark of QUALITY.
The controversy created an deep adverse impact on the company with their sales not only drastically dipping down, but at the same time allowing the competitors to establish their foothold and taking maximum advantage of Cadbury’s misfortune. The “worms’ controversy” came at the worst time ….the next few months were the peak season of Diwali, Eid and Christmas. Cadbury sells almost
1000 tonnes of chocolates during Diwali. In that year, the sales during festival season dropped by 30%. Clearly, the worm controversy took a toll on Cadbury’s bottom-line. However, Cadbury’s reiterated that all through the 55 years of leadership in India, that it has remained synonymous with chocolates and have remained committed to high quality and consumer satisfaction.
CADBURY‟S FIGHT-BACK/FEASIBLE SOLUTION: „Project Vishwas‟ “Steps to ensure quality and regain the confidence”
Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiled „Project Vishwas‟ , a plan involving distribution and retail channels to ensure the quality of its products. The company’s team of quality control managers, along with around 300 sales staff, checked over 50,000 retail outlets in Maharashtra and replaced all questionable stocks with immediate effect. The Vishwas programme was intended to build awareness among retailers on storage requirements for chocolates, provide assistance in improving storage conditions and strengthen packaging of the company’s range of products. Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60 bars. These helped stockiest display and sell the products “safely and hygienically”. Nearly 190,000 retailers in key states were covered under this awareness programme.
ROADBLOCK AND CHALLENGES IN INDIAN CHOCOLATE INDUSTRY:
A peculiar problem that hinders the distribution of far-off places is the tendency of chocolates to melt under even moderate heat. The temperature can reach as high as 48 degree in summers, whereas chocolate starts melting at body temperature (about 37-38 degrees). Manufacturers have to take precautionary measures to ensure the preservation of chocolates especially in summer.
2. Unavailability of controlled refrigeration:
India does not have controlled refrigerated distribution. Air-condition Supermarkets are rare. Cadbury loses 1.5 percent of annual sales of Rs. 6.8 billion to heat damage. Companies revise ingredients to make Chocolate withstand heat, and so Indian chocolates are more resilient To heat than European chocolates by a factor of 2 degrees. Ironically, the Chocolate market has grown recently because smaller retailers have Stuffed fridges and coolers supplied by the cola companies coke and Pepsi with chocolates. Electricity costs money and is not provided in a uniform way, so On and off the electricity goes and the product may suffer sometimes.
3. Raw material: Cocoa is the key raw material and accounts for around 35% of the Total material cost of chocolates. The price of cocoa has been hitting a New high of late. Consumption of chocolates and other cocoa-based Products, especially among the middle class, has been growing. 4. Transportation: Chocolate needs to be distributed directly, unlike other FMCG products 90% of our products are sold directly to retailers. Building such a direct Network in rural areas is a daunting task since the infrastructure is poor In India in rural areas.
5. Threat from imported brands:
Free availability of imported brands brought through illegal routes pose a Threat to the domestic chocolate industry. Usually, these imported Chocolates taste better than domestic chocolate due to recipe difference. Hence consumers who are willing to spend a little more, prefer these Imported Chocolates. However, the premium brands, which come through official channels, do Not pose a threat to the market, as these cater to a small niche market. However there is a lot of dumping from neighboring countries like Dubai, Nepal etc. of inferior brand of imported chocolates. These are not only of Low quality, but are brought very near to their expiry dates. Most of the \ cheap chocolates brands that are available do not meet Indian Food Regulations.
CHAPTER-VI FUTURE PROJECTION FUTURE PLANS OF CADBURY INDIA
Company wants to source all the cocoa for its Indian products from withinthe Country.The Company have plans to increase acreage for cocoa cultivation. The increase in acreage will involve a tripling of investments in contract farming and in five years it wants to source cocoa for domestic production entirely from India.
Here is a transcript of Sagar Malviya and Sandeep Srikanth's comments on CNBC-TV18. Also watch the accompanying video.
India produced about 10,000 tonne of cocoa in 2007–08, with annual demand of about 18,000 tonne. Cadbury India which already procures 5,000tonne of cocoa through contract farming now wants that number to increase. Sanjay Purohit,
Executive Director-Marketing, Cadbury India said, “We have identified areas in Andhra Pradesh and Tamil Nadu, and are working with governments there to improve the acreage for cocoa cultivation.”The increase in acreage will involve a tripling of investments in contract farming and in five years it wants to source cocoa for domestic production entirely from India. The Indian chocolate market is growing at 20% annually and Cadbury, which has 71% market share, presently, sources half of its cocoa requirements from other countries. It is importing cocoa from Ghana for anew range of dark chocolate under the name Bournville, which it has introduced in India. The company says this new brand, to be sold mainly through modern retailers, will be a platform to launch more products from its international range. All this is being done in an effort to preserve market share which is now being targeted by many global competitors who are coming in.
Cadbury India expects strong growth in India in future. The company plans to increase the franchise of its existing brands and continue to explore new product opportunities including adjacent market opportunities. Cadbury India is also looking for more opportunities in the SAARC region.
CHAPTER-VII CONCLUSIONS OF THE CADBURY INDIA Conclusion:
Cadbury India Ltd’s position in India is relatively strong. In order to maintain its lead in such a large market, it must learn to address the specific needs of its consumers and continue to maintain their goodwill, while also analyzing its competitors’ marketing strategies.
By doing so, it will be able to isolate the benefits and drawbacks of its competitors’ marketing mix and use those to its own advantage. Cadbury must also appreciate the advantages of a positive reputation and always stress consumer satisfaction.
One key aspect of this lies in maintaining the safety of its products so that the name of Cadbury is always synonymous with high quality safe products. Repeats of the recent melamine and worms issues cannot be allowed to happen as once consumer confidence in its brand name is shattered, Cadbury India’s brand recognition aspect will immediately work against it by highlighting the link between its name and contaminated food products. This will cripple sales and reverse the fruits of 70 years of hard work in the country, leaving the path open for more efficient local companies like Amul to learn from Cadbury India’s mistakes and take over its market share.
In India, Cadbury has the largest market share anywhere in the world and has been the fastest growing FMCG company in the last three years with a compound annual growth rate of 12.5 percent.
CHAPTER-VIII Profession Outcome
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