EXECUTIVE SUMMARY

A Study of Indian Chocolate Industry & Re-Launch Strategy for Cadburys 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 Cadburys 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 Cadburys product (Cadburys 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 Cadburys India with reference to above points. Apart from that, the project also gives a detailed study on Cadburys Picnic - A product that failed in The Indian market and gives a marketing strategy for re-launching the product in the India.

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. CADBURYSIN INDIA 2.1. Cadburys overview 2.2. History of Cadbury 2.3. Cadburys 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. Cadburys fight-back 3.11. The big b factor 3.12. Cadburys singing sweetly again 3.13. Success factors of Cadburys India limited

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 Cadburys picnic 8. CONCLUSION ANNEXURES BIBLIOGRAPHY

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 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, 4

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 Cooperative 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 Finla d n Netherla d s n Fra c e n United States Swe e n d Aus trali a Belgium Series 1

Co nt u ry

United K n dom i g De mark n Nor ay w G rma y e n Ireland Aus tria Switzerla d n 0 5 10 15 20 25

Consumptio n in Pou d n

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

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 chocolatefree. 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 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%

MARKETING INDIA

OF

CHOCOLATES

IN

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 manufacturers 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.

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.

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.

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.

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 theres 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 others 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

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. CADBURYS 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

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 AngloSwiss 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

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 Hersheys 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

CADBURYS IN INDIA

CADBURYS 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 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 flavored centers 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.

CADBURYS INDIA LIMITED

Cadbury was originally incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas Ltd (CSOL) in 1948. The companys 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. CSOLs 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 1990s. 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

Cadburys objective is to grow shareholder value over the long term. Cadbury in every pocket. Cadburys 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 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
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.

BUSINES
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. 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
Cadburys 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.

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

Cadburys Dairy Milk (CDM): Cadburys Dairy Milk is the flagship brand of Cadburys 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 Cadburys 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. Cadburys Temptation: Cadburys Temptation is premium chocolate brand aimed for high value consumption. Various variants available are Almond, Rum, Cashew & Orange. Cadburys temptation is priced at Rs. 40 Cadburys 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 Nestles Munch. Perk had been under fire from Nestles deadly duo of KitKat and Munch, but after the

relaunch, its marketshare is two per cent more than KitKats. 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 Cadburys 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.

STRATEGIES OF CADBURYS
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 crme 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 crme 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 Nestles Munch and Chocostick, Cadburys 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 largestselling SKU. This is a potent price point in India, because the average purchasing power is abysmally low, is what industry analyst have to say.

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.

DISTRIBUTIO N
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.

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 Cadburys 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).

PROMOTIO N
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.

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 90s bought instant growth to Cadburys 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 Zintas angelic dimples laid the foundation for what would become the Indian teenagers favorite snack. After this campaign, PERKS sale surged. Cadburys advertising has, over the past few years, aptly reflected Indias 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." Cadburys Dairy Milk..Asli swad zindagi ka CADBURY DESERTS - khaane ke baad kuch meetha ho jaaye. Cadburys Celebrations - Rishto ki Mithas

CADBURY AND THE WORM CONTROVERSY

The discovery of worms in some samples of Cadburys 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 Cadburys 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, Cadburys 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."

CABDBURYS FIGHT-BACK

'Project Vishwas' Steps to ensure quality & regain the confidence Following the controversy over infestation in its chocolates, Cadbury India Ltd unveiled 'Project Vishwas', a plan involving distribution and retail channels to ensure the quality of its products. The company's team of quality control managers, along with around 300 sales staff, checked over 50,000 retail outlets in Maharashtra and replaced all questionable stocks with immediate effect. The Vishwas programme was intended to build awareness among retailers on storage requirements for chocolates, provide assistance in improving storage conditions and strengthen packaging of the company's range of products. Cadbury reduced the number of chocolates in its bulk packets to 22 bars from the present 60 bars. These helped stockists display and sell the products "safely and hygienically" 190,000 retailers in key states were covered under this awareness programme.

THE BIG 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. Cadburys 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 heat sealed or a flow-pack packaging that offers a high level of resistance to infestation from improper storage. 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.

CADBURYS SINGING SWEETLY AGAIN

All is well that ends well. And for Cadburys 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, Cadburys 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.

SUCCESS FACTORS OF CADBURYS 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 countrys 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. 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.

Moulded chocolate and clairs 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. 5. 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.

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 1829 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 !!

CADBURY PICNIC: AN APPEAL TO THE FOUR 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 its 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.

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 o Also the name Cadbury could not be clearly and easily seen. 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. o Also peanuts and raisins were not properly fried resulting in varying taste.

Improper communication about the value proposition to the target audience o o o Cadbury PICNIC chocolate was not properly promoted by the company since it was not its flagship product. Also lack of association with brand ambassador when compared to its competitors resulted into low sales. 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 Cadbury PICNIC bar which can be used outflow in infrastructure development.

production of

without causing additional cash

Cadbury PICNIC chocolate being rich with peanuts and raisins should be relaunched 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.

STP ANALYSIS
Segmentation
Cadburys 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. 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.

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. Theres 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.

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 Chewing candies Breath freshners, digestives, throat relievers

Gum based products are:

Chewing gum

Bubble gum

Chocolates and Confectionery Industry Chocolates Sugar confectionery Bars/ Slabs Count lines Panned (Gems) Eclairs Assorted Hard boiled Toffees Soft chew Jelly candies Deposit candies Lollipops Mints, etc. CHOCOLATE SEGMENTATION

Gum based Chewing gum Sugar coated chewing gum Bubble gum

Chocolate market can be segmented into moulded chocolates, count chocolates, panned chocolates, eclairs and assorted chocolates. Type of chocolates Moulded Count Eclairs Panned Others % Share in chocolate market 37% 30% 20% 10% 3%

Panned

Others

10% Eclairs 20%

3% M oulded 37 %

Moulded Count Eclairs Panned Oth ers

Coun t 30%

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

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 http://www.cadburyindia.com/home/index.asp http://en.wikipedia.org/wiki/Picnic_(chocolate_bar)

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