CATEGORY ATTRACTIVENESS OF CADBURY

PRERNA SHARMA

Cadbury Plc

Cadbury Plc now the subsidiary of the Kraft foods Inc was founded in 1824, It operated in the confectionery industry . It is headquartered in Cadbury house, Uxbridge, UK.

The group manufactures over 100 different products under different brand names.

One of the popular brand of the group is dairy milk which is milky chocolates, there are various products under this brand name. One of which is the latest chocolate introduces by the group, Dairy Milk Silk.

Cadbury Dairy Milk

Cadbury Dairy Milk is a brand of chocolate bar made by the Cadbury plc unit of Kraft Foods and sold in several countries around the world. It first went on sale in the United Kingdom in 1905.

Situation Analysis. The Cadbury dairy milk is launched by the Kraft

foods Inc which is the largest confectionery, food, and beverage corporation headquartered in the US. The Kraft foods Inc take over Cadbury in 2010 which is the a British confectionery company, the industry's second-largest globally. This new product is launched globally.

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Category Attractiveness Analysis Aggregate Market Factors Category Size: The size of the chocolate market currently is estimated to be

around 10,152,568,593 pounds of chocolate annually. The chocolate category is growing at 7.4 percent globally and Cadbury Dairy Milk is growing even faster, at 8.6 percent a year, according to Euromonitor

The chocolate industry in India as it stands today is dominated by two companies, both multinationals. The market leader is Cadbury with a lion's share of 70 percent. The company's brands (Five Star, Gems, Eclairs, Perk, Dairy Milk) are leaders their segments. Till the early 90s, Cadbury had a market share of over 80 percent, but its party was spoiled when Nestle appeared on the scene. The latter has introduced its international brands in the country (Kit Kat, Lions), and now commands approximately 15 percent market share

The Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Arecanut and Cocoa Manufactures and Processors Co- operative (CAMPCO) are the other companies operating in this segment. Competition in the segment will get keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian chocolate pie..

Market size is big, so this market has high attractiveness, as we see around 10,152,568,593 pounds of chocolate are annually sold.

Assessment Market Attractiveness: (++)

Category Growth The market presently has close to 60mn consumers and they

are mainly located in the urban areas. Growth will mainly come through an increase in penetration as income levels improve.

However, almost all of this consumption is in the cities, and rural India is nearly chocolate-free’. But the fact is that three quarters of Indians live in Rural Areas.“ Average summer time temperatures reach 43 degrees Celsius in India. Chocolate melts at body temperature of36 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%. ...

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.

After economic liberalization in 1991, major changes have occurred in food habits, partly on account of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of the middle-class representing a third of the total population. Availability of chocolate products has also exploded.

Market growth of 12.6% percent YoY is assumed to be good enough, so from growth perspective the category have moderate attractiveness

Assessment Market Attractiveness: (+)

Sales Cyclicity While Cadbury are premium prices for their

medium income group & its prices are such that they get impacted directly with the variations in GDP

When a product have direct affect due to changes in GDP its unattractive

Seasonality: Year round Sales

Category overall may experience a sales increase in the Holy festival seasons specially near Diwali, rakhi Festive season, as people tend to purchase chocolate as gifts. Normally, chocolate have year round sales but festive seasons show an increasing trend

Assessment Market Attractiveness: (+)

Internal factor analysisMen and Money: The group has sufficient financial

and human resources and these factors help the dairy milk brand and the other brand of the group as well.

Machines and Material: The group also have state of the art machines and enjoys a close relationship with the supplier and have sufficient material which help the brand.

Management and Management information: The management of the group is highly qualified and skilled and the information system is up to date which provide timely information to make decisions. This help the brand.

Porter’s five forces analysisCompetitive rivalry in the industry: there is a

huge rivalry in the industry and this rivalry in the industry make it attractive.

Threat of substitute product: chocolate is a established product and million of people love it round the globe therefore there is not much threat of the substitute.

Threat of new entrants: the confectionery industry has no barrier to entry and this make this industry open to competition and make it attractive.

Bargaining power of customer Buyers are extremely choosy about the

brand and type chocolate they want to eat . The industry is highly price sensitive and increase in price or decrease in income of people will result in decrease in demand for the product and will affect the brand.

A buyer market is not attractive, because this leads to reduction in prices & ultimately lower profits.

Assessment Market Attractiveness:[- ]

PESTEL AnalysisLet us examine the macro environment of the

group using PESTEL analysis.Political factors that will affect the launch of

the dairy milk silk chocolates are health and safety laws, employment laws of different countries where Kraft group operates.

Socio-cultural factors that may affect include life styles of people, health and fitness awareness and perception, different cultures, spending patterns, aging populations.

Technological factors that will affect the brand are the internet as the product will be promoted using web marketing. The robotic manufacturing will also help in quick production. -Economic factors that will affect it are interest and inflation rates as it will affect production, world economic growth and current recession will also effect it. There will be also some environmental factors that will affect like energy and environment and recycling of the plastic and other products like chocolate can be packed in completely recyclable packet. -Legal/ Educational factors will also influence like perception of people and what people think about the richer milk chocolates.

SWOT analysisStrengths of the brand: As Cadbury dairy milk is a

established brand which enjoys good customer perception therefore it is the strength of the brand and the dairy milk s get benefit of it. The resources that the group have is also one of its strength and the no of products that it make will help in achieving economies of scale is also one of the strength of the brand. The acquisition of Cadbury by Kraft food Inc which make the group the leader in the confectionery industry is also a strength of the brand. Millions of customers around the globe is also one of the strength of the brand

. Weakness: The biggest weakness is the size of the group which make it difficult to innovate as the Kraft foods Inc has recently acquired the Cadbury so the group will focus to get the return and little or no focus will be given to the innovation. Large group size also make increase the time to make crucial decisions. Timing to implement the decision will also increase because of the group size which is also a weakness.

Opportunities: There are various opportunities for the brand and for the group as the group is one of the leading confectionery producers therefore it can increase its market share by reducing price and as it has sufficient resources which it can used to purchase other producers and increase its market share.

There is also an opportunity to make new products as the group can afford it and with the two brand names it can market it. The combination of the US and the British manufacturer create an opportunity for the group as it has now presence in the biggest part of the world and it can get best workers and best people to manage the company.

Threats: large size is the biggest threat as if the acquisition does not work that it will affect all the brands including the dairy milk. Confectionery industry is open to competition which is a threat to the brand and for the group. Improved chocolate by some other producer will affect the brand and it create threats as the producers are always in search of something new. The industry is highly price sensitive and increase in price or decrease in income of people will result in decrease in demand for the product and will affect the brand.