Cadbury Dairy Milk Essay Example for Free

Cadbury Dairy Milk Essay Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing their rights of, disadvantaged producers and workers especially in the South (FINE, 2001). Fair Trade certified producer organizations must comply with a number of requirements, related to social, economic and environmental developments. In addition, labour conditions in these organizations must follow certain standards. The essential characteristic of Fair Trade cocoa is that producer organizations receive a higher price for their cocoa beans. The Fair Trade price represents the necessary condition for the producer organizations to have the financial ability to fulfil the above requirements, and to cover the certification fees. It is calculated on the basis of world market prices, plus fair trade premiums. The Fair Trade premium for standard quality cocoa is US$ 150 per tonne. The minimum price for Fair Trade standard quality cocoa, including the premium, is US$ 1,750 per tonne. Other benefits for certified producer organizations are better capacity building and market access. Presently, cocoa sold with the Fair Trade label still captures a very low share of the cocoa market (0. 5%). Organic cocoa and chocolate The organic cocoa market represents a very small share of the total cocoa market, estimated at less than 0. 5% of total production. ICCO estimates production of certified organic cocoa at 15,500 tonnes, sourced from the following countries: Madagascar, Tanzania, Uganda, Belize, Bolivia, Brazil, Costa Rica, Dominican Republic, El Salvador, Mexico, Nicaragua, Panama, Peru, Venezuela, Fiji, India, Sri Lanka and Vanuatu. However, the demand for organic cocoa products is growing at a very strong pace, as consumers are increasingly concerned about the safety of their food supply along with other environmental issues. According to Euromonitor International, global organic chocolate sales were estimated to have increased from a value of US$ 171 million in 2002 to US$ 304 million in 2005. Certified organic cocoa producers must comply with all requirements associated with the legislation of importing countries on production of organic products. The benefit for cocoa farmers is that organic cocoa commands a higher price than conventional cocoa, usually ranging from US$ 100 to US$ 300 per tonne. However, originating countries with smaller volumes can fetch much higher premiums. This premium should cover both the cost of fulfilling organic cocoa production requirements and certification fees paid to certification bodies. | | | | The Indian Chocolate Industry has come a long way since long years. Ever since 1947 the Cadbury is in India, Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. Indian Chocolate Industry’s Cadbury Company today employs nearly 2000 people across India. The company is one of the oldest and strongest players in the Indian confectionary industry with an estimated 68% value share and 62% volume share of the total chocolate market. It has exhibited continuously strong revenue growth of 34% and net profit growth of 24% throughout the 1990’s. The brand of 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. In 1946 the cadbury? s manufacturing operations started in mumbai, 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 in 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, and perk etc. Cadbury operates as the third party operations at phalton, warana and nashik in maharashtra. These factories churn out close to 8,000 tonnes of chocolate annually. In response to rising demand in the chocolate industry and reduce dependency on imports, indian cocoa producers have planned to increase domestic cocoa production by 60% in the next four years. The indian market is thought to be worth some 15bn rupee (? 0. 25bn) and has been hailed as offering great potential for western chocolate manufacturers as the market is still in its early stages. Chocolate consumption is gaining popularity in india due to increasing prosperity coupled with a shift in food habits, pushing up the countrys cocoa imports. Firms across the country have announced plans to step-up domestic production from 10,000 tonnes to 16,000 tonnes, according to reuters. To secure good quality raw material in the long term, private players like cadbury india are encouraging cocoa cultivation, the news agency said. Cocoa requirement is growing around 15% annually and will reach about 30,000 tonnes in the next 5 years. brief introduction indian chocolate industry as today is dominated by two companies, both multinationals. The market leader is cadbury with a lions share of 70%. The companys brands like five star, gems, eclairs, perk, dairy milk are leaders in their segments. Untill early 90s, cadbury had a market share of over 80 %, but its party was spoiled when nestle appeared on the scene. The other one has introduced its international brands in the country (kit kat, lions), and now commands approximately 15% market share. The two companies operating in the segment are gujarat co-operative milk marketing federation (gcmmf) and central arecanut and cocoa manufactures and processors co-operation (campco). Competition in the segment will soonly get keener as overseas chocolate giants hersheys and mars consolidate to grab a bite of the indian chocolate pie. The uk based confectionery giant, cadbury is a dominant player in the indian chocolate market and the company expects the energy glucose variant of its popular perk brand to be singularly responsible for adding five per cent annually to the size of the company? s market share. market capitalization The indian candy market is currently valued at around $664 million, with about 70% share ($ 461 million) in sugar confectionery and the remaining 30% ($ 203 million) in chocolate confectionery. Indian chocolate industry is estimated at us$ 400 million and growing at 18% per annum. Cadbury has over 70 % share in this market, and recorded a turnover of over us$ 37m in 2008. size of the industry The size of the market for chocolates in india was estimated at 30,000 tonnes in 2008. Bars of moulded chocolates like amul, milk chocolate, dairy milk, truffle, nestle premium, and nestle milky bar comprise the largest segment, accounting for 37% of the total market in terms of volume. The chocolate market in india has a production volume of 30,800 tonnes. The chocolate segment is characterized by high volumes, huge expenses on advertising, low margins, and price sensitivity. the count segment is the next biggest segment, accounting for 30% of the total chocolate market. The count segment has been growing at a faster pace during the last three years driven by growth in perk and kitkat volumes. Wafer chocolates such as kit kat and perk also belong to this segment. Panned chocolates accounts for 10% of the total market. The chocolate market today is primarily dominated by cadbury and nestle, together accounting for 90% of the market. major players †¢cadbury? s india limited †¢nestle india †¢gujarat co-operative milk marketing federation †¢cocoa manufactures and processors co-operative (campco) †¢bars count lines wafer panned premium †¢cadbury? s dairy milk variants †¢5-star, milk †¢amul milk chocolate †¢treat perk gems, †¢tiffins temptation celebrations †¢nestle milky bar bar one. latest developments †¢chocolate-lovers may soon find their chocolate dearer if the problems plaguing the industry continue. Raw material costs have risen by more than 20 % in the last few years. Although retail prices have not increased, a rise in input costs will force the manufacturers to consider a price hike. the bigger players in the country such as cadbury, which leads the rs 2,500 crore chocolate markets in india with a share of 72%, will find it easier to absorb the surge in input costs as it has products at various price points in the market, said industry experts. Cadbury may also opt for a price hike, albeit marginal, if the current trend continues. Indian chocolate industry? s margin range between 10 and 20%, depending on the price point at which the product is placed. The input costs in india are under check owing to the 24% decline in the prices of sugar. †¢the world? s leading manufacturer of high quality cocoa and chocolate products barry callebaut, has announced the opening of its first, state-of the art, chocolate academy in mumbai, india in july 2007. †¢according to the analysis of the international market intelligence provider euromonitor, the relatively small indian chocolate market with volumes of about 55,000 metric tonnes of chocolate and compound per year is expected to grow on average per year by around 17. 8% between 2008 and 2012. Ferrero the italian confectionery giant of $8 billion has planned up for a new production facility in maharashtra with an investment of over $125 million to whip up some of its popular brands that include rocher and kinder. INDIAN CHOCOLATE INDUSTRY AT A GLANCE IN 2011 -2012 | Chocolate market in India is estimated to be around 1500 crores according to A C Nielson report, growing at 18-20% per annum. Cadbury is the market leader with 72% market share of India. The per capita consumption of chocolate in India is 300 gram compared with 1. 9 kilograms in developed markets such as the United Kingdom. Over 70 per cent of the consumption takes place in the urban markets of India. Margins in the chocolate industry range between 10 and 20 per cent, depending on the price point at which the product is placed. Chocolate sales have risen by 15% in recent years to reach 36000 tonnes according to one estimate. Another estimate puts the figure at 25000 tonnes. | | The chocolate wafer market in India is around 35 % of the total chocolate market and has been growing at around 13% annually. As per a study, the Indian candy market is currently valued at around USD 664 million, with about 70%, or USD 461 million, in sugar confectionery and the remaining 30%, or USD 203 million, in chocolate confectionery. The global chocolate market is worth $75 billion annually. | | Chocolate Market in India Facts Figures 1. Chocolate market is estimated to be around 1500 crores (ACNielson) growing at 18-20% per annum 2. Cadbury is the market leader with 72% market share 3. The per capita consumption of chocolate in India is 300 gram compared with 1. 9 kilograms in developed markets such as the United Kingdom 4. Over 70 per cent of the consumption takes place in the urban markets 5. Margins in the chocolate industry range between 10 and 20 per cent, depending on the price point at which the product is placed 6. Chocolate sales have risen by 15% in 2007 to reach 36000 tonnes according to one estimate. Another estimate puts the figure at 25000 tonnes 7. The chocolate wafer market (Ulta Perk etc) is around 35 % of the total chocolate market and has been growing at around 13% annually 8. As per Euromonitor study, Indian candy market is currently valued at around USD 664 million, with about 70%, or USD 461 million, in sugar confectionery and the remaining 30%, or USD 203 million, in chocolate confectionery 9. Entire Celebrations range marketshare is 6. 5% 10. The global chocolate market is worth $75 billion annually Companies 1. The chocolate market in India has only three big players, Cadbury, Nestle and Amul 2. New brands such as Sweet World, Candico and Chocolatiers are present in several malls 3. The largest target segment for Cadbury is youth 4. Delhi-based Chocolatiers, started with a small shop in south Delhi’s Chittaranjan Park and has now ventured into malls and multiplexes in NCR, Mumbai and Bangalore, with focus on high-end or designer chocolates, a niche market of their own 5. Candico India is aiming for 400 locations across malls and multiplexes in the country by 2010. Companies Brands 1. Cadbury Cadbury, 5 Star, Bytes (chocolate snack), Celebration, Dairy Milk, Gems, Perk 2. Nestle Bar One, Kit Kat, Milkybar, Munch, Nestle 3. Amul Amul (Chocozoo, Chocomines) 4. Dairy Milk is the market leader 5. 5 Star (heritage brand which came to India in 1969) has a marketshare of over 14% Consumer Trends 1. Mithai- the traditional Indian sweats is getting substituted by chocolates among upwardly mobile Indians. Instead of buying sweats on Raksha Bandhan, sisters prefer offering chocolates to their brothers. This is the reason for sudden spurt in advertisement between July Sep by most of the companies 2. The range and variety of chocolates available in malls seems to be growing day by day, which leads to lot of impulse sales for chocolate companies 3. Chocolates which use to be unaffordable, is now considered mid-priced. Convenience over Mithai in terms of packaging and shelf life in making both middle class and rich Indians opt for chocolates 4. Designer chocolates have become status symbols. They are linked to one’s aspiration and lifestyle and malls are perfect points of sale as people usually are happy and gay at these destinations 5. Cadbury initial communication for Celebrations was concentrated on occasions like Diwali and Rakshabandhan. Over the last seven to eight years, the brand emerged as a good gift proposition for occasions and enabled people to come closer. Research done by Cadbury suggested that they should extend the plank of occasion-based gifting to social gifting i. e. all-year-round gifting options 6. Consumers can choose from wide range of chocolates, which initially was limited to Milk chocolates like DairyMilk and MilkyBar. In past few years we have seen so many SKUs with almonds, raisins and all sort of nuts. And how can we forget latest 5 star crunchy and Ulta Perk, which has opened new windows for consumers 7. In past, consumers had negligible inclination for dark chocolates. But now we have seen a change in the Indian palate, which is increasing the base of this sub-segment Advertisement Trends (AdEx division of TAM Media Research) 1. Chocolate advertising rose by 30 per cent during January-November 2007 compared to January-November 2006 2. Maximum chocolate advertising was during Raksha Bandhan across 2005 and 2006 and January-November 2007 3. As expected chocolate advertising skewed towards kids channels and regional GEC took the second position 4. Cadbury India Ltd rules chocolate advertising on television 5. 17 per cent more advertising during third quarter 2007 (Raksha Bandhan festival) compared to first quarter 2007 6. Regional GEC took the second place with a 21 per cent share ad volumes of chocolates, followed by Hindi movie with 13 per cent share during January-November 2007 7. Among regional GEC, maximum advertising of chocolates was on Malayalam and Bengali channels 8. Cadbury India Ltd was way ahead of its peers with 66 per cent share followed by Nestle India Ltd and Parle Products Pvt Ltd during January-November 2007 9. During January-November 2007 the number of new chocolate brands advertised decreased to seven from 12 during 2006 10. Nestle Munch Pop Chocolate led the chart of new chocolate brands advertised on television during January-November 2007 Some BTL Activities 1. Cadbury India has tied up with leading coffee chain Cafe Coffee Day for direct sampling of the product in top cities External Environment 1. The prices of cocoa and milk, the chief ingredients used in chocolates, have gone up by 50 per cent, while the price of sugar, another important raw material, has come down. The overall input costs have gone up by 20 per cent. If the prices of these commodities keep increasing, companies will be forced to increase the prices. India imports most of its cocoa requirements. The prices of cocoa have risen globally due to unavailability of the commodity 2. US-based chocolate-maker Hersheys is mulling a foray into the Indian chocolate market through its joint venture with Godrej Cadbury Dairy Milk 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. Our Advertising: The advertising highlights the joy of savoring CDM Silk and builds on its creamy and smooth experience that instantly melts in your mouth. This brand promise was beautifully captured by the tagline `Have You Felt Silk Lately? ’ The campaign comprised of three commercials which showcased different protagonists indulging and savoringCadbury Dairy Milk Silk chocolate, with innocence and unabashed joy, unmindful of their surroundings.