Cadbury needs a Subh Aarambh !

Cadbury India Ltd., a part of Mondelez International, operates in five categories – Chocolate confectionery, Beverages, Biscuits, Gum and Candy. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands are Cadbury Dairy Milk, Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls, Éclairs, Bubbaloo, Tang and Oreo.
In India, Cadbury began its operations in 1948 by importing chocolates and now has completed 60 years of its existence. Cadbury India enjoys a value market share of over 70 percent in the chocolate category and its brand Cadbury Dairy Milk (CDM) is considered the “gold standard” for chocolates in India. In the Milk Food drinks segment our main product is Bournvita – the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy category Halls is the undisputed leader.

Cadbury products have positioned so well in the minds of consumers, be it a kid, a college student, married couples or old people, it has targeted every segment of the market and the consumers today are willingly speaking “Kuch mitha ho jaye, Aaj meethe me kya hai!” It is always ready with effective strategy & execution that maintain brand equity and at every regular interval (including festival), brand Cadbury Dairymilk is coming with new campaign & recalling “Shubh Aarambh (Auspicious Beginning)”.
The purchasing power of the Indian middle class is increasing and so is the demand for quality food products. India is the 2nd largest producer of food and holds the potential to be largest globally on food and agricultural front. This can be seen as an opportunity for the food companies to flourish in India. Cadbury too has been flourishing ever since it was taken over by Kraft food Ltd.
Company Trend Analysis:
Kraft developed a new organizational structure at Cadbury India – the process being called ‘Project Leap’ – aimed at integrating the company more closely with its new parent and moving it away from being primarily a chocolate manufacturer to producer of a wide range of snacks. It dominated the premium biscuit segment in India by launching Cadbury Oreo, which were priced cheaper than the rivals’ ITC’s Dark Fantasy and Britannia’s Dark Magic biscuits, though the cookies are slightly smaller in size.
Two years after Kraft acquired Cadbury globally, the sales in Indian business grew faster than ever before. The firm aggressively ramped up distribution and increased advertising expenses on both Cadbury’s existing products as well as new launches from Kraft’s portfolio. Between January and September 2011, Cadbury India sales grew by 40% especially due to the successful launch of world’s largest selling cookie Oreo in March as well as double digit growth of all other existing brands.
But now, Cadbury is getting a bitter taste of slowdown under its new parent Mondelez. Its revenues increased 20.8% to Rs 4,065 crore, the lowest growth rate since 2006 and a sharp deceleration from the 34.4% growth recorded in 2011. Profit after tax increased by 2.1% to Rs 303.4 crore. This slowdown will be seen as a small setback to Mondelez International’s plans to rev up growth in emerging markets.
Mondelez came into existence in October 2012, when grocery and snacks giant Kraft was split into two companies. Its international business, including Oreo cookies and Cadbury, was spun off and named Mondelez while most of the US assets remained in Kraft. Kraft had acquired Cadbury in January 2010.Cadbury India experienced a slowdown in sales and profit in 2012, despite launching legendary Swiss triangular chocolate brand Toblerone, as consumers cut back on discretionary products, many even trading pricier chocolates with lower priced candies and confectionery.
The slowdown comes after two years of aggressive growth enabled by Kraft launching its global brands here through Cadbury India. Since 2010, the company has brought in three Kraft brand’s biscuits with Oreo, fruit juices and beverages with Tang and premium chocolate Toblerone helping post high sales growth of 30% and 35% in the initial two years.
Cadbury India had launched products such as Silk and Bournville, and entered the biscuits segment in the past two years, which drove the growth, but it seems not all consumers are going for repeat purchases for some of these products. Also, the availability of foreign brands such as Ferrero Rocher and Lindt in the premium segment could be hampering growth in that category.
Rivals have been getting aggressive in the Rs 5,562-crore chocolates segment, which is still synonymous with Cadbury in India. Sales of its peers, including Ferrero India and Nestle India’s in chocolates segment, have grown 30% and 6% respectively in 2012, over a much smaller base. Cadbury controls over 67% share in the chocolates segment, followed by Nestle at 21% and Ferrero at 6%, according to market research agency Nielsen.
Competitor Analysis:
Nestle has been its closest competitor since years and enjoys almost 21% of  the market share.  Nestlé has won the latest tit-for-tat trademark battle with rival Cadbury, after regulators overturned their original decision to allow rivals to make KitKat-shaped products.
Nestlé originally successfully registered the shape of a four-bar of KitKat chocolate in 2006.But Cadbury applied to invalidate the registration on the basis that the shape of a chocolate bar was unlike, for example, a name, and was instead a generic thing that could not be monopolized by one company. Originally, Cadbury won its appeal. But now trademark regulators have overturned the original decision, after a fresh appeal from Nestlé. Thus it had educated the public that chocolate bars of that shape would always originate from Nestle.
Nestle has recently launched a new product in the premium chocolate market named Nestle Alpino and hence has pooled a new competition for Cadbury.
Ferrero Rocher:
It is the next rival of Cadbury in the premium chocolate segment. Cadbury under Kraft Foods’ launched Toblerone in India, to take on Ferrero Rocher. While Cadbury tried tapping the top end of the market with Silk, it hasn’t worked as well as expected and hence necessitated the launch of Toblerone. Cadbury’s premium chocolate brands like Celebrations, Bournville and Dairy Milk Silk have been under pressure ever since Ferrero set up its Indian subsidiary four years ago. Ferrero Rocher has 6% share in the estimated Rs 2,500-crore chocolate market despite having an entry pricing of 60 per pack of 37.5 gm and much less market penetration than Cadbury India. This makes Ferrero Rocher the segment leader as premium chocolate market is estimated at 10% of the overall market. Cadbury India has some 25 SKUs in premium end, while Ferrero has 16.
Ferrero Rocher became an instant hit in India for gifting and during festive seasons as consumers brought it as an upgrade version of the traditional mithai (sweet) box. It’s the new age gift with laddu shape and traditional gold color which Indians can relate to easily.
Cadbury enjoys maximum market share in the chocolate industry but has recently slowed down its sales and profit and hence its growth rate against its rivals as they are constantly launching new products in the market. Thus Cadbury has to rethink about its marketing strategies to maintain its position as an undisputed leader.
Cadbury was involved in tax probe in 2012 where in the Tax authorities detected alleged tax evasion of Rs 213 crore by in two separate cases and realised Rs 12.6 crore in one of the cases. It should take care not to involve in such matters as it may spoil the brand image.
As it has contributed to the society through its CSR activities such as in October 2011 as a part of delicious difference week, 1600 of their employees served meals to 15000 under privileged children along with a program called ‘sahyog’, in Himachal Pradesh to teach the children of migrant workers, it should continue with its CSR activities. Also, it can come up with new shapes and flavors in existing categories and launch chocolates in the premium category with slightly lower price than the rivals. Let’s hope to have a “subh aarambh” for Cadbury soon! 

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