Relaunch strategy of Cadbury’s Picnic - Document Transcript

1. Marketing Project on Re-launch Strategy of Cadbury’s Picnic Project Guide: Prof. Kuldip
Kawatra Project by Mr. Heemanish Midde Roll No.: 220 2007 - 2009 Xavier Institute of
Management & Research, Mumbai Mumbai University 1

2. EXECUTIVE SUMMARY “A Study of Indian Chocolate Industry & Re-Launch

Strategy for Cadbury’s Picnic in India” is a sweet CHOCOLATE story of chocolates in the hot
and humid plains of INDIA, which enlightens us about the size & status of chocolate industry in
India. The project gives information about the competitors, their market share, and their product
basket and highlights success features. The project also covers a brief study of Cadbury’s India
Limited – the biggest player in the Indian Chocolate Industry with reference to its presence,
market share, product offerings, marketing strategies, strengths & weaknesses, success factors
and Worm Controversy Management. Also, the implication of pricing, distribution strategies and
impact of external environment has been recorded. The project throws light on one of the
Cadbury’s product (Cadbury’s picnic) which failed in India market. Gives an overview of the
reasons for the failure and try to give a promotion strategy as to how Cadbury can re-launch the
product. This project aims at understanding the overall Chocolate Industry in India, various
factors affecting the growth and success of chocolate industry in India, the challenges and
opportunities which the market offers and the changing trends in the Indian Chocolate Industry.
The project also covers a brief study of Cadbury’s India with reference to above points. Apart
from that, the project also gives a detailed study on Cadbury’s Picnic - A product that failed in
The Indian market and gives a marketing strategy for re-launching the product in the India. 2

3. TABLE OF CONTENTS EXECUTIVE SUMMARY 1. INDIAN CHOCOLATE

INDUSTRY 1.1. Overview 1.2. Marketing of chocolates in India 1.3. Problems & challenges in
Indian chocolate industry 1.4. External factors affecting growth of chocolate industry in India
1.5. Growth opportunities in Indian chocolate industry 1.6. Strategies for growth & success in
India 1.7. Market size (by value & by volume) 1.8. Major players 2. CADBURY’S IN INDIA
2.1. Cadbury’s overview 2.2. History of Cadbury 2.3. Cadbury’s India limited 2.4. Objectives
and values 2.5. Vision 2.6. Business 2.7. SWOT analysis of Cadburys 2.8. Product mix -
chocolates 2.9. Product innovations 3. STRATEGIES OF CADBURY’S 3.1. Cadbury's creative
launch 3.2. Pricing 3.3. Volume led growth strategy 3.4. Price woes 3.5. Distribution 3.6.
Promotion 3.7. Re-inventing Cadbury 3.8. Cadbury advertisements 3.9. Cadbury and the worm
controversy 3.10. Cadbury’s fight-back 3.11. The big ‘b’ factor 3.12. Cadbury’s singing sweetly
again 3.13. Success factors of Cadbury’s India limited 3
4. 4. CADBURY PICNIC 4.1. Background 4.2. Cadbury picnic: an appeal to the five senses
5. MARKET SURVEY 5.1. Objective of the study 5.2. Collection and analysis of data 5.3.
Research methodology 6. DATA FINDINGS AND ANALYSIS 6.1. Data analysis for
consumers 6.2. Data analysis of retailers 7. RECOMMENDATION 7.1. Reasons for failure 7.2.
Proposed re-launch of picnic 7.3. STP analysis 7.4. Marketing mix: 7.5. Proposed advertisements
for Cadbury’s picnic 8. CONCLUSION ANNEXURES BIBLIOGRAPHY 4

5. INDIAN CHOCOLATE INDUSTRY OVERVIEW Chocolate consumption in India is

extremely low. Cadbury dominates the chocolate market with about 70% market share. Nestle
has emerged as a significant competitor with about 20% market share. Key competition in the
chocolate segment is from co-operative owned Amul and Campco, besides a host of unorganized
sector players. There exists a large unorganized market in the confectionery segment too.
Leading national players are Parry's, Ravalgaon, Candico and Nutrine. MNC's like Cadbury,
Nestle, Perfetti, are recent entrants in the sugar confectionery market. Other competing brands
such as GCMMF's Badam bar and Nestle's Bar One have minor market shares. Chocolate
consumption in India is extremely low. Per capita consumption is around 160gms in the urban
areas, compared to 8-10kg in the developed countries. In rural areas, it is even lower. Chocolates
in India are consumed as indulgence and not as a snack food. Indian chocolate market grew at
the rate of 10% pa in 70's and 80's, driven mainly by the children segment. In the late 80's, when
the market started stagnating, Cadbury repositioned its Dairy Milk to any time product rather
than an occasional luxury. Its advertisement focused on adults rather than children. Cadbury's
Five Star, the first count chocolate, was launched in 1968. Due to its resistance to temperature,
the chocolate has become one of the most widely distributed chocolate in the country. In the
early 90's, high cocoa prices compelled manufacturers to raise product prices and reduce their
advertisement budget affecting the volumes significantly. The launch of wafer chocolates Kit
Kat and Perk spurred volume growth in the mid 90's. These chocolates 5

6. positioned as snack food rather than on the indulgence platform compete with biscuits
and wafers. A strong volume growth was witnessed in the early 90's when Cadbury repositioned
chocolates from children to adult consumption. The mid 90's saw the entry of new players like
Nestle, which created categories like wafer chocolate and spurred growth. The chocolate industry
in India as it stands today is dominated by two companies, both multinationals. The market
leader is Cadbury with a lion's share of 70 percent. The company's brands (Five Star, Gems,
Eclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s, Cadbury had a market
share of over 80 percent, but its party was spoiled when Nestle appeared on the scene. The latter
has introduced its international brands in the country (Kit Kat, Lions), and now commands
approximately 15 percent market share. The Gujarat Co- operative Milk Marketing Federation
(GCMMF) and Central Arecanut and Cocoa Manufactures and Processors Co-operative
(CAMPCO) are the other companies operating in this segment. Competition in the segment will
get keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the
 Indian chocolate pie. Per Capita Chocolate Consumption (in pounds) of first 15 countries of the
world Italy Finland Netherlands France United States Sweden Australia Cu ty o nr Belgium
Series1 United Kingdom Denmark Norway Germany Ireland Austria Switzerland 0 5 10 15 20
25 Consumption in Pound INDIA, stands nowhere even near to these countries when compared
in terms of Per Capita Chocolate Consumption. The Indian chocolate industry is extremely
fragmented with a range 6

7. of products catering to a variety of consumers. We have the bars/slabs, jellies, lollipops,

toffees and sugar candies. Given India's mammoth population, it comes as a surprise that per
capita chocolate consumption in the country is dismally low - a mere 20 gms per Indian.
Compare this to over 7 kgs in most developed nations. Datamonitor figures show that the Indian
chocolate market was worth just $188.6 million in 2006, despite having a population of over one
billion; this compares to the US market value of $15.2 billion, where the population is just under
300 million. Furthermore, Indian consumers' sweet snack of choice is currently the traditional
candy known as mithai, and, therefore, a significant marketing push would be required in order
to persuade them to transfer their allegiance to chocolate. In addition, there are already two
global giants operating in the Indian chocolate market, Nestle and Cadbury, which hold over
90% of market value share between them. Both chocolate and sugar confectioneries have
abysmally low penetration levels, in fact, even lower than biscuits, which reach 56 per cent of
the households. Market growth in the chocolate segment has hovered between 10 to 20%. In the
last five years, the category has grown by 14-15% on an average and will expect it to continue
growing at a similar rate in the next five years. The market presently has close to 60mn
consumers and they are mainly located in the urban areas. Growth will mainly come through an
increase in penetration as income levels improve. However, almost all of this consumption is in
the cities, and rural India is nearly ‘chocolate- free’. But the fact is that three quarters of Indians
live in Rural Areas. “Average summertime temperatures reach 43 degrees Celsius in India.
Chocolate melts at body temperature of 36 degrees.” Per capita consumption of chocolates in
India is minuscule at 20gms in India as compared to around 5-8 kgs and 8-10 kgs respectively in
most European countries. Awareness about chocolates is very high in urban areas at over 95%.
Despite these barriers, however, the Indian market offers great potential for growth in the long
term. Datamonitor figures state that the average annual growth of the Indian chocolate market, in
value terms, was 8% between 2002 and 2006, and this growth is forecast to continue, with
expected annual growth of 4.3% between 2006 and 2010 7

8. Growth of other lifestyle foods such as malted beverages and milk food have actually
declined by 3.7 per cent and 11.7 per cent, however the CHOCOLATES continue to grow at the
rate of 12.6%. Low priced unit packs, increased distribution reach and new product launches can
be said to have fuelled this growth. The launch of lower-priced, smaller bars of chocolate in the
last two years and positioning of chocolate as a substitute to traditional sweets during festivals,
have boosted consumption. This is also because chocolate, which was considered to be an elitist
food, has caught the fancy of buyers looking for a lifestyle item at affordable cost. Till recently,
chocolate consumption had been restricted by low purchasing power in the market. Chocolates
 and other cocoa-based snack foods were looked upon as food suitable only for the well-off.
Chocolate Consumption Structure in India 33% Children Adults 55% Young Adults 12% 8
9. MARKETING OF CHOCOLATES IN INDIA Traditionally, chocolates were always
targeted at children. But stagnancy in growth rates made the companies re-think their strategies.
Cadbury was the first chocolate company that took the market by storm by repositioning brands
at adults, as opposed to children. BUYING BEHAVIOUR Chocolates are consumed as
indulgence and not as snack food, as prevalent in western countries. Almost 75% chocolates are
impulse purchases. Chocolates are bought predominantly by adults and gifted to children. The
wholesaler usually deals in all kinds of FMCG goods, Foodstuff in addition to the chocolates.
The items like chocolates are placed near the counter. Chocolates are kept in cardboard boxes
and are also delivered in the same. ... In a few of the cases the chocolates were kept separately
(as per equipment provided by the manufacturer – e.g. VISI Coolers), In addition to marketing
promotions companies have been focusing extensively on the promotions by the sales staff. Also
the companies can devise there marketing strategies that are catering to specific segments and are
thus more effective. NATURE OF RETAIL OUTLET Chocolates are primarily sold through
Kirana Stores, Gift stores, Medical Stores, canteens, Pan-Bidi stores, Bakeries, Sweet Shops 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, Cadbury brands occupied
more than Nestle brands. The chocolates category thrives on excitement. It's all about giving the
consumer a choice and taste which they enjoy. STOCKING OF THE PRODUCTS In most of the
cases, various brands of chocolates are kept together. In some of the cases the chocolates are
stocked depending on the manufacturer’s provision. The chocolates are kept in Glass Jars and
boxes – These are provided by the respective companies along with the product. The chocolates
are kept there. But in most of the cases chocolates are stocked near the counter. Ideally the
shopkeeper tries to keep chocolates within the reachable (sitting on the counter) distance. 9
10. Chocolates are kept at or below the eye level. This is to facilitate visibility of the
chocolates for the customer who is visiting the store. PROBLEMS & CHALLENGES IN
INDIAN CHOCOLATE INDUSTRY TEMPERATURE A peculiar problem that hinders the
distribution to far-off places is the tendency of chocolates to melt under even moderate heat. The
temperatures can reach as high as 48 degrees 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. 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 Eurupean 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. Nestle and Cadbury
have tried to provide loans for retailers to buy fridges, but to hold down power costs the
shopkeepers switch off the fridges at night. As a result the cocoa fat melts and migrates to the
main body of the chocolate bar. When the cooling is switched on in the morning, the cocoa fat
solidifies and turns white, presenting a bizarre, un-sellable white on black form. Nestle tried to
provide fridges with see-through doors, but was appalled to see its chocolates sandwiched
between dead chicken, butter and vegetables. Small coolers were provided to retailers to keep the
chocolate from melting, but that didn't quite do the trick. Electricity costs money and is not
provided in a uniform way, so on and off the electricity goes and the product may suffer. RAW
 MATERIALS Cocoa is the key raw material and accounts for around 35% of the total material
cost (including packaging) of chocolates. The price of cocoa has been hitting a new high of late.
10
11. 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. THREAT
FROM IMPORTED BRANDS: Free availability of imported brands bought 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 chocolate brands that are available do not meet
Indian Food Regulations. EXTERNAL FACTORS AFFECTING GROWTH OF CHOCOLATE
INDUSTRY IN INDIA • Good monsoon ensures adequate availability of raw materials, which
are mainly agricultural in nature. Raw material prices have significant influence on margins. •
Government policies in terms of licensing, duties, movement of agricultural commodities etc.
also affect the introduction of products, time lag for a product launches, taxes, excise, etc all
influence the business. • Market growth driven by overall economic growth and urbanization
also contributes. An overall booming economy will consume tonnes of chocolates because
consumer spending increases. Also, the absolute number of consumers in middle class & upper
middle class increases. • Rupee depreciation improves export realizations; however it also makes
import of raw material (esp. cocoa) expensive. 11
12. GROWTH OPPORTUNITIES IN INDIAN CHOCOLATE INDUSTRY UNTAPPED
MARKET & LIMITED CONSUMPTION: The fact that chocolate is not a traditional food, high
prices and domestic production problems will provide the main problems to market growth. As
these markets develop, prices will fall making these products more accessible to the wider
population. However the Indian market is still untapped and provides immense scope for growth,
both geographically as well as product basket wise. Chocolates right now reaches about 70mn to
75mn consumers. It is estimated that chocolates have a potential market of about 116mn
consumers. Chocolate consumption in India is extremely low. Per capita consumption is around
160gms in the urban areas, compared to 8-10kg in the developed countries. The per capita
chocolate consumption in India is still much below the East Asian standards. Hence per capita
consumption has a immense scope for improvement. In rural areas, it is even lower. Chocolates
in India are consumed as indulgence and not as a snack food. A strong volume growth was
witnessed in the early 90's when Cadbury repositioned chocolates from children to adult
consumption. The biggest opportunity is likely to stem from increasing the consumer base.
Leading players like Cadbury and Nestle have been attempting to do this by value for money
offerings, which are affordable to the masses. We also believe that the near term opportunity lies
in increasing penetration rather than increasing intensity of consumption. CHANGING
ATTITUDES & CONSUMPTION PATTERN: In the past, chocolate consumption had been
restricted by low purchasing power in the market. Chocolates and other cocoa-based snack foods
were looked upon as food suitable only for elitist consumption till recently. But with the launch
of lower-priced, smaller bars of chocolate in the last two years and positioning of chocolate as a
substitute to traditional sweets during festivals, have boosted consumption. Chocolates which
 were considered to be an elitist food hit the fancy of masses looking for a change in life style at
affordable cost. 12
13. RURAL EXPANSION: Rural market and small town markets are seen as the key to
spurring double-digit growth. Products such as liquid chocolate packs from the existing portfolio
are expected to enable rapid acceptance. LEVERAGE INDIA FOR OFF-SHORING: India is
being leveraged for export of finished goods, as a superior destination for manufacturing best
practices, and for BPO opportunities. All the above points bring us to a conclusion that there’s an
immense scope for growth of chocolate industry in India not only in its offering pattern but also
for increment in its total consumption value and size. STRATEGIES FOR GROWTH &
SUCCESS IN INDIA • Revamp the product to keep the excitement alive. • Companies should
look at new avenues, while expanding the reach of its products. Distribution will hold the key.
Companies need to reach out to smaller towns, where three-fourths of the population does not
even know the product. • Merger & Acquisitions: Mergers & Acquisitions with companies that
match the product portfolio & overall growth strategy should be considered which will not only
strengthen the company to establish a stronger hold in the country but also ward off possible
competition in the select category. Such collaborations will also facilitate companies to use each
other’s distribution networks. MARKET SIZE (BY VALUE & BY VOLUME) The Indian
chocolate market is valued at $188.6 million in 2006. The The total sale of the chocolate was
$394 million per annum in 2008 with total Chocolate sales per capital of $0.36. According to
market researcher Euromonitor International chocolate confectionary sales in India have
doubled, growing sales by 64% over the last five years. Chocolate penetration in the country is a
little over 4 percent, with India's metros proving to be the big draw clocking penetration in
excess of 15 percent. Next, comes the relatively 13
14. smaller cities/towns where consumption lags at about 8 percent. Chocolates are a luxury
in the rural segment, which explains the mere 2 percent penetration in villages. The market
presently has close to 60mn consumers and they are mainly located in the urban areas. MAJOR
PLAYERS The major players in the Indian Chocolate Industry are: 1. CADBURY’S INDIA
LIMITED: Cadbury India is a food product company with interests in Chocolate Confectionery,
Milk Food Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery
business with a market share of over 70%. Some of the key brands of Cadbury are Cadbury
Dairy Milk, 5 Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinks
segment, Cadbury's main product - Bournvita is the leading Malted Food Drink in the country.
Cadbury is the world's largest confectionery company and its origins can be traced back to 1783
when Jacob Schweppe perfected his process for manufacturing carbonated mineral water in
Geneva, Switzerland. In 1824, John Cadbury opened in Birmingham selling cocoa and chocolate.
Cadbury and Schweppe merged in 1969 to form Cadbury Schweppes plc. Milk chocolate for
eating was first made by Cadbury in 1897 by adding milk powder paste to the dark chocolate
recipe of cocoa mass, cocoa butter and sugar. In 1905, Cadbury's top selling brand, Cadbury
Dairy Milk, was launched. By 1913 Dairy Milk had become Cadbury's best selling line and in
the mid twenties Cadbury's Dairy Milk gained its status as the brand leader. Cadbury India began
its operations in 1948 by importing chocolates and then repacking them before distribution in the
Indian market. Today, Cadbury has five company-owned manufacturing facilities at Thane,
Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales
offices (New Delhi, Mumbai, Kolkota and Chennai). Its corporate office is in Mumbai.
Worldwide, Cadbury employs 60,000 people in over 200 countries. 2. NESTLE INDIA Nestle
India is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures a variety of food
 products such as infant food, milk products, beverages, prepared dishes & cooking aids, and
chocolates & confectionary. Some of the famous brands of Nestle are NESCAFE, MAGGI,
MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLE
SLIM Milk, NESTLE Fresh 'n' Natural Dahi and NESTLE Jeera 14
15. Raita. Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestle's first
product was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle acquired the Anglo- Swiss
Condensed Milk Company. Nestle's relationship with India started 1912, when it began trading
as The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling
finished products in the Indian market. After independence, in response to the then economic
policies, which emphasized local production, Nestle formed a company in India, namely Nestle
India Ltd, and set up its first factory in 1961 at Moga, Punjab, where the Government wanted
Nestle to develop the milk economy. In Moga, Nestle educated and advised farmers regarding
basic farming and animal husbandry practices such as increasing the milk yield of the cows
through improved dairy farming methods, irrigation, scientific crop management practices etc.
Nestle set up milk collection centres that ensured prompt collection and paid fair prices. Thus,
Nestle transformed Moga into a prosperous and vibrant milk district. In 1967, Nestle set up its
next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into
soluble tea. Nestle opened its third factor in Nanjangud (Karnataka) in 1989. Thereafter, Nestle
India opened factories in Samalkha (Haryana), in 1993 and two in Goa at Ponda, and Bicholim in
1995 and 1997 respectively. Today, Nestle is the world's largest and most diversified food
company. It has around 2,50,000 employees worldwide, operated 500 factories in approximately
100 countries and offers over 8,000 products to millions of consumers universally. 3. THE
GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION (GCMMF) – AMUL
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products
marketing organisation. It is a state level apex body of milk cooperatives in Gujarat which aims
to provide remunerative returns to the farmers and also serve the interest of consumers by
providing quality products which are good value for money. AMUL means "priceless" in
Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality
control expert in Anand. Variants, all meaning "priceless", are found in several Indian languages.
Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk
Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice
cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India.
(Turnover: Rs. 52.55 billion in 2007-08). Today Amul is a symbol of many things. Of high-
quality products sold at reasonable prices. The company is trying to push its chocolate sales
through its extensive dairy distribution network. It is giving discount offers for its recently
launched sugar-free chocolates. The company has also placed its chocolate products at lesser
price points compared with its 15
16. competitors. Other chocolate brands by Amul include Bindaaz, Fundoo, Almond bar,
Milk chocolate and Fruit-n-nut. Yet chocolate has never been a major thrust area for the
company. It still remains one of its non-core categories. Its chocolate drinks have received better
response than its chocolates. The chocolate category in India is also seeing increased activity
with MNCs such as Hershey’s planning to introduce products from its global stable in India in
the coming year. Amul is looking at building a bigger portfolio in this category by introducing
new types of chocolates 16
17. CADBURY’S IN INDIA CADBURY’S OVERVIEW Half a century of constant
innovation, constant value addition, constant success. Cadbury India Ltd. (CIL), a part of the
 Cadbury Schweppes group, is India's leading confectionery manufacturer with a 70% volume
share of the chocolate market. And is synonymous with chocolate in the minds of countless
Indians - young and old. The company is also a key player in the malted food drink and sugar
confectionery markets in the country. Today, the governing objective for Cadbury India is to
deliver Superior Shareholder Value and to see the brand in every pocket, in every home.
HISTORY OF CADBURY The Cadbury story is a fascinating story of a family business that
grew into one of the biggest, most loved chocolate brands in the world. A story that you will
remember as the story of the real taste of life as the business grew, it was moved to a larger
factory in Bridge Street in 1847. John Cadbury then took his brother Benjamin into a partnership.
And the business came to be 'Cadbury Brothers, Birmingham". In 1853, the Cadbury Brothers
received a royal warrant as chocolate manufacturers to Queen Victoria a royal appointment that
the company holds to this day. 22-year-old John Cadbury opened a one-man grocery business in
Birmingham, selling tea, coffee, hops, mustard and cocoa. To this list he soon added drinking
chocolate which he prepared using a mortar and pestle. Young Cadbury had a considerable flair
for advertisement, which inspired him to install a pate glass window in his store - the first in 17
18. Birmingham. This along with a Chinaman in native costume presiding over the counter
created quite a stir and drew a lot of attention. The growing sales and popularity of Cadbury's
'superior quality cocoa and chocolates resulted in the business shifting to a larger warehouse in
Crooked Street in 1831. Dissatisfied with the quality of products produced by all manufacturers,
including their own, the brothers Cadbury took a momentous step which was to change the way
the chocolate business was done in England. Following a visit to Van Houten in Holland, they
introduced a process for pressing the cocoa butter from the beans to produce cocoa essence,
which was really the forerunner of the cocoa we know today. This essence was advertised as -
'Absolutely Pure, Therefore Best'. From the mid 1860's, Cadbury introduced many new kinds of
eating chocolate. Not only the more refined forms of plain chocolate but chocolate cremes - fruit
flavoured centres covered with chocolate. These exotic chocolates were sold in decorated boxes,
which Richard Cadbury with his distinct artistic talent designed. In fact, many of his original
designs still exist. Elaborate chocolate boxes were extremely popular with the late Victorians,
with designs extending from superb velvet covered caskets with beveled mirrors, to pretty boxes
showing kittens, flowers, landscapes or beautiful girls. As the company prospered, the brothers
implemented new ideas in their work practices like, office picnics to the country, a sports field,
kitchen and well heated dressing rooms for the workers. While these practices are common in
organisations today, they were unheard of in the 19th century. Among the many innovations in
the factory was the appointment of Frederic Kinchelman, a master confectioner from the
continent, who was engaged to impart the secrets of his craft to Bournville. Cadbury was soon
making nougats, pistache, pate b'abricot, avelines and other delights. All of the quality that
'Fredric the Frenchman', as he was known, was renowned for. Over the next few years, Cadbury
opened up chocolate markets in Australia, New Zealand, South Africa, India, the West Indies,
South America, the United States and Canada. Every successful company has its famous brands
and Dairy Milk, today one of the most popular moulded chocolates in the world, is one of the
biggest Cadbury success stories. Cadbury has grown from strength to strength with new
technologies being introduced to make the Cadbury confectionery business one of the most
efficient in the world. The merger in 1969 with Schweppes and the subsequent development of
the business have led to Cadbury Schweppes taking the lead in both the confectionery and soft
drinks markets in the UK and becoming a major force in international markets. Cadbury
Schweppes today manufactures products in 60 countries and trades in over a staggering 120. 18
19. CADBURY’S INDIA LIMITED Cadbury was originally incorporated as a wholly owned
subsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. The company’s original name
was Cadbury Fry (India) Ltd. In 1978, CSOL diluted its equity stake to 40% to comply with
FERA guidelines. In 1982, the name was changed to Hindustan Cocoa Products. CSOL’s
shareholding was increased to 51% in Jan ’83 through a preferential rights issue of Rs700mm.
The current name was restored in Dec ’89. In 2001, Cadbury Schweppes made an open offer to
acquire the 49% public holding in the company. The parent holds over 90% of the equity capital
after the first open offer. A second open offer has been made to buyback the balance
shareholding, after which the company would operate as a 100% subsidiary of Cadbury
Schweppes Plc, Ever since the Cadbury is in India in 1947; Cadbury chocolates have ruled the
hearts of Indians with their fabulous taste. The company today employs nearly 2000 people
across India. Its one of the oldest and strongest players in the Indian confectionary industry with
an estimated 68 per cent value share and 62 per cent volume share of the total chocolate market.
It has exhibited continuously strong revenue growth of 34 per cent and net profit growth of 24
per cent throughout the 1990’s. Cadbury is known for its exceptional capabilities in product
innovation, distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bournvita,
Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit all
occasions and moods. Today, the company reaches millions of loyal customers through a
distribution network of 5.5 lakhs outlets across the country and this number is increasing
everyday. OBJECTIVES AND VALUES Cadbury’s objective is to grow shareholder value over
the long term. Cadbury in every pocket. Cadbury’s 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 Adopting Value Based Management for
major strategic and operational decisions and business systems 19
20. Creating an outstanding leadership capability within the management and Sharpening the
company culture to reflect accountability, aggressiveness and adaptability Aligning the
management rewards structure with the interests of our shareowners. VISION Life Full Of
Cadbury Cadbury is an organization which impacts and interacts with the consumers. Cadbury is
present in most happy occasions in the life of our consumer. The brands excite the consumer.
Cadbury is an expression of a consumer's life. Cadbury Full Of Life Cadbury as a company is
vibrant. Cadbury is a fun and energizing workplace. Cadbury is robust and alive. BUSINESS
Cadbury dominates the Indian chocolate market with above 65 – 70 % market share. Besides, it
has a 4% market share in the organized sugar confectionery market and a 15% market share in
milk/ malted foods segment. Cadbury's Indian operations are not just the largest in Asia but also
the cheapest. 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 per cent. SWOT ANALYSIS OF CADBURYS Strength 1. Cadbury is a company, which
is reputed internationally as the topmost chocolate provider in the world. 2. The brand is well
known to people & they can easily identify it from others. 3. Cadbury the world leaders in
chocolate, is a well-known force in marketing and distribution. 4. Users have a positive
perception about the qualities of the brand. 5. Cadbury main strength is Dairy milk. Dairy milk is
the most consumed chocolate in India. 20
21. 6. By using popular models like Cyrus Brocha, Preety Zinta and others Cadburys has
managed to portray a young and sporty image, which has resulted in converting buyers of other
brands to become its staunch loyalists. 7. Cadbury has well adjusted itself to Indian custom. 8. It
has properly repositioned itself in India whenever required i.e. from children to adults,
 togetherness bar to energizing bar for young ones etc. Weaknesses 1. There is lack of penetration
in the rural market where people tend to dismiss it as a high end product. It is mainly found in
urban and semi-urban areas. 2. It has been relatively high priced brand, which is turning the price
conscious customer away. 3. People avoid having their chocolate thinking about the egg
ingredients. Opportunities 1. The chocolate market has seen one of the greatest increases in the
recent times (almost @ 30%) 2. There is a lot of potential for growth and a huge population who
do not eat chocolates even today that can be converted as new users. Threat 1. There exists no
brand loyalty in the chocolate market and consumers frequently shift their brands. 2. New brands
are coming and existing brands are introducing new variants to add up to an already
overcrowded market. PLANT LOCATIONS Cadbury’s manufacturing operations started in
Mumbai in 1946, which was subsequently transferred to Thane. In 1964, Induri Farm at
Talegaon, near Pune was set up with a view to promote modern methods as well as improve milk
yield. In 1981-82, a new chocolate manufacturing unit was set up at the same location in
Talegaon. The company, way back in 1964, pioneered cocoa farming in India to reduce
dependence on imported cocoa beans. The parent company provided cocoa seeds and clonal
materials free of cost for the first 8 years of operations. Cocoa farming is done in Karnataka,
Kerala and Tamil Nadu. 21
22. In 1977, the company also took steps to promote higher production of milk by setting up
a subsidiary Induri Farms Ltd near Pune. In 1989, the company set up a new plant at Malanpur,
MP, to derive benefits available to the backward area. In 1995, Cadbury expanded Malanpur
plant in a major way. The Malanpur plant has modernized facilities for Gems, Eclairs, Perk etc.
Cadbury also operates third party operations at Phalton, Warana and Nashik in Maharashtra.
PRODUCT MIX - CHOCOLATES PRODUCT BASKET- Category Brand Variants • Bars
Dairy Milk Plain • Fruit n Nuts • Double Decker • Roasted Almond • Chunky • 5-Star • 5 Star
Count Lines 5 Star Chrunchie • Milk Treat Chocolate • Orange • Wafer Chocolate Perk Perk •
Perk XL • Other Chocki Mint, Strawberry & Chocolate • Premium/ Gift Chocolates Temptation
Rum, Cashew, Almond & Orange • Celebrations Various Gift Packs 22
23. Cadbury’s Dairy Milk (CDM): Cadbury’s Dairy Milk is the flagship brand of Cadbury’s
not only in India but world wide. CDM is the single largest selling unit in India. It has annual
sales to the tune of Rs 200 crore. CDM not only accounts for 30 per cent of the total chocolate
market in value, but commands nearly 26 per cent in volume terms and close to 30 per cent of
Cadbury’s annual turnover. Moving from a predominantly adult positioning in the days of the
legendary dancing girl ad, to the teens and the tweens, when the Cyrus Broacha ads hit the
airwaves, CDM has made a long sweet journey. In spite of the new categories being explored by
Cadbury, its star brand remains Cadbury Dairy Milk (CDM) which continues to corner almost 30
per cent of the chocolate market. Cadbury’s Temptation: Cadbury’s Temptation is premium
chocolate brand aimed for high value consumption. Various variants available are Almond, Rum,
Cashew & Orange. Cadbury’s temptation is priced at Rs. 40 Cadbury’s Celebration Cadbury
India launched its premium Celebrations range, which contains traditional Indian dry fruits
wrapped in Dairy Milk chocolate. This gifting option combines the pleasure of giving away dry
fruits — which Indians traditionally consider a premium, healthy gift — with chocolate. Cadbury
now has 90 per cent market share in this profitable segment. PRODUCT INNOVATIONS 5
STAR: Consumer feedback suggested that the old 5 Star was too chewy, and people complained
of it sticking to their teeth. It was made softer and melted easily in the mouth & introduced as 5
Star Crunchy PERK: Perk was made much lighter and the size of the bar increased to match
 Nestle’s Munch. Perk had been under fire from Nestle’s deadly duo of KitKat and Munch, but
after the 23
24. relaunch, its marketshare is two per cent more than KitKat’s. And, the five-year-old
brand is now almost as big as the decades-old 5 Star in size, both in the region of Rs 50-55 crore.
HEROES: Packaging innovation has played a vital role in revamping of various Cadbury’s
brands. Heroes brand is simply a multi-pack with miniatures of all its most popular brands in a
single outer case. NEW PRODUCT LAUNCHES CADBURY 5 STAR CRUNCHY The same
delicious Cadbury 5 Star was now available with a dash of rice crispies. Cadbury 5 Star &
Cadbury 5 Star Crunchy now aim to continue the upward trend. This different and delightfully
tasty chocolate is well poised to rule the market as an extremely successful brand.
COLLECTION – A RANGE OF PREMIUM CHOCOLATE GIFT BOXES. Available in
attractive packs, the Collection caters to a premium gifting consumer and is an ideal festive gift.
It is a unique combination of the best Cadbury chocolate and premium dry fruits and comes in
four different formats each of which is a mix of select premium dry fruits enrobed in rich
Cadbury Dairy Milk chocolate. BOURNVILLE FINE DARK CHOCOLATE Cadbury India
launched its dark chocolates- Cadbury Bournville Fine Dark Chocolate - in the Indian market.
Globally, dark chocolate is the fastest-growing segment. It is loved by millions of consumers
because of its rich taste and intrinsic health and well-being benefits. The chocolate is available in
four different variants - Rich Cocoa, Almond, Hazelnut and Raisin & Nut - priced at Rs 75 a
pack. 24
25. STRATEGIES OF CADBURY’S CADBURY'S CREATIVE LAUNCH A new ‘after
dinner' segment Cadbury Desserts “for sweet moments after dinner” “Khaane Ke baad Kuch
Meetha Ho Jaye” Rs. 20/- per packet of 44 gms Cadbury Dairy Milk (CDM) Desserts – with rich
indulgent crème center, in exotic & traditional flavors of Tiramisu and Kalakand. CDM Desserts
offer the perfect rounding off taste, after meal that adds special ‘Meetha' moments to the family.
The rich tastes of CDM combined with the unique crème center in exotic flavors provide a
special chocolate experience. CDM 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. PRICING After the roaring success of Nestle’s Munch and Chocostick, Cadbury’s
empire struck back hard. The Rs 5 price point accounts for more than half of all chocolate sales.
Nestle had seized the initiative at this price point, with its launch of Munch, now a roaring
success (and the largest selling product at that price point). Today, Cadbury has four products at
this price point: CDM, Perk, 5 star and Gems — and the five-rupee CDM bar is its single largest-
selling SKU. “This is a potent price point in India, because the average purchasing power is
abysmally low,” is what industry analyst have to say. 25
26. Nestle kicked off one of the biggest success — the liquid chocolate category with its
brand Chocostick priced at Rs.2 — three months ahead of competition. Cadbury did react with
Chocki, priced at Rs 2, expanding the concept of sachetisation to new frontiers. Chocki has been
the single biggest growth driver for Cadbury as well as the entire chocolate category. The
novelty of the format endeared itself to the existing customer. In less than one year, it constituted
nearly 10 per cent of the total chocolate market, split equally between Cadbury and Nestle.
VOLUME LED GROWTH STRATEGY Cadbury has followed a well-planned strategy of
fuelling volume growth by introducing smaller unit packs at lower price points. Simultaneously,
the company seems to have astutely juggled with the larger pack sizes and raised prices to a
degree higher than what appears at face. PRICE WOES Chocki, selling at a potent price point of
Rs 2, was ideal for smaller towns, especially since it did not need refrigeration. But Chocki
 started to cannibalise other higher-priced chocolates in larger markets. DISTRIBUTION
Chocolate needs to be distributed directly, unlike other FMCG products like soaps and
detergents, which can be sold through a wholesale network. 90% of chocolate products are sold
directly to retailers. Distribution, in the case of chocolates, is a major deterrent to new entrants as
the product has to be kept cool in summer and also has to be adapted to suit local tropical
conditions. Cadbury's distribution network used to encompasses 2100 distributors and 450,000
retailers. The company has a total consumer base of over 65 million. Besides use of IT to
improve distribution logistics, Cadbury is also attempting to improve distribution quality. To
address the issues of product stability, it has installed VISI coolers at several outlets. This helps
in maintaining consumption in summer, when sales usually dip due to the fact that the heat
affects product quality and thereby offtake. 26
27. To avoid cannibalization of its higher priced products from lower priced ones, Cadbury is
setting up two separate distribution channels – one for CORE business & other for MASS
markets, with different stockists, wholesalers and retailers. One set will be dedicated to
Cadbury’s high-end products and traditional chocolates. The other will cater to the mass market
brands namely Chocki, Halls, Eclairs et al — all products priced below Rs 3. But today,
Cadbury's distribution network reaches out to six lakh outlets each for its chocolate &
confectionery brands (i.e. total reaching12 lakh outlets). PROMOTION Typically it is said that
chocolates are being eaten when everyone is happy. And this is something advertising has
always portrayed. But it is found chocolates are eaten under diverse conditions and moods -
when people are anxious, when they are sad, when happy - a whole range of emotions.
Condensing these views & thoughts, it can be said chocolate is a true soul mate. Someone who is
with you through the ups and downs of life, helping you bounce back. And that's what Cadbury's
Dairy Milk (CDM) positioned itself as - a special friend. 27
28. RE-INVENTING CABDURY “Kya Swad Hai Zindagi Mein” redefined the way Indians
looked at Cadbury Chocolates. (The commercial showed a beautiful young lady overcoming all
obstacles on the cricket ground, crossing boundary, watchman, securities and embracing her
lover who won the game by hitting a six). This theme introduced in around mid 90’s bought
instant growth to Cadbury’s Dairy Milk. The Ad campaign ran successful for about four years
and immersed deeper inside hearts of Indians. In March 2002, Cadbury launched its next
advertisement campaign for its flagship chocolate brand, Cadbury's Dairy Milk (CDM). The
campaign featured a television (TV) commercial that was significantly different from the
company's earlier commercials for the brand. It featured Cyrus Broacha interviewing college
students and asking why they liked to eat CDM. This was followed by college students 'singing'
their excuses for eating CDM. Just as the commercial seems all set to end with the students and
Cyrus singing the famous CDM theme, 'Khane Walon Ko Khane Ka Bahaana Chaahiye' (those
who want to eat, will find excuses), a student comes up and questions Cyrus. The advertisement
aimed at conveying the idea that no specific occasion is required for consuming CDM. This was
a significant departure from CIL's strategy of appealing to adults in India, who sought a rational
justification for indulging in chocolate consumption. Cadbury roped in Preity Zinta for its PERK
brand. Preity Zinta’s angelic dimples laid the foundation for what would become the Indian
teenager’s favorite snack. After this campaign, PERK’S sale surged. Cadbury’s advertising has,
over the past few years, aptly reflected India’s passion for chocolates. CADBURY
ADVERTISEMENTS • Dil ko jab kushi choo jaye..."...kuch meetha jo jaye.." • Akhir barvi pass
ho hi gaya." kuch meetha jo jaye.. • Log Cadbury Kyon Khate Hai….Khaane waalon ko khaane
 ka bahaana." • Cadbury’s Dairy Milk…..Asli swad zindagi ka • CADBURY DESERTS -
“khaane ke baad kuch meetha ho jaaye.” 28
29. • Cadbury’s Celebrations - Rishto ki Mithas CADBURY AND THE WORM
CONTROVERSY The discovery of worms in some samples of Cadbury’s Chocolate in early
October 2003 created one of the biggest controversies in India against a Multi National 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 controversy, and the adverse publicity received in several countries, set back its plan of
outsourcing model which would have resulted in significant revenue generation, several months
back. The "worms’ controversy" came at the worst time….the next few months were the peak
season of Diwali, Eid & Christmas. Cadbury sells almost 1,000 tonnes of chocolates during
Diwali. In that year, the sales during festival season dropped by 30 per cent. The company saw
its value share melt from 73 per cent in October 2003 to 69.4 per cent in January 2004. In May,
however, it inched up to 71 per cent. CDM sales volumes declined from 68 per cent in October
’03 to 64 per cent in January 2004 Clearly, the worm controversy took a toll on Cadbury's
bottom-line. For the year ended December 2003, its net profit fell 37 per cent to Rs 45.6 crore
(Rs 456 million) as compared with a 21 per cent increase in the previous year. However,
Cadbury’s reiterated that all through the 55 years of leadership in India that it has remained
synonymous with chocolates and has remained committed to high quality and consumer
satisfaction." CABDBURY’S FIGHT-BACK 'Project Vishwas' “Steps to ensure quality & regain
the confidence” 29
30. 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 stockists display
and sell the products "safely and hygienically" 190,000 retailers in key states were covered under
this awareness programme. THE BIG ‘B’ FACTOR The big factor that has pushed up CDM
sales is the Amitabh Bachchan campaign. It helped restore consumers' faith in the quality of the
product. In early January, Cadbury appointed Amitabh Bachchan as its brand ambassador for a
period of two years. The company believed that the reputation he has built up over the last three
decades complements their own, which was built over a period of 50 years. Yet, the entire credit
of recovery could not be attributed to the brand mascot. Incisive action taken by the company
also helped. Some of which were: 1. Responded to consumers concern over the issue rapidly.
Also, the communication campaign worked effectively in giving out the central message. 2. The
packaging was changed to include a sealed plastic wrapper inside the outside foil. Cadbury’s
launched a new 'purity-sealed' packaging for its flagship product, Cadbury Dairy Milk. The
packaging is in response to foreign bodies, notably worms, being found in its products. Over the
next few weeks Cadbury will work towards introducing either a heatsealed or a flow-pack
packaging that offers a high level of resistance to infestation from improper storage. 30
31. 3. New advertising & promotion campaigns were in place which accounted for an Ad
spend of nearly Rs 40 crore (Rs 400 million) Cadbury invested nearly Rs 25 crore (Rs 250
 million) this year on new machinery for the improved packaging. CADBURY’S SINGING
SWEETLY AGAIN All is well that ends well. And for Cadbury’s India, nothing can be sweeter
than Regaining Back the Consumer Confidence. Thanks to quick action taken to recover the
damage done by the worm controversy like Operaion Vishwas, adopting new packaging &
massive advertising with Mr. Amitabh Bachchan as their brand ambassador, Cadbury’s regained
its market share. Cadbury India appointed management consultancy firm AT Kearney to draw up
a strategy to control costs in several areas, including sourcing of raw materials and packaging.
This was partly an outcome of the worms’ controversy more than a year ago. Among other
things, it changed the wrappers for its Cadbury Dairy Milk brand and introduced better coolers.
The consultancy firm will also look at the sourcing of direct and indirect materials like
renegotiating with suppliers for longer term contracts and vendor management. Other costs
(indirect expenses) like travel costs and hotels were also being studied. In other words, Cadbury
is trying to reduce the cost per stock keeping unit (SKUs, or packs). The aim is to improve
efficiencies. 31
32. 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 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. 32
33. 6. Brand Building: Since its inception, Cadbury in India has stayed ahead thanks to their
constant marketing initiatives, that have at all points in time understood the needs of and
opportunities in a changing nation but Nestle had stood firm in second position resulting from
their responsibilities and providing quality products. Amul an Indian company has been able to
create brand quality and thus selling their product through their name. 7. Wide variety of brands:
The '60s was a decade which saw the launch of brands that are etched in the hearts of generations
of Indians - Tiffins, Nut Butterscotch, Caramels, Crackle, 5 Star and Gems. It was a strategy that
introduced consumers to a variety of tastes and product forms leading to a rapid increase in
chocolate consumption. 8. Quality products at low price: Cadbury's Eclairs was launched in
 1972, at the then princely sum of 0.25p and was an instant hit. It continues to be one of the
biggest brands in the Cadbury portfolio and offers the lowest price point at which consumers can
experience the real taste of chocolate. But as compared to other companies the price are very
high because of lack of competition. 9. Innovative & attractive packaging: In the years that
followed, Cadbury invested in technology and made an impact through innovative packaging.
This decade experienced a continuous growth in volumes as Cadbury launched a flurry of brands
with different pack sizes, at various price points. The now ubiquitous Sheet Metal Dispenser seen
on cash counters of thousands of shops for dispensing chocolates was an innovation that helped
brand the colour purple in the minds of the Indian consumer. 10. Timely expansion of market: In
the 90's Cadbury realised both the scope and the need to expand the market. Hitherto perceived
only as a children's product, Cadbury 'universalized' the chocolate market. The multi-award
winning advertising campaign - 'The Real Taste of Life' - was launched, capturing the childlike
spontaneity in every adult. 33
34. Moulded chocolate and éclairs also showed satisfactory growth. This has also helped in
improving the infrastructure and distribution reach of the company in chocolate and
confectionery segment. 11. Introducing new products: Cadbury 5 Star with its “Energizing Bar”
campaign targeted the youth, offering them a mind and body charge. While pre-empting
competition, Cadbury Perk - the light chocolate snack - pushed chocolates into the wider area of
snacking by promising 'Thodi Si Pet Pooja Kabhi Bhi Kahin Bhi' (anytime, anywhere) and has
introduced new flavours like ‘Mint Hint’, ‘Mango Tango’, Very Strawberry’. It has also
introduced various new chocolates like Gollum and Frutus in recent years. 12. Constant
diversification: Faced with rapidly changing markets and increased competition, Cadbury
launched Truffle to hit the high ground of great tasting chocolate. This was followed by Picnic in
1998, which with its unique, multi-ingredient construct, promises to take chocolates straight into
the realm of snacks. With the introduction of Gollum and Frutus Cadbury has taken the market
by surprise. 13. Commitment of expansion: With the launch of Trebor Googly, the tangy, fizzy
candy, Cadbury took the market by surprise and marked the entry of Trebor into the fast growing
Indian sugar confectionery market. The extension of Googly to a Mint flavour reinforces
Cadbury's commitment to establish the Trebor name as a strong player in the value added sugar
confectionery market. 14. Repositioning: Cadburys has been repositioning its products for
children to adults and for celebrative occasions. A repositioning campaign was arranged for dairy
milk that showed adults doing unconventional things (like a lady breaking into a jig in the middle
of the overflowing cricket stadium) driving home the message that adults could enjoy chocolate
as well. 34
35. 15. Information technology: At Cadbury India they believe that effective communication
and availability of information 'at the right time and the right place' is critical for an edge in
business. In order to achieve this they realised the importance of and have in place, an effective
IT infrastructure. Through IT investment, they aim to • Remain competitive in the fast changing
environment. • Incorporate best practices in the business processes. • Arrive at uniform software
and business practices globally within Cadbury Schweppes. • Provide Y2K compliant software
for all group companies. • Achieve flexibility of systems to keep pace with changing
environments. • Increase speed of response to business processes. • Minimise working capital. 35
36. Cadbury Picnic BACKGROUND Cadbury Picnic is a chocolate bar with milk chocolate
and peanuts, covering nougat, caramel, and puffed rice. Picnic is a random composition and has
different fairly chunky ingredients. The Picnic brand was launched in India in the year 1998.
Cadbury launched Picnic, which is one of its major chocolate from its international portfolio.
 Picnic was launched to further evolve the chocolate market into the snacking area, a task that has
already been initiated by Perk. Picnic was specifically designed for Russian taste thus not suited
to the Indian consumer. Indians felt that this chocolate had too many textures and too many
flavours, none of which really made a coherent experience. Indians are very particular about
tastes and may not have taken the product taste too well. Picnic was re-launched with a changed
composition in smaller packs in the year 1999 – 26 gm pack priced at Rs. 10 and 43-gm pack
priced at Rs.15. Picnic is shaped in a very rough manner and can rightly be called ugly looking.
Nothing agrees with this better than the slogan for this particular product "Deliciously Ugly".
The bars are lumpy in shape and may not have been liked by the Indian consumer. 1998 was a
time when India was not really open to such a product. Targeted at males of 18- 29 at time when
a third of population was below 15 years of age in 2000 points that timing was not correct. Picnic
was “wrong product in wrong time at wrong place” destined to fail !! 36
37. CADBURY PICNIC: AN APPEAL TO THE FIVE SENSES The Packaging • The
packaging is purple. • The word ‘Picnic’ covers most of the front and also it depicts peanuts and
raisins. • The packaging informs you in gold writing that it’s ‘Packed with Peanuts and Raisins’.
• Turning the bar over, the – nutritional information, barcode, best before date, weight,
ingredients and contact information can be seen. Appearance upon Opening • Cadbury PICNIC
is around five inches long and it appears to be packed with SOMETHING. There are large
bumps all over the upper surface of the rounded bar. • The chocolate is brown colored milk
chocolate. The Smell • The smell of the chocolate lacks the appealing smell associated with other
chocolates. The Taste • Cadbury PICNIC is crunchy (at the top teeth) and chewy (bottom) (due
to the cereal and nuts for the crunch, and the caramel and raisins for the chew). • The peanuts are
not a dominating flavour in the Picnic unlike in Snickers; in fact, the raisins have a stronger
flavour. The cereals are the most noticeable crunch texture, and the caramel makes the bar
chewy. • The flavour is difficult to describe, perhaps because there were so many different
flavours and textures presenting in one bar. The flavours bind together, providing a very
appealing taste sensation. 37
38. MARKET SURVEY OBJECTIVE OF THE STUDY: The Objective of my study is: •
The study consumer’s preferences for chocolate • To study the recall value of Cabdury’s Picnic
among the consumers and retailers • To find a Gap to Relaunch and reposition Cadbury’s Picnic
in the Indian market. COLLECTION AND ANALYSIS OF DATA: • Primary Data
Surveys/Questionnaires 1. Customers Survey – A sample size of 100 is chosen. 2. Retailors – A
sample size of 25 is chosen. Interactive 1. Interaction with customers in the Market/Household 2.
Interaction with Retailers. • Secondary Data 1. Data accessibility from Prowess and EBSCOO 2.
Internet 3. Newspapers, Magazines and Other Published Journals • Statistical Analysis of the
collected primary data • Report preparation 38
39. RESEARCH METHODOLOGY: • Types of questionnaire For the convince of
conducting survey for 100 customers and 25 Retailers the questionnaire is structures,
undisguised and closed ended so that it becomes easy for the customers to response. • Mode of
administration Personal interview and interaction have been done with few retailers and
customers to framing of the questionnaire. • Sampling detail Unit: The total size (N) = N1 + N2
Where, N1 = 100 Customers N2 = 25 Retailers Frame: For Customers & retailers Survey –
Customers & Retailers across Mumbai were surveyed 39
40. Data findings and Analysis DATA ANALYSIS FOR CONSUMERS 1. Do you like to
eat chocolates? LIKE AND DISLIKE OF CHOCOLATES 2% 11% Very much Okay Okay 28%
Not much 59% Not at all As far as the demand of the chocolate majority of customers like to eat
 chocolate. There is tremendous scope for the Indian Chocolate market which can be fulfilled by
various chocolate players in the market. 40
41. 2. How frequently do you buy chocolates? BUYING PATTERN Special occasions Once
every 25% day Once every day 33% 2-3 times a week Once a Once a week week Special
occasions 12% 2-3 times a week 30% 33% of people responded that they buy chocolate on daily
basis People buying chocolates 2 or 3 times in a week was 30%.This shows that the overall
buying patter of chocolate among customers is good and the market should has great potential. 3.
Where do you normally buy chocolates from? PREFFERED DISTRIBUTION CHANNEL 12%
9% Kirana shop Supermarkets Both 79% The buying patter of the customers shows that most of
the customers prefer to buy chocolate from small local kirana shops. That shows that in order to
succeed in the chocolate market the players have good relationship with the Kirana shops. 41
42. 4. Which brand of chocolates you prefer? MARKET LEADER 2% Cadbury’s 2% Nestle
& Cadbury 2% 9% Cadbury & Foreign Brands 10% Only Foreign Brands 57% 18% Amul
Nestle Nestle & Foreign Brands The customers most preferred choice of brand is Cadbury
followed by Nestle. Cadbury rules the Indian market and is customers 1st choice. 5. Would you
prefer to switch to another brand if the prices are high??? PRICE SENSITIVITY OF
CONSUMERS Indifferent 4% No No 43% Yes Yes 53% Indifferent It could be seen that Indian
customers are very much price sensitive. 53% of the customers responded that if the price of
chocolate is increased they might even change the brand they prefer. 42
43. 1. What is the first word that comes to mind (your first reaction) on looks of the below
chocolate? Nuts 21% 19% Ugly Crunchy 18% 27% Weired 15% Wont Buy it at all 27% of the
customers responded that they found the shape of picnic ugly and many even responded that
since the shape does not appeal to their eyes they will not buy it. 7. Now that you have seen how
the chocolate looks, would you like to buy it? Give your answer just based on its looks. 15% Yes
No 85% Even after taking a look at the package of the chocolate customers responded that since
the packaging was not appealing to them they will not buy the chocolate 43
44. 8. Your reaction on shape of the chocolates? · I don’t care; I am ok with uneven shapes!
5% 10% · I like bar shape (e.g.: 30% Dairy Milk, Kit Kat) · I like spherical shape (e.g.: Munch
55% balls, Gems) · I am OK with any shape, it should be even! The bar shape chocolate is the
most preferred choice of the customers followed by spherical shape. 9. Do you know the brand
of below chocolate? 25% Yes No 75% Most of the customers were not able to recognize the
Brand that manufactures Picnic nor were they able to recollect that such a brand was ever
launched in India. 44
45. 10. Rate your preferences in choice of chocolates on a scale of 1-5 (5 being highest rank)
PREFERENCES Packaging Taste 20% 28% Taste Brand Ingredients Ingredients Packaging 25%
Brand 27% On an average the scale of preference was as follows: 1st priority: Taste 2nd priority:
Brand 3rd priority: Packaging 4th priority: Flavors 5th priority: Sweetness/less sweet 6th
priority: Calories 7th priority: Price The customers prefer taste and they even go for brand
reliability. Brand and the taste of chocolate is the most important factor that influences
customer’s decision. 45
46. DATA ANALYSIS OF RETAILERS 1. Which brands of chocolates does the shop sell?
5% 23% 39% Cadbury’s Nestle Amul Imported brands 33% Most of the retailers sell Cadbury’s
brand. This shows the distribution network of Cadbury’s and their relationship of the company
across various distribution channels 2. Which Brand of Chocolate Sell the Most? 3% 12%
Cadbury’s Nestle 25% Amul 60% Imported Brands Cadbury’s is the most selling brand in the
 Indian market. It’s the most preferred choice of the customers and that the reason it’s the most
preferred choice of retailers. 46
47. 3. What are customer’s preferences in the choice of chocolates? Taste Sweetness 19%
22% Price Calories 15% 8% Brand of the chocolate 15% Packaging 18% 3% Ingredients/ flavors
According to the retailers customers give 1st preference to taste and another importance they
give to brand of chocolate. 4. Sales of chocolates are highest during which period? 12% Festival
Constant throughout the year 88% Festival season is the time when the sale of chocolate really
goes up. This shows that the customers buying trend is changing and they are moving from
traditional sweets to chocolates. 47
48. 5. Are there any customer complaints about the existing brands of chocolates? 5% Yes
No 95% Most of the customers do not have any complain with the chocolate they buy. They
have almost forgotten the Cadbury’s warm story and are almost satisfied with brand they buy. 6.
Do you know the brand of below chocolate? 12% Yes No 88% 88% of the retailers were not able
to recognize Picnic chocolate brand. This very well shows that the chocolate when it was
launched was not a successful product in the Indian market. 48
49. 7. Has the demand for chocolates risen in the past few years? 25% Yes No 75% Ever the
last period the sale of chocolate has risen. The product is getting acceptable by the customers and
is the buying pattern and taste of customers is changing. 49
50. RECOMMENDATION REASONS FOR FAILURE • Physical appearance o Its irregular
shape did not appeal to the customers. o Varying quantity of peanuts and raisins in each PICNIC
bar resulting into low standardization. o Due to irregular mold of the chocolate opening and
eating it was a problem. • Packaging o In the packaging the letter PICNIC was so large that it
covered most of the front side which was unlikely the Cadbury way to brand. o This resulted in
poor brand association with the customers. o Also the name Cadbury could not be clearly and
easily seen. o The word picnic was surrounded by what looked like a jam spoilage or may be
blood giving a negative impact about the product to the customers. • Pricing o The PICNIC bar
was priced at Rs.10 whereas its competitor Nestle sold Munch for Rs.5 and used aggressive
marketing. • Inconsistent taste o Due to inconsistent proportion of raisins and peanuts taste
varied from each picnic bar to bar. o Also due to this the chocolate could not meet the taste
requirement of some customers resulting in unsatisfied customers. 50
51. o Also peanuts and raisins were not properly fried resulting in varying taste. • Improper
communication about the value proposition to the target audience o Cadbury PICNIC chocolate
was not properly promoted by the company since it was not its flagship product. o Also lack of
association with brand ambassador when compared to its competitors resulted into low sales. o
Also the promotional campaign positioned it as an alternate to full diet which is contrary to the
mindset of an Indian customer. PROPOSED RE-LAUNCH OF PICNIC Rationale behind the re-
Launch • Considering the current competitive market and intense competition Cadbury can no
longer rely on its flagship product even though it faces low competition in the market • By re-
launching Cadbury PICNIC chocolate as an energy bar the product portfolio should be expanded
which can prove to be a flanking strategy for Cadbury. • Considering the average age
composition of the Indian population which lies around 25-30 Cadbury PICNIC chocolate if
launched as energy bar on the move it can have a huge target segment. • Also the company has a
state of art manufacturing unit for the production of Cadbury PICNIC bar which can be used
without causing additional cash outflow in infrastructure development. • Cadbury PICNIC
chocolate being rich with peanuts and raisins should be re- launched since it can fulfill energy
needs in a tasty way and its nutritional facts can be highlighted for this purpose. • Cadbury can
 use the re-launch to make competitors re-strategize also it can have the first mover advantage. •
There is a very low competition in the market for an energy bar at an affordable price. So,
Cadbury being the market leader in Indian chocolate industry with deep financial backing,
advanced technology, extensive distribution network and a trusted name can easily cover the
gap. 51
52. STP ANALYSIS Segmentation • Cadbury’s ‘Picnic’ is a mass market product. This
confirms that all demographic segments & geographic segments have the potential. • Customers
for chocolate can be distinctly identified by their behavior patterns (perceived benefit of the
product). Thus, behavioral segmentation is adopted as the basis of segmentation. • The market is
segmented as per the benefit sought by the consumers. • The market can be divided into
customers looking for – Fun & Relishing, Filling, Instant Energy, Socializing. Targeting • The
target chosen for re-launching this product are the consumers looking for Instant energy amidst
their fast-paced life. • Cadbury Picnic scoring high on nutritional facts and has energy giving
ingredients like peanuts, raisins it can initially target from teenagers to working class people. •
These would involve school-going children during their lunch breaks, college students, working
people under stress during the office hours. Positioning: • We propose to position Cadbury Picnic
Bar as “TOTAL ENERGY REPLENISHER ON THE MOVE” as a meal between the meals.
MARKETING MIX: Product: • Cadbury PICNIC should be showcased as an Instant Tasty
Energy Bar for all those who have the need for energy replenishment on the run. • Cadbury
Picnic should have a proper mould which would give all the Picnic Bars a uniform shape and
size making it much more acceptable. 52
53. • The Picnic Bars should also have a prefixed amount of peanuts and raisins which will
make the taste of the Picnic bar uniform and also the calories in each bar at the same quantity.
Place: • Cadbury PICNIC should make full utilisation of the highly efficient distribution network
to make sure that Cadbury Picnic taps the full potential market. • One more strategy that Cadbury
Picnic should use is a higher or an increase in the trade discount should be given. • Also Cadbury
Picnic has to concentrate more on the Tier I and Tier II cities where the people would actually
like a chocolate energy bar to fulfill their energy needs. Price: • The price of the energy bar
should be around 10 Rs. per bar which would not only be the same as that of the older price but
will also be in correspondence to the similar products available in the market today. Promotion: •
Cadbury Picnic has to go for an aggressive promotion and marketing campaign. • The traders
should be motivated to gain maximum shelf space for PICNIC leading to more visibility. •
Selection of a brand ambassador for the bar who should be such that there is an easy association
for the ambassador and the energy bar Picnic. Brand Ambassador like Akshay Kumar should be
roped in as he is considered a Man with of lot energy and has a good popularity among the
Indian Masses. • Heavy display of the Cadbury Picnic bar at Public Places by the use of banners,
billboards, dazzlers and kiosks. • Sponsoring of certain sports and other energy sapping events
should be done in such a way that would help in gaining a good presence in the consumers mind.
• Also advertisements should be displayed or telecasted during the primetime in order to get the
maximum viewership. 53
54. PROPOSED ADVERTISEMENTS FOR CADBURY’S PICNIC Advertisement 1 54
55. Advertisement 2 In the above shown advertisements the clear cut message of energy
could be seen. Popeye spinach is considered as a great source of energy for him and in the above
advertisements his Spanish is replaced with Cadbury’s picnic which now gives his instant energy
and is his new choice. 55
56. Advertisement 3 Part 1 56
57. Advertisement 3 Part 2 Advertisement 3 is an innovative advertisement, in which the 1st
page would be part 1 and it will open out to part 2 of the advertisement. Cadbury’s “Pappu Pass
Ho Gaya” was a Hit campaign and trying to leverage that same Advertisement “Pappu Pahalwan
ban Gaya” campaign could be launched. 57
58. CONCLUSION The Indian Chocolate Industry is a unique mix with extreme
consumption patterns, attitudes, beliefs, income level and spending. At one hand, we have
designer chocolates that are consumed when priced at even Rs 2500/kg while there are places in
India where people have never even tasted chocolates once. Understanding the consumer
demands and maintaining the quality will be essential. Companies will have to keep themselves
abreast with the developments in other parts of the world. PRICING is the key for companies to
make their product reach consumers’ pockets. Right pricing will make or break the product
SUCCESS. Economical distribution of the products will also be equally important. The
companies’ strategies should focus on driving sales through a right product mix, efficient
materials procurement, reduced wastages, increased factory efficiencies and improved supply
chain management. There’s an immense scope for growth of chocolate industry in India -
geographically as well as in the product offering. The Indian Chocolate Industry is destined to
grow and will do so in the future. 58
59. ANNEXURES CHOCOLATES TYPES OF CHOCOLATES Depending on what is
added to (or removed from) the chocolate liquor, different flavors and varieties of chocolate are
produced. Each has a different chemical make-up; the differences are not solely in the taste. 1.
Unsweetened or Baking chocolate is simply cooled, hardened chocolate liquor. It is used
primarily as an ingredient in recipes, or as a garnish. 2. Semi-sweet chocolate is also used
primarily in recipes. It has extra cocoa butter and sugar added. Sweet cooking chocolate is
basically the same, with more sugar for taste. 3. Milk chocolate is chocolate liquor with extra
cocoa butter, sugar, milk and vanilla added. This is the most popular form for chocolate. It is
primarily an eating chocolate. CATEGORIES OF CHOCOLATES Chocolate market can be
segmented as follows: Large units bars/ slabs, • Count lines, • Panned varieties, • Small value
added units. Confectionery products can be categorized as • Hard boiled sugar candies, lollipops,
jellies • Toffees 59
60. • Chewing candies • Breath freshners, digestives, throat relievers Gum based products are
• Chewing gum • Bubble gum Chocolates and Confectionery Industry Chocolates Sugar
confectionery Gum based Bars/ Slabs Hard boiled Chewing gum Count lines Toffees Sugar
coated chewing gum Panned (Gems) Soft chew Bubble gum Eclairs Jelly candies Assorted
Deposit candies Lollipops Mints, etc. CHOCOLATE SEGMENTATION Chocolate market can
be segmented into moulded chocolates, count chocolates, panned chocolates, eclairs and assorted
chocolates. Type of chocolates % Share in chocolate market Moulded 37% Count 30% Eclairs
20% Panned 10% Others 3% Others Panned 3% 10% Moulded Moulded Count Eclairs 37% 20%
Eclairs Panned Count Others 30% 60
61. Moulded chocolates, like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium,
Nestle Milky Bar, is the largest segment accounting for more than 1/3rd of the market. Count
lines (5 Star, Perk, Kit Kat, Picnic) are the second largest segment accounting for 30% of the
volumes. The Count line segment has been growing at a faster pace during the last three years
driven by growth in Perk and Kit Kat volumes. Panned products include Cadburys' Gems,
Nutties, and Nestle's Marbles. In panned segment, Cadbury dominates with over 95% market
share. Eclairs (droplets of hard caramels with a soft chocolate fillings) are a low unit priced
product. Cadbury Eclairs was launched in 1972. Parle Products launched Melody in 1991. Nestle
 is a recent entrant in the segment. Nutrine's Eclairs has done extremely well in the market.
FORM OF CONSUMPTION a. Pure Chocolates b. Toffees c. Cakes & Pastries d. Malted
Beverages e. Wafer Biscuits & Baked Biscuits f. Chocolate Desserts 61
62. MARKET SURVEY FOR CHOCOLATES QUESTIONNAIRE FOR CONSUMERS
Name:
……………………………………………………………………………………………………
…………………………………….. Age :
………………………………………………………………………………………………………
…… ……………………………….
Gender………………………………………………………………………………………………
… ………………………………………. Questions List 1. Do you like to eat chocolates? • Very
much • Okay Okay • Not much • Not at all 2. How frequently do you buy chocolates? • Everyday
• 3-4 times a week • 1-2 times a week • 1-2 times a month • Never 3. Where do you normally buy
chocolates from? • Your local kirana shops • Supermarkets like Big Bazaar 4. Which brand of
chocolates you prefer? • Cadbury’s • Nestle & Cadbury • Cadbury & Foreign Brands • Only
Foreign Brands • Amul • Nestle • Nestle & Foreign Brands 5. Would you prefer to switch to
another brand if the prices are high? 62
63. • Yes • No • Indifferent 6. What is the first word that comes to mind (your first reaction)
on looks of the below chocolate? • Nuts • Ugly • Crunchy • Weird • Won’t buy it 7. Now that
you have seen how the chocolate looks, would you like to buy it? Give your answer just based on
its looks. • Yes • No 8. Your reaction on shape of the chocolates? • I don’t care; I am ok with
uneven shapes! • I like bar shape (e.g.: Dairy Milk, Kit Kat) • I like spherical shape (e.g.: Munch
balls, Gems) • I am OK with any shape, it should be even! 9. Do you know the brand of below
chocolate? • Yes • No 63
64. 10. Rate your preferences in choice of chocolates on a scale of 1-5 (5 being highest rank)
• Taste • Sweetness • Price • Calories • Brand of the chocolate • Packaging • Ingredients/ flavours
64
65. MARKET SURVEY FOR CHOCOLATES QUESTIONNAIRE FOR RETAILERS
Name of the
Shop………………………………………………………………………………………………
…… ……………………
Location……………………………………………………………………………………………
…… …………………………………….. Questions List 1. Which brands of chocolates does the
shop sell? • Cadbury’s • Nestle • Amul • Imported Brands 2. Which Brand of Chocolate Sell the
Most? • Cadbury’s • Nestle • Amul • Imported Brands 3. What are customer’s preferences in the
choice of chocolates? Taste Sweetness Price Calories Brand of the chocolate Packaging
Ingredients/ flavors 4. Sales of chocolates are highest during which period? • Constant
throughout the Year 65
66. • Festival Season 5. Are there any customer complaints about the existing brands of
chocolates? • Yes • No 6. Do you know the brand of below chocolate? • Yes • No 7. Has the
demand for chocolates risen in the past few years? • Yes • No 66
67. BIBLIOGRAPHY References Websites
http://www.candysnob.com/archives/2009/02/review_cadbury_picnic_bar_from.php •
http://www.hinduonnet.com/businessline/iw/2000/10/01/stories/0201b053.htm •
3.http://budgetwithet.economictimes.indiatimes.com/Economic_Survey/Your_Say/For
um/Impact_on_You/Young_India_to_reap_demographic_dividends/esarticleshow/28 23066.cms
• http://www.icmrindia.org/casestudies/catalogue/Marketing/Reinventing%20Cadbury% 20-
%20Marketing%20Case.htm • http://www.chocablog.com/reviews/cadbury-picnic/ •
http://www.domain-b.com/news_review/199908aug/19990815newsa.html •
http://www.thehindubusinessline.com/2006/01/17/stories/2006011701531100.htm •