Cadbury India Company Analysis
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INDUSTRY TREND India Perspective The purchase power of the middle income group in India is rising considerably and that is the main reason behind the increase in the demand for quality food products. India is the 2nd largest producer of food and holds the potential to be the largest globally on food and agricultural front. Indian food industry is projected to grow by US$ 330 billion by 2013. This sector has attracted foreign direct investment (FDI) worth US$ 1,253.79 million from April 2000 to April 2011. Global Perspective Even with an improving economy, doing business is challenging on the home front by regulatory changes, raw material pricing, business sustainability goals and changing consumer demands. And on the global front by the difficulty to set up foreign operations, security and dependability of foreign suppliers, impact of currency fluctuations and competition for talent. Threats to Food Industry Ever since the end of 2006, quite a lot of natural disasters have affected food and cash crop production in Latin America and the Caribbean. Their impact on rural development and food security has been varied. • Central America & Caribbean tropical depression (October 2007) Damages to sugar cane plantations and melon crops were reported. Losses to maize and bean crops estimated to at 4 -14 % of the annual production
PEST ANALYSIS POLITICAL: 1. Government policy on taxation 2. Political conflict due to invasion of large number of foreign nationals in the country. 3. Instability in the economy due to inability on government to stabilize the economy. ECONOMIC: 1. 2. 3. 4. Credit crunch Recession leads to unemployment High interest rates Inflation – e.g. high fuel prices/ overall high price rise (this could lead to lower demand.) SOCIAL: 1. Changes in social trends 2. Trend in snacking – increase in people eating on the ‘go’ (Vending machines) 3. More people are health conscious – might stress on nutritional content TECHNOLOGICAL: 1. Better equipment calls foe skilled labour which might be an issue 2. Cost of machineries are very high and an addition of the import duties and taxes makes it worse. 3. Delay in procuring new machinery might disturb the production schedule. 4. Maintenance and repairs is one major factor as skilled labour is a issue
COMPETITIORS Though Cadbury enjoys maximum market share and economies of large scale, it faces mufti dimensional competition as it has an existence in chocolate, beverages, biscuits, candy and gum. The brand positioning is so strong that chocolate is synonymous to Cadbury in India. Cadbury’s prime competitors are: Nestle, Dabur, Britannia, Lotte, Wrigley’s, Parrys, Parle Agro, GSK etc… Most of the chocolates in the Indian market are priced identically which makes it very difficult for the weaker brands to survive. Dairy Milk comes in different sizes
and is priced in the denominations of Rs.5/10/20… similarly KitKat a product of Nestle is priced at same rates.. If we consider beverages Cadbury has Bournvita while GSK offers Horlicks, both have priced their product around Rs.200. SWOT ANALYSIS STRENGTHS OF THE FOOD INDUSTRY IN INDIA 1. India one of the largest food producers in the world 2. Indian has a varied agro-climatic conditions which a large and diverse raw material base. 3. India has well developed infrastructure and distribution network 4. India’s geographic location makes it easy for Europe, Far East, South East and West Asia. WEAKNESSES OF THE FOOD INDUSTRY IN INDIA 1. A large quantity of population lives below poverty line and price is a constrain. 2. Major distribution channels concentrates to cities and towns while a majority still lives in remote areas and villages 3. People in villages insists on home cooked food OPPORTUNITIES 1. Food industry is in the list of the banks priority sector for bank lending 2. Excise duty of 16 % in dairy machinery has been fully waived off 3. Use of foreign brand name is permitted THREATS 1. India is a developing economy and major population is young so is aware of bad eating habits 2. Due to the influence of western culture people prefer staying fit and might avoid food containing excessive fats 3. Due to a majority of Hindu population non-vegetarian food is not a big hit
COMPANY ANALYSIS Business in India (Company description & General info) Cadbury India Ltd. is a part of Kraft Foods. Cadbury India operates in five categories – Chocolate confectionery, Beverages, Biscuits, Gum and Candy. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands are Cadbury Dairy Milk, Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls, Éclairs, Bubbaloo, Tang and Oreo. In India, Cadbury began its operations in 1948 by importing chocolates. After over 60 years of existence, it today has six company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) Hyderabad and 4 sales offices (New Delhi, Mumbai-HQ, Kolkata and Chennai). The corporate office is in Mumbai. Cadbury India enjoys a value market share of over 70 % in the chocolate category and their brand Cadbury Dairy Milk (CDM) is considered the "Gold Standard" for chocolates in India. The taste of CDM defines the chocolate taste for the Indian consumer. In the Milk Food drinks segment their main product is Bournvita - the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy category Halls is the undisputed leader. They recently entered the biscuits category (in India) with the launch of the Worlds No. 1 biscuit brand Oreo. Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, they have worked with the Kerala Agricultural University to undertake cocoa research and released clones, hybrids that improved the cocoa yield. Their Cocoa team visits farmers and advises them on the cultivation aspects from planting to harvesting. They also conduct farmer meetings & seminars to educate them on Cocoa cultivation aspects. Their efforts have increased cocoa productivity and touched the lives of thousands of farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree! Cadbury/Kraft Foods has a market capitalization of over Rs1,500 crore. The company employs around 2000 people across India. Managing director Anand Kripalu, is also the group president for South Asia and Indo China.
FINACIAL PREFORMANCE Two years after Kraft acquired Cadbury globally; the sales in their Indian Business have grown faster than ever before. The firm aggressively ramped up distribution and increased advertising expanses on both existing Cadbury brands and new launches from Kraft portfolio. Between January and September 2011, Cadbury India's sales grew 40%, especially due to the successful launch of world's largest selling cookie Oreo in March as well as double digit growth of most existing Cadbury brands. Company’s growth has increase from around 20-23% each year in 2009 to more than 30% in 2010 and 40% in the first 9 months of the year 2011. Sales of its rivals including Hindustan Unilever, Nestle, Britannia and GlaxoSmithKline have grown between 15%-20% during the same period. Cadbury India had posted 29% jump in sales at Rs 2,652 crore for the year ended December 2010, the first year after US-based food giant Kraft acquired it.
SWOT ANALYSIS-COMPANY STRENGTHS 1. Cadbury’s (Kraft Foods) is a very profitable organization, generates revenue more than £6,508 billion (2005) 2. It is a global chocolate brand and enjoys a reputation for superior quality products and services 3. Cadbury’s was one of the Fortune Top 100 in 2005. The company is a esteemed employer that values its employees
1. Cadbury’s enjoys a reputation because it comes up with creative and innovative ideas however there are concerns regarding the possibility that their innovation may falter over time. 2. The organization has a strong presence in the United States of America, UK and India. It is often argued that they need to look for a portfolio of countries, in order to spread business risk. 3. Cadbury's recalled over 1 million chocolate bars over salmonella fears 4. The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.
1. Cadbury has decided to focus on a few of its key brands such as Cadbury Dairy Milk, Oreo to achieve growth for the company. 2. Co-branding with other manufacturers of food and drink, and brand franchising has potential. 3. Cadbury India is acquired by Kraft Foods
1. Cadbury’s are exposed to rises in the cost of chocolate and cocoa. 2. Devaluation of rupee and currency fluctuation 3. Conflicts between Kraft foods (USA) and Cadbury’s (UK)
Description: It describes about Industry Trends of food industry, PEST Analysis of food Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about the Cadbury India it's Finance performance, SWOT analysis of Cadbury india and various Strategies employed.