Strategic Management of Cadbury

1.0 PREFACE

Despite the fact that Indians have a strong affinity for sweets, the size of the domestic

confectionery is small on the account of traditional consumer tastes and habits. The chocolate

market in India is a niche market penetrated largely in urban areas and per capita

consumption is low compared to those in developed countries of the West. Despite the

economic growth, a very large proportion of India’s over 1 billion population continue to live

in extreme poverty. There is serious disparity between the urban and rural population.

The confectionery market in India has undergone major changes and growth especially since

the opening up of the economy, this has resulted in its steady growth and gradual

transformation from a commodity market to a branded products market dominated by

multinational companies.

The Confectionery industry will never cease to lose its popularity; In fact it is arguably in the

midst of the best growth cycle in its history. In a country like India where majority of people

have a sweet tooth and find every reason to celebrate any occasion with sweets, the

confectionery industry is bound to be the largest and most popular among the food processing

sectors in the country. If one hast to define the term ‘Confectionery’, it would be the category

of food items that are rich in sugar. The confectionery industry is broadly divided into

chocolate confectionery, sugar confectionery and gums. In India this industry is further

divided into chocolates, hard boiled sugar candies, lollipops, lozenges, & chewing  bubble

gums. 

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2.0 INTRODUCTION & HISTORY

2.1 About the F&B Sector

Food and Beverage (F&B) segment is one segment, which would get affected most with the

increase in retail players. Among all the retail segments, Food and Beverage (F&B) is the one

preferred by almost all the retail players. With around 63% of the share, this category

accounts for a bulk of the Rs 14110 billion retail market in India. However, with a turnover

of just Rs 70 billion, the category accounted for 13% of the organized retail market and a

minuscule 1% of the total F&B retail market. This largely unexploited potential has made a

number of players like Subhiksha, Food Bazaar, Spencer’s, Reliance Fresh, and More etc. to

enter in the lucrative segment.  

The Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes,

beliefs, income level and spending.

2.2 Confectionery Market in India:

The organized confectionery segment in India segment is pretty much dominated by the

multinational companies; however, domestic players are gradually increasing their foothold

in the market.

Cadbury India, Ltd. is by far the market leader, followed by Perfetti Van Melle India, Ltd.

and Nestle India, Ltd. Other important players are Lotte India Ltd, Nutrine Confectionery

Co Pvt Ltd, CandicoIndia Ltd, Parle Products Pvt Ltd, Wrigley India Pvt Ltd, ITC

Foods, Hindustan Lever Ltd and CAMPCOLtd.  Since import restrictions were eased in

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2001, imports of confectionery products have grown rapidly. Retail chocolates and sugar

confectionery account for the greatest share of total confectionery imported into India.

The organised market for confectionery in India is valued at Rs 2,000 crore. The contribution

from rural India is estimated at 48 per cent and the balance 52 per cent from urban India.

With demand for high-end confectionery going up, India is becoming an attractive place for

foreign investments with large multinational companies entering the Indian chocolate &

confectionery market. These foreign brands are entering the industry either through direct

imports or by acquisitions of existing confectionery companies. This will indirectly help in

opening up new avenues in market and also help in exploring possibilities to bring up new

products in this country.  With the entry of new MNCs in India, there is tremendous potential

for exports of these products.

The history of Cadbury as a manufacturer of chocolate products in Birmingham dates back to

the early 19th century, when John Cadbury opened a shop in the centre of the city, trading as

a coffee and tea dealer. Soon a new sideline was introduced - cocoa and drinking chocolate,

which he prepared himself using a mortar and pestle. The founding of the Cadbury business

dates back to 1831 when John Cadbury first made cocoa products on a factory scale in an old

malt house in Crooked Lane, Birmingham. In 1847 the business moved to larger premises in

Bridge Street, which had its own private canal spur linking the factory via the Birmingham

Navigation Canal to the major ports of Britain. Business continued at the Bridge Street site

for 32 years and by 1878 the workforce had expanded to 200, so more space was needed.

This heralded the move to Bournville and the building of what is now one of the largest

chocolate factories in the world. John Cadbury retired in 1861 handing over the business to

his eldest sons Richard and George. It is to their leadership that the success of the enterprise

is owed as the company prospered. The origin of the group goes back over two centuries.

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They are respectful of the social and natural environment in which theyoperate; supportive of

our consumers, customers and colleagues; proud of our heritage, and passionate about

success. This passion for success led to the company expanding its business overseas and

thus bringing the flavour of chocolate to people and tickling their taste buds. Cadbury

expanded their business to many countries like Australia, America, Canada, India etc. When

Cadbury Dairy Milk chocolate was first introduced in the early 1900s it made an immediate

impact quickly becoming the market leader. The success story has continued. It is still the top

selling chocolate brand. As an international brand Cadbury Dairy Milk carries the same

distinctive image all over the world. Wherever you buy a bar of Cadbury Dairy Milk the pack

design will be exactly the same, only the language will be different.

2.3 Cadbury India

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% the chocolate category and the brand

Cadbury Dairy Milk (CDM) is considered the "gold standard" for chocolates in India. The

pure taste of CDM defines the chocolate taste for the Indian consumer.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For

over two decades, we have worked with the Kerala Agricultural University to undertake

cocoa research and released clones, hybrids that improve the cocoa yield. Our Cocoa team

visits farmers and advises them on the cultivation aspects from planting to harvesting. We

also conduct farmer meetings & seminars to educate them on Cocoa cultivation aspects. Our

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efforts have increased cocoa productivity and touched the lives of thousands of farmers.

Hardly surprising then that the Cocoa tree is called the Cadbury tree! 

2.4 Milestones Of Cadbury’s India History

1948

- The Company was Incorporated on 19th July, as a private limited company under the name

of Cadbury-Fry (India) Private Limited and commence business soon thereafter.

Manufacturing facilities were setup gradully.

1964

- Through its subsidiary, Induri Farm Ltd., the Company had set up facilities near Pune to

breed cattle that would give improved yield of milk at economic feeding costs.

1967

- Cadbury introduced the `Five Star and Gems' chocolates in 1967 and 1968 respectively.

1977

- The name of the Company was changed from Cadbury-Fry (India) Pvt. Ltd., to Cadbury

India Pvt. Ltd., on 7th June. It was converted into a public limited company on 11th June.

An agreement was entered into with Cadbury Overseas Ltd., (COL) U.K., on 3rd May, for

technical services concerning new products and processes.

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1978

- The Company also received a letter of intent for setting up manufacturing facilities in

Jammu & Kashmir for the production of apple juice concentrate. Approval of Government

was received for technical collaboration with Bulmer's of the U.K.

1979

- With a view to upgrading the present technology, improve quality of the products, the

Company proposed to acquire technology and process know-how from Cadbury Schweppes

plc. (CSP), who offer the said services only to their wholly owned subsidiary companies.

1982

- On 17th December, the name of the Company was changed from Cadbury India Ltd., to

Hindustan Cocoa Products Ltd., consequent to 60% of Its shares being held by the Indian

public.

1995

- `Perk' was launched from its Malanpur plant. Towards the end of 1996, the Company has

launched a new range of sugar confectionery, `Googly', a trangy, fizzy fruit flavoured candy

in Chennai under the brand name `Trebor'.

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1998

- Cadbury's launches Picnic: Cadbury India Ltd on March 23, announced the launch of

Picnic in Karnataka. It is being made at a specially imported new line in the state-of-the-art

factory near Gwalior.

- Cadbury India is celebrating its golden jubilee in India. To commemorate the occasion, the

company has organised a series of events for the employees and business associates in

Mumbai, the branch offices and plant sites.

Cadbury House, its corporate headquarters at Pedder Road in South Mumbai.

2000

- Cadbury's has introduced Perk Slims, a slimmer version of the wafer chocolate.

- The Company has relaunched Perk, its chocolate-coated wafer, it has four new layers

covered in Cadbury Dairy Milk Chocolate.

- Cadbury India Ltd. has launched a range of gift packs for Diwali.

- The Company had entered into a Memorandum of understanding on July 5th, to sell its

immovable property at Colaba, Mumbai.

2001

- Mathew Cadbury will take over as the new managing Director of the Rs. 511-crore

Chocolate confectionery major, Cadbury India Ltd. With effect from February 5.

- The Company has launched Sweet Nothings range of gift packs for Valentine Day.

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2002

-Cadbury SchweppesPlc acquires 39.34% stake in its Indian subsidiary Cadbury India Ltd.

-Cadbury Scheweppes Pcl developed a new phenomenon allowing its consumers to define its

brand profitle.

-Cadbury's market share has dipped to 70.7% due to competition.

-Cadbury India tapping unconventional marketing channels like non-retail chain to drive

their market expansion.

-The Maharashtra Food and Drugs Administration seizes stocks and charges cadbury with

mis-branding.

2003

-Cadbury India launches Cadbury's Heroes, which is a blend of company's leading brands.

-Cadbury India relaunched its flagship brand 'Cadbury Dairy Milk'.

2004

-Amitabh Bachchan new brand ambassdor for Cadbury Dairy Milk

2005

-Cadbury Schweppes Asia-Pacific has announced that Mr Bharat Puri, Managing Director of

the Indian sub-continent, has been appointed Commercial Strategy Director for Asia-Pacific

and will be based in Singapore

2007

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- Cadbury India has rolled out a wafer-based chocolate called 'Ulta Perk' nationally. 'Ulta

Perk' has been test marketed in southern states like Tamil Nadu and Karnataka for over 6

months and is now being launched in other parts of India. The product is targeted

towards teenagers and youth. 'Ulta Perk' will be the second product offering from Cadbury in

the chocolate-wafer segment, after the “Perk” brand.

2.5 CSR

On the Corporate Social Responsibility (CSR) front Cadbury continues to support The Sri

Aurobindo Rural Village Action Movement (SARVAM) community project in the coastal

region of Pondicherry, India; it also partner with Vatsalya Foundation, an NGO working with

underprivileged street children in Mumbai. To encourage employees commitment to grow

community value and make a difference to the community, it launched

Touch a Life, a payroll giving program enabled by Givelndia. To promote cocoa research in

India, it has undertaken an extensive Cocoa research project with the Tamil Nadu

Agricultural University (TNAU).

As part of the cocoa outreach they planted 50 lakh seedlings in the cocoa growing areas of

Kerala, Andhra Pradesh and Tamil Nadu.

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3. PRODUCT LINE

3.1 Chocolate

Dairy Milk

Cadbury Dairy Milk encapsulates an enormous breath of emotions, from shared values such

as family togetherness, to the personal values of individual enjoyment. It stands for goodness.

A moment of pure magic!

Cadbury Dairy Milk (CDM) entered the Indian market in 1948, and since then for consumers

across India, the word Cadbury has become synonymous with chocolate. CDM remains at the

top of the Indian chocolate market not only because of its most delicious, best tasting

chocolate but also because of its memorable communication. 

Cadbury Shots

With a large section of Indians still choosing traditional sweets (Mithai) over chocolates, an

offering was required that would seed chocolate consumption amongst non-users and help

increase consumption frequency amongst fringe chocolate users. Also, even at its lowest

price point, Cadbury chocolate was still inaccessible to majority of the rural population.

Therefore, in an effort to upgrade the Candy and Mithai eating consumers to chocolate,

Cadbury launched CDM Shots in 2008. An innovative format of sugar coated chocolate made

to withstand the rural temperature fluctuations.

Positioned as ‘chocolate laddoo’ and priced at Rs. 2 for 2 pieces, the attempt was to introduce

the product to consumers as the perfect value-for-money accompaniment for their small

celebratory occasions.

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Cadbury Silk

Cadbury Dairy Milk has captured the heart of Indian consumers for over six decades; but

there was room for a more premium entrant in the category. And enter CDM Silk.

Most CDM lovers thought that nothing could taste better, but CDM Silk came as a welcome

surprise! It is creamier, smoother, and tastier. Its dome shaped cubes pack more chocolate

and hence provide a superior eat experience.

Launched in January 2010, with a tantalizing taste that tempts the taste buds, CDM

Silk delivered an exquisite chocolate eating experience in the Indian market.

Bournville

Hailed as Cadbury’s answer to the emerging market of luxury chocolates, Cadbury

unveiled Bournville – the Indian formula for dark chocolate in 2009.

5 Star

With over 40 years of being a favorite of the Indian consumer, 5 Star still continues to be

what it was back then – a novel concept in the chocolate world!

Launched in 1969, 5 Star soon became the star of every refrigerator and pocket; people could

not resist biting into one. What made 5 Star so irresistible was the unique combination of

chocolate, caramel, and nougat that set a new revolution in the making of chocolates. Never

before had people bitten into something so chocolaty and deliciously chewy at the same time!

Gems

Cadbury is known to make chocolates with a difference and Gems is yet another unique

offering. What makesGems different is the way the chocolate has been designed; a little

button of chocolate covered with colorful candy shell with attractive packaging.

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Quite predictably, Gems became a big hit given its unique taste and shape. Having grown up

with the brand, a lot of teens and adults consume Gems as well.

Perk

Perk is neither a chocolate nor just another snack to be missed; it is a delightful combination

of both! Come 1996 and Cadbury had one more surprise - Perk. 

Perk was launched as ‘Anywhere. Anytime’ snack – a perfect solution for a quick snack,

which made both chocolate lovers and the frequent snackers happy.

3.2 Beverages

CADBURY BOURNVITA

Cadbury Bournvita is among the oldest brands in the Malt Food category with a rich heritage

and has always been known to provide the best nutrition to aid growth and all round

development.  Launched in 1948, throughout its history, Cadbury Bournvita has continuously

re-invented itself in terms of product, packaging, promotion & distribution. The Cadbury

lineage and rich brand heritage has helped the brand maintain its leadership position and

image over the last 60 years.

The brand has been an enduring symbol of mental and physical health ever since it was

launched. This layered with the great Cadbury chocolate taste has made the brand distinct

from other offerings. It is hardly surprising then, that Bournvita enjoys a major presence in

the Malt Food market.

It is a universal truth that mothers attach a lot of emotional importance to nourishment while

bringing up their children. However, children always look out for the tastiest option to make

their daily dose of milk more enjoyable.

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Cadbury offers two options to capture this appeal: Cadbury Bournvita, with its popular

chocolate taste, and its latest offering, Cadbury Bournvita 5 Star Magic, leveraging the rich

chocolate and caramel flavour ofCadbury 5 Star.

TANG

The world’s favorite powdered beverage –Tang, is now available in India the delicious and

refreshing flavors of Orange & Lemon. Launched in March 2011, the combination of yummy

taste and micronutrients such as Iron, Vitamin A B & C makes it a favorite with moms.  At

an affordable price, mothers are able to make a deliciously refreshing, nutritious and

convenient drink for their kids.

One of our power brands in India, Tang is right on trend as it delivers a winning bundle for

consumers - affordability, convenience, nutrition and great fruit taste! Tang.

Sold in more than 30 countries, Tang, is the latest brand from the Kraft Foods portfolio to

enter the “billion dollar” brands club.

3.3 Biscuits

Oreos

Launched in India in March 2011 the delicious combination of dark chocolate biscuit and

vanilla cream was first introduced to the world in 1912. That original formula was so perfect

that it has hardly been modified since. Each year more than 7.5 billion Oreo Biscuits are

eaten, making it the world’s No. 1 biscuit. Paired with a glass of milk, it is the perfect snack.

Children across the world teach their parents the fun way to eat Oreo – twisting the biscuit

open, licking the cream, and then dunking the biscuit in milk. It’s no wonder then, that

families the world over, come together over this tasty snack.

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3.4 Candy

Eclairs

Cadbury Éclairs has been present in India since 1971 and has remained a favourite with

adults and kids alike. The credit for making éclairs, goes to an English confectionary firm

which devised this delicious formula in the 1960s. This tasty wonder with indulgent

chocolate wrapped in soft, chewy caramel came to Cadbury in 1971, when Cadbury took over

this confectionary firm. In 1994 the brand took on the purple and gold packaging which has

been its trademark since then.

The brand has remained a favorite and its franchise in India has grown manifold since then.

In the year 2009,Cadbury Éclairs was relaunched with an enriched chocolate center The

chewy caramel was also made softer improving the product significantly.

Cadbury Éclairs is also available in a pocket pack which is preferred by teenagers and heavy

consumers who find the brand irresistible.

In 2011, Cadbury Éclairs heralded the new year with another exciting addition to its fold -

the new Cadbury Eclairs Rich Brownie. The luscious new candy contains an indulgent

brownie flavour in its caramel and pureCadbury Dairy Milk chocolate in its centre. The new

addition has already become a favorite of consumers who love the great flavour and the

superior chocolate gush you experience as soon as you bite into the candy

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Halls

Halls was first launched in India in 1968 and  soon established itself as a ‘therapeutic’ candy

competing in the cough lozenge market. Halls came into the Cadbury fold in 2003 as part of a

global merger with Adams Confectionery.

Halls has had a colorful advertising history in India and was in fact, one of the earliest brands

to advertise on television in India. In the 1980’s, ads featuring Meenakshi Sheshadri and

later, Vijeta Pandit on its unique‘vapour action’ formula with a classic Halls Jingle were

aired which established the brand firmly in the market. In the 90’s, Halls advertising adopted

a different take with its ‘Traffic Jam’ advertising where Halls restores order to a situation of

chaos. The early 2000’s saw Halls advertising on the ‘refreshment’ platform. Over the

years Halls has been strongly positioned on the `soothes sore throat’ benefit in the consumers

mind.

Halls continues to be one of the leading mint brands in India even in the changed competitive

context.

3.5 Gum

Bubbaloo

Bubbaloo took its first steps in the international confectionery market in the year 1984. With

its launch in the Indian market in 2007, the definition of bubble gum underwent a juicy

change!

Bubbaloo is synonymous with flavored fun in bubble gums! Bubbaloo stands out because of

its unique flavored liquid filling. There is a Bubbaloo for everyone, and that is why bubble

gum fans will continue loving it for years to come!

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4. THE KRAFT CADBURY DEAL

In 2009, US food company Kraft Foods launched a hostile bid for Cadbury, the UK-listed

chocolate maker. As became clear almost exactly two years later in August 2011, Cadbury

was the final acquisition necessary to allow Kraft to be restructured and indeed split into two

companies by the end of 2012: a grocery business worth approximately $16bn; and a $32bn

global snacks business. Kraft needed Cadbury to provide scale for the snacks business,

especially in emerging markets such as India. The challenge for Kraft was how to buy

Cadbury when it was not for sale.

Kraft itself was the product of acquisitions that started in 1916 with the purchase of a

Canadian cheese company. By the time of the offer for Cadbury, it was the world’s second-

largest food conglomerate, with seven brands that each generated annual revenues of more

than $1bn.

Cadbury’s own defence documents stated that shareholders should reject Kraft’s offer

because the chocolate company would be “absorbed into Kraft’s low growth conglomerate

business model – an unappealing prospect that sharply contrasts with the Cadbury strategy of

a pure play confectionery company”.

Little did Cadbury’s management know that Kraft’s plan was to split in two to eliminate its

conglomerate nature and become two more focused businesses, thereby creating more value

for its shareholders.

The Cadbury team determined that a majority of shareholders would sell at a price of roughly

830 pence a share. A deal was struck between the two chairmen on January 18 2010 at 840

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pence per share plus a special 10 pence per share dividend. This was approved by 72 per cent

of Cadbury shareholders

In any takeover, especially a cross-border deal in which the acquired company is as well

known as Cadbury was in the UK, the transaction will be front-page news. In this case, it was

the lead business story for at least four months. Fortunately, this deal had no monopoly or

competition issues, otherwise those regulators could also have been involved.

But aside from any regulators, most other commentators will largely be distractions. It is

important for the acquiring company’s management and advisers to stay focused on the deal

itself and the real decision-makers – the shareholders of the target company.

As this deal demonstrates, these shareholders may not (and often will not) be the long-term

traditional owners of the target company stock, but rather very rational hedge funds and other

arbitrageurs (in Cadbury’s case, owning 31 per cent of the shares at the end), who are swayed

only by the offer price and how quickly the deal can be completed.

What The Takeover Has Brought For Cadbury India Ltd.

Today, Two years after US-based Kraft Foods acquired Cadbury Plc globally, sales in its

Indian business have grown the fastest ever last calendar as the firm aggressively ramped up

distribution and increased advertising spent on both existing Cadbury brands and new

launches from Kraft portfolio.

Between January-September 2011, Cadbury India's sales grew 40%, thanks to the successful

launch of world's largest selling cookie Oreo in March as well as double digit growth of most

existing Cadbury brands

"The fact that our top line has accelerated by so much is frankly our best performance of

growth in the history of the company," says Cadbury India Managing Director Anand

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Kripalu, who is also group president for South Asia and Indo China. The company has moved

from a growth of 20%-23% each year before 2009 to over 30% in 2010, and 40% in the first

nine months of 2011, he says.

Peer sales including HindustanUnilever, Nestle, Britannia and GlaxoSmithKline Consumer

have grown between 15%-20% during the same period.

And Cadbury managed this growth on top of a 30% jump in the previous year.

It shows that at least the Indian operation is getting a grip on the integration. Since 2010,

Cadbury India has brought in two Kraft brands-biscuits with Oreo and fruit juices and

beverages with Tang. While Tang is manufactured at Kraft's Hyderabad plant, Punjab-

based Bector Foods makes Oreo. Both segments call for significant investments, particularly

in the Rs 14,000-crore biscuit category, which is increasingly getting competitive.

Cadbury sees great potential in biscuits, the fastest growing processed food segment in India.

According to a Nielsen study, the category grew at 17 per cent in 2010; but the per capita

consumption remains low, indicating a big opportunity to grow.

Post launch Oreo’s global ‘Twist, Lick, Dunk’ (TLD) communication broke across media —

including television, print, radio, below-the-line and digital. “Our television campaign aims

to highlight the bonding moments between a father and child, as they indulge in child-like

delight while eating an Oreo and performing the ‘Twist Lick Dunk’ routine,” says

Chandramouli Venkatesan, director, snacking & strategy, Cadbury India.

Oreo has used the TLD proposition in its communication in over 107 markets for nearly a

hundred years. Says Venkatesan, “We want our brand to encourage fathers and mothers to

spend quality time with their children.” Oreo’s maiden television campaign in India broke

during the ICC World Cup 2011 to grab maximum eyeballs.

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5.0 Startegy

5.1 A Look Into Cadbury’s Marketing Strategy

One will often find oneself smiling at a television screen/ radio jingle right after viewing a

commercial by the sweet house of Cadbury. Be it their wholesome approach to touching the

emotional chord in its consumers hearts, or be it the fact that it has been India’s premier

chocolate since times immemorial, Cadbury sure has an innovative and ever endearing

approach to all its marketing campaigns.

It comes as no surprise then, that after a brief incident of fall in quality through the worms

episode, Cadbury was quick to relaunch its campaign and PR through various approaches

including the introduction of Amitabh Bachchan as its brand ambassador, the face of mass

love in India.

5.2 How A Smart Marketing Strategy Won Over Consumers After The

Worms Incident

In 2003, 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.

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.

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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

CNBC-TV18, “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.

Remedy:

A focused and intense communications program was implemented over the next six months

to rebuild credibility and restore confidence among the key stakeholders. The results:

In media, the key message that infestation was a storage-linked problem, not manufacturing

related,found widespread acceptance. Across the board, media carried Cadbury’s point-of-

view on the issue.

Sales volumes climbed back to almost to pre-crisis levels eight weeks after the launch of

new packaging – a concrete step taken by the company to minimize the incidence of

infestation. This reflected consumer confidence in the brand and the company.

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There was significant upward movement in ratings amongst consumers on parameters like

company’s image, responsiveness of company and behavioral parameters like intention to

buy Cadbury chocolates.

The last two helped to restore faith in the corporate brand among the trade and employees

.

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5.3 Marketing Challenges and Objectives

The incident came close on the heels of a cola controversy where a scientific laboratory

declared colas unsafe due to high levels of pesticide. The jury was still out on that issue and

so this incident acquired political overtones with parties decrying Cadbury as an irresponsible

MNC. Andrea Dawson- Shepherd, Global Corporate Communication Counsel, Cadbury

Schweppes called it ‘the worst worm infestation-related crisis anywhere in the world’.

The immediate objective was to get the following key messages across:

Infestation could never occur at the manufacturing stage

The problem was storage linked; this without alienating trade channels

Cadbury Dairy Milk continued to be safe for consumption

The challenge was to restore confidence in the key stakeholders (trade and employees,

particularly salespersons) and build back credibility for the corporate brand through the same

channels (the media) that questioned it.

Strategy:

It was decided from the start to address the issue head-on and take whatever steps were

necessary to restore confidence. Having historically maintained a low profile with the media

and let its brands and its performance speak for it, the company began to cultivate

relationships with the media and turn it into an ally and a credible, independent endorser to

rebuild stakeholder confidence.

Phase 1: Presenting Cadbury’s view (October-December 2003)

The day the crisis broke, the agency set up a media desk to ensure that no media query went

unanswered. From Day 1 every story carried Cadbury’s point of view.At the first media

briefing organised by the agency, the Cadbury’s Managing Director addressed consumer

concerns with the following key messages:

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Infestation is a storage linked problem.

It is safe to eat Cadbury chocolates.

Consumers must exercise the same care in purchasing a chocolate as they would when

buying any food item.

At a second media briefing about two weeks after the first incident was reported, Cadbury

announced significant steps to restore consumer confidence. Called Project Vishwas (Trust),

this entailed:

A retail monitoring and education program undertaken on a war footing to address storage

problems.

Significant packaging changes to ‘reduce dependency on storage conditions as much as

possible’ –to be launched within two months.

An Editorial Outreach program with 31 media editors across 5 most affected cities was

orchestrated by the agency to get senior Cadbury spokespeople to share their version of

events in one-on-one meetings. The trade, and consumers, were reached nationally through a

press ad ‘Facts about Cadbury’, released in 55 publications in 11 languages. It presented facts

about Cadbury manufacturing and storage and highlighted corrective steps being taken by the

company. This was a public statement of the corporate stand on the issue. The trade was

supported with posters and leaflets to help them share Cadbury point-of-view with their

customers. A response cell with a toll free number and an e-mail id were put in place to give

trade a means to directly contact the company with any issues they faced- reinforcing the

company’s commitment to quality. From the beginning, a series of town hall meetings were

held with senior managers addressing employees

to ensure they were updated on the proactive actions being taken by Cadbury to manage

media, help trade and ensure future occurrences of such incidents were kept to the minimum.

Regular email updates from the MD were also used to communicate the company’s point of

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view and to ensure consistency of messaging since employees are the company’s

ambassadors.

Phase 2: Packaging change (January- March 2004)

The new ‘purity sealed’ packaging was launched in January 2004. 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.This entailed double wrapping for maximum protection to reducing the possibility

of infestation. This was a big step involving investment of millions of dollars and getting on

stream a production process in 8 weeks, that would normally take about six months. To

communicate these significant changes the company was making, Cadbury brought in a

brand ambassador to reinforce the credibility that the company had demonstrated through its

actions. Amitabh Bachchan, a legendary Indian film star, was chosen, as he embodied the

values of Cadbury as a brand and connected with all of India – mothers, teenagers, children,

media persons and trader partners.

A media conference was organized in Mumbai to launch the new packaging. And this was

followed with press conferences in cities worst affected by the crisis – Pune and Nagpur in

Maharashtra and Cochin in Kerala. In these conferences, media persons were encouraged to

compare the old and new packs with an innovative comparison kit and experience the

significant changes in packaging first hand. An audio visual with a message from Amitabh

Bachchan, was beamed to build credibility and excitement. Given that much of the damage

had come from television coverage, a video news release with packaging shots and factory

shots was given to television channels to control the visual messaging. Simultaneously, senior

Cadbury spokespersons had one-on-ones with the Editors of the Outreach program initiated

in November 2003.

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Another audio visual with a message from the star was used in a series of sales conferences to

enthuse and reassure salespersons. And this helped to rebuild confidence in the salespersons

to go and sell the product more convincingly and confidently to the trade. The announcement

of the new pack was done through a testimonial advertisement on TV called ‘Sincerity’. It

consciously addressed the problem head-on, with the superstar talking straight into camera

about how before doing the ad he first convinced himself about the quality of Cadbury

chocolates by visiting the factory. Consumers respected the brand for not skirting the issue

but acknowledging it and giving a solution to the problem This was Public Relations using a

TV Commercial to get key messages across!

Results:

Media Coverage: The media relationship effort clearly helped in making media accept that

the infestation was genuinely caused by storage-linked problems. From the start, all media

reports carried the Cadbury’s point-of-view. Bad news automatically gets great coverage.

However, the agency helped Cadbury get a total of 378 clips in over 11 languages covering

the new packaging, and its benefits, in January 2004. The Business Today clip is a typical

representation of the changed media perception and a better understanding of the problem

over a three month period.

Sales: Sales volumes, which declined drastically between week 1 and week 10 of crisis,

climbed back almost to the pre-incident levels by week. within 8 weeks of introduction of

new packaging and communication. This is a clear reflection of restoration of consumer and

hence trade confidence in the corporate brand.

Image: There was significant upward movement in ratings amongst consumers on

parameters like company image, responsiveness of company and behavioral parameters like

intention to buy Cadbury chocolates. While the new product introduction and advertising

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had their role to play in the changing consumer perceptions, the media’s positive coverage

and the trade’s positive pre-disposition played a huge part in helping Cadbury regain its

reputation in the market.

5.4 Understanding the Marketing Mix of Cadbury Dairymilk

In the early days, the brand had a huge fan following among kids. In order to build stronger

appeal among older age groups, the brand re-positioned itself through the classic ‘Real Taste

of Life’ campaign in 1994. The campaign positioned Cadbury Dairy Milk as the chocolate

that awakened the little child in every grown up and very soon, both teenagers and adults,

were hooked on to this bar of pure magic.

With the launch of the Rs. 5 pack in 1998, CDM became more affordable and hence more

accessible for the masses. The ensuing positioning of ‘Khaane Waalon ko khaane ka Bahana

Chhayie’ made consumption into a joyful, social occasion.

In 2004, the `Kuch Meetha Ho Jaaye’ campaign was launched, seeking to

increase CDM consumption by making it synonymous with traditional sweets (Mithai). With

Amitabh Bachchan as the face and voice of the brand, the campaign went on to become a

huge success. People could relate to the commercials that were aired to promote Cadbury

Dairy Milk. How many can forget the `Pappu Pass Ho Gaya’ commercial? The country

cheered on as Pappu fell in love in the Pappu Love Test commercial. Then came`Miss

Palampur’ and the country celebrated the beauty pageant with a difference. The`Kenya’

commercial that was aired in 2008 celebrated the spirit of cricket and that of true

sportsmanship. In 2009, we aired another commercial under the `Kuch Meetha Ho

Jaaye’ platform, called the `Pay Day’ commercial.

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In the year 2010, the `Shubh Aarambh’ campaign was launched, drawing lines from the

traditional Indian custom of having something sweet before embarking on something new.

With `Shubh Aarambh’, Cadbury took the Dairy Milk journey a step further into the hearts of

its million lovers.

With the current campaign ‘Khaane Ke Baad Meethe Mein Kuch Meetha Ho Jaaye’, our aim

is to introduce the thought of having a CDM as a post dinner meetha (dessert).

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5.5 Cadburys Dairy Milk’s 4 Ps’

Product;

Cadbury dairy milk is made from real chocolate. Its ingredients include cocoa, butter and

there is a glass and half full cream dairy milk in every 200 grams in every dairy milk

chocolate. Cadbury buys 65 million liter of fresh milk each year to make Cadbury dairy milk

chocolate.

Strategy;

The strategy of Cadbury dairy milk is to continuous improvement in the quality and features

of product. It is the mission statement of Cadbury to make quality chocolate which have

competitive advantage from the competitor’s products and it enhances the goodwill of the

company.

Price;

It is an important element of the marketing mix. The price for a chocolate bar can determine

whether a consumer will buy it or not it can be determined easily and sales volume tells about

that price is reasonable or not.

If competitors charge the low price than the Cadbury chocolate, it is automatically affect the

company’s profit.

Strategy;

Cadbury dairy milk applies the reasonable and affordable policy to charge the price from its

competitors. Because it is the vision of Cadbury that Cadbury is in every pocket. It charges

the fewer price from its competitors and provides better quality also. We can say it is used

penetration strategy because have low prices as compare to its competitors and have long life

cycle of the product. Cadbury wants to survive in the market for long run.

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Place;

Cadbury dairy milk is produced at the chocolate factory in Bourneville in Birmingham. After

the chocolate is produced and goes through the process of all quality checks. It is transported

to the staff rooms and then Cadbury sells it product to shops.

Strategy;

The placement strategy of Cadbury dairy milk is to sell the chocolate at every corner shop,

super stores, bakers shop, petrol pumps and even medical stores also included in it. It is the

mission statement of Cadbury to provide chocolate to all type and class of customers.

Promotion;

The purpose of promotion is to communicate directly with potential and actual consumers. In

order to encourage them to purchase dairy milk chocolate the Cadbury used different

promotional tactics.

Strategy;

Cadbury dairy milk is used press and electronic media to motivate the potential and inspires

the actual customers to purchase the product of Cadbury.

Promotion is an important element of marketing mix because if it is not well planned then

company is unable to increase it sales.

The company gives discounts on different occasions.

To inspire the Childs to purchase the Cadbury chocolate the company made such type of ads.

To encourage the youth class the company hires the superstars for advertisement of the

products which inspires the all type of consumers who want to eat sweet.

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6.0 SWOT ANALYSIS OF CADBURY INDIA

6.1 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.

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 customers.

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.

6.2 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. Consistent reduction in the net weight of products, does not go unnoticed with loyal

consumers.

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6.3 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.

3. With the increasing exposure to globalization, a new stream of buyers that previously

didn’t look at chocolates and confectionary as a gifting option, opens up.

6.4 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.

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7.0 Vision

“To align with our core purpose, Cadbury India has defined its Vision as "Life Full Of Cadbury and

Cadbury Full of Life".

Cadbury India will participate in many spaces of consumer life through a cache of product offerings -

be it chocolates or snacks or gum.

We believe that work and fun can co-exist beautifully. Therefore at Cadbury India, it's all about work

hard, play harder!. We bring moments of delight to our consumers everyday and every time.

Therefore, we strongly believe that the people who create these products should also have fun while

doing so.

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8.0 MISSION

We make, market and sell unique brands, which give or bring pleasure to millions of

consumers around the world everyday.

We are an international company, proud of our long heritage, respectful of the social and

natural environment in which we operate, supportive of our consumers, customers and

colleagues, and above all, we are passionate about success.

This success has been built upon understanding the needs of our consumers, customers and

other stakeholders and by operating to a clearly defined set of values. But around us the

world changes. The obligations of business to society have broadened. Yet, at the same time

we want to ensure the continuation of our own heritage.”

8.1 Core Purpose

Cadburys’ purpose is "Working together to create brands people love".

The core purpose captures the spirit of what they are trying to achieve as a business.

It collaborates and works as a team to convert products into brands.

8.2 A General Abstract Of Cadbury’s Broad Company Ideology

Consumers inspire us.

o To make today delicious, we begin with our consumers.

o We listen, we watch and we learn.

o We understand their joys and their challenges because we’re consumers too.

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What we do.

o We make delicious foods you can feel good about.

o Whether watching your weight or preparing to celebrate, grabbing a quick bite

or sitting down to family night, we pour our hearts into creating foods that are

wholesome and delicious.

Our reach.

o We believe we can make a delicious difference, everywhere.

o We’re constantly looking for fresh ideas to improve our workplace, our

partnerships, our communities and our world.

How we behave – Our Values.

o We understand that actions speak louder than words, so at Kraft Foods:

o We inspire trust.

o We act like owners.

o We keep it simple

o We are open and inclusive.

o We tell it like it is.

o We lead from the head and the heart.

o We discuss. We decide. We deliver.

o

How we grow.

o We focus on creating sustainable, profitable growth. And our strategies guide

our efforts:

o Build a high performing organization

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o Reframe our categories

o Exploit our Sales capabilities

o Drive down costs … without compromising quality”

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9.0 CONCLUSION

India is a small market compared to the global numbers, but it has an annual turnover of

around Rs 3,500 croreswith huge potential to grow. According to a study by Euromonitor, the

Indian sugar confectionery market is projected to expand at a compounded annual growth

rate (CAGR) of 8 per cent until 2011.

The confectionery market can grow immensely, depending on the kind of categories &

products that are introduced. There are some companies which are focusing on niche high-

end or designer chocolates. These kinds of chocolates have become status symbols and are

linked to the people’s aspiration & lifestyle and malls are the perfect points of sale.

As the competition becomes more intense and the future looking bright for the confectionery

industry, companies are gearing up by introducing new strategies and products in the market.

Re Entry in Ice Cream Manufacturing? :Cadbury India had a diversification into the ice-

cream market in 1989 by introducing Dollops was undertaken in a strategic alliance with

Brooke Bond India (a subsidiary ofUnilever), which was sold off to the latter in 1992.

Considering market conditions and its already well established chocolate and beverage

foothold, this sale seemed like a viable decision for Cadbury India at that time. Though today,

20 years later, the market conditions are totally different and so is the consumer spending

pattern.

In Asian markets other than India, Cadbury’s core competitors like Nestle have already

established a firm market in ice cream manufacturing through marketing ice creams flavoured

in their popular chocolate bars like KitKat. If Casbury India was to enter this sector, now

would be the perfect opportunity before its competition tabs the market before itself.

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10.0 BIBLIOGRAPHY

The data for compilation of this project has been sourced from:

Newspapers and Magazines:

The Hindu

The Economic Times

Forbes India

Television and Radio:

Various Commercials on Television and Radio Channels

Websites:

www.cadburyindia.com

www.corporatemissions.in

www.ft.com/management

Various videos from

www.youtube.com

http://www.youtube.com/watch?v=Pk9bmUWqk3c

http://www.youtube.com/watch?v=AqiONfDvoZY

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