Category : Articles
Nupur Agrawal : 231
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, Cadburys main product – Bournvita is the leading Malted Food Drink in the? country.
Its heritage can be traced back in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then we have expanded our business throughout the world by a program me of organic and acquisition led growth. On 7 May 2008, the separation of our confectionery and Americas Beverages businesses was completed creating Cadbury plc with a vision to be the worlds BIGGEST and BEST confectionery company.
??? They make and sell three? kinds of confectionery: chocolate, gum and candy
??? They operate in over 60? countries
??? John Cadbury opened for business in1824? – making them nearly 200 years young
??? They work with around 35,000? direct and indirect suppliers
??? They employ around 45,000? people
??? Every day millions? of people around the world enjoy their brand
Cadbury is the worlds largest confectionery company and its origins can be traced back to1783 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, Cadburys top selling brand, Cadbury Dairy Milk, was launched. By 1913 Dairy Milk had become Cadburys best selling line and in the mid twenties Cadburys Dairy Milk gained its status as the brand leader. Cadbury India began its operations in 1948 by importing chocolates and then re-packing 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.
Acquisition of Cadbury
After a four-month fight, the US food company Kraft finally acquired the British chocolate producer Cadbury in January 2010.This $19.5 billion take-over has been approved by Cadburys board, thus creating the world??™s biggest chocolate maker according to Cadbury??™s website.?
Prior to the acquisition, Kraft was the largest candy, food, and Beverage Company headquartered in the United States and the second-largest in the world (after Nestle SA) which markets nine brands each with annual revenues exceeding $1 billion. More than 50 additional brands belonging to Kraft have revenues greater than $100 million in more than 155 countries. Cadbury was a British confectionery and Beverage Company and the worlds second largest confectionery manufacturer after Mars/Wrigley, with operations in over 60 countries under famous brands like Cadbury, Trident and Halls.
The combination of these two giants of the food industry has attracted a lot of attention. According to Kraft??™s ???Recommended Final Offer??? released on 19 January 2010, Kraft expects to create a global leader in the global foods and confectionery sector by building up a strong and complementary strategic fit with a portfolio of more than 40 confectionery brands each with annual sales in excess of USD 100 million after the acquisition.
How does Kraft want to capitalise on Cadbury??™s brand image
Kraft is a well recognised and highly regarded brand with products well positioned in 170 countries. However, for the past few years, Kraft??™s developed markets have been declining while the growing markets have grown at double digit rates.
Kraft has a strong presence in every country, but the main motive behind acquiring Cadbury is to have a strong presence in India, one country where it has not been able to mark its presence.
Kraft has tried entering India on its own in the past without much success. The Cadbury structure offers the company a chance to re-enter the market on a stronger footing, while bulking up Cadbury??™s confectionery portfolio.? Krafts acquisition is the type of “horizontal expansion” that can work well in todays post-economic downturn environment. The one advantage that Cadbury offers Kraft is the fact that the former is a major player in one of the world??™s largest markets, India.
Kraft in India is small. Three products are being distributed ??” Tang, Toblerone and Oreo. It might use the merged identity to distribute these products.
Cadbury??™s distribution network of over 1.2 million shops offers amazing value for Kraft, in a country where supply chains tend to be highly fragmented. The Indian confectionery market is a high volume low price market. This tends to bring in many competitors, who leave the market fragmented. In India, the deal would give Kraft the Cadbury??™s distribution network for its beverages, cheese, dairy products and snacks in addition to Cadbury??™s chocolates, thereby helping it to take on Nestle. Kraft will gain insight into the methods used by important industry players to give them a competitive edge. The other major intervention by Kraft is in increasing the number of outlets selling chocolates through visicoolers. The delivered-eat experience of chocolates is far better when served from a visicooler as most chocolates collapse in Indian climatic conditions. It took Cadbury nearly four years to put up 20,000 visi-coolers. But after the acquisition, Kraft has doubled the number of outlets having visicoolers to 40,000 in a year. Kraft hopes to gain from the enhanced distribution channel for its brand to gain more recognition with world consumers. Furthermore, the combined company Kraft/ Cadbury will be able to compete with Mars/Wrigley in the confectionery market.
Cadbury is a socially aware business
For most of its 185-year history Cadbury has been viewed as one of the most paternalistic and socially aware employers in the UK.
That is best symbolised by Bourneville, the purpose-built village for Cadbury workers on the outskirts of? Birmingham? ??” a 120-acre site that was started in 1893.
John Cadbury opened his first shop in Bull Street, Birmingham in 1824 selling tea, coffee and drinking chocolate. As a strict Quaker he didnt drink alcohol and wanted to provide the people of Britains second city with wholesome alternative drinks.
Cadbury India has always believed that good values and good business go hand in hand. Its a part of our heritage and the way they do things today. Cadbury India has a tradition of caring for the environment and enriching the quality of lives of the communities we live and work in, through a variety of result-oriented programs.
Cadbury??™s brand value, particularly its heritage, remains intact. Cadbury has a strong brand heritage which means that despite of diverse product lines and extensions, its brand value remains the same. It has made great strides in spreading its brand values across the world, including emerging nations. This makes it stand out from the crowd in the confectionery market. By acquiring Cadbury, Kraft aims at working on its heritage and increasing its brand value by using cadbury??™s image in the mind of consumers.
A lively brand
Kraft is huge in the confectionary market, but with additional product line extensions it has become a very professional but a dull brand. On the contrary, Cadbury has had its own share of extensions but along with that it has also been able to come up with innovative and lively campaigns every time they introduce a new product or an advertising campaign. Cadbury can provide them with innovative campaigns and better brand image on which they are capitalizing.
Cadbury is highly complementary to Kraft??™s geographical footprint and will increase developing market??™s contribution to Kraft??™s net revenue from about 20% to about 25%. For Cadbury which owns brands such as Cadburys Dairy Milk and Bournville, India has proved to be one of its most resilient markets with sales growth of 20% and profits growing at 30% in a competitive market.
Cadbury??™s grip in other markets
The UK-based Cadbury plc??™s strong grip on India and other emerging markets is the biggest factor in Kraft Foods??™ aggressive takeover offer for the UK-based candy maker. In a clean sweep, Kraft has snapped up access to two fast-growing parts of the global confectionery market: developing countries and the chewing-gum business.
? Kraft wants to take advantage of Cadburys fast-growing emerging-market operations, especially in Brazil, India, and China, to speed up its sluggish growth in developing countries and bolster its position in chewing gum specifically.
Krafts CSR and sustainability efforts are more opaque as there is a lack of similar detailed information and what does exist is not easily accessible. This results in an impaired brand value as Kraft has the opportunity to greatly expand its efforts in this regard while Cadburys efforts to provide more detailed information about its products, processes and policies to the public provides more transparency that allows Cadbury to enjoy a higher brand value.? Kraft can take substantial steps to elevate their sustainability and CSR efforts and attempt to align more closely with those of Cadbury so that Krafts brand value increases, boosting profits.
The most important determinant of the deal is the culture match; an American organization coming together with a British organization. They??™ll have a great experience at working with multinational companies.
Kraft was looking for a platform, so? Cadbury? is giving them the platform. The question is can the Kraft and? Cadbury? management now take advantage of the brands and the technology that Kraft has and the platform that? Cadbury? gives for it to expand quickly and have a manufacturing set up.