Chocolate industry

CHOCOLATE INDUSTRY

BySujith kumar pAnu joseAnuraj sSteevenson

“Life is like a box of chocolates. You never know what you’re going to get.”

What is chocolate?

• A confection produced from the fruit of the tropical tree Theobroma cacao. The fruit, known as cacao beans, are fermented, dried, roasted, and ground, and the resulting product is called cocoa liquor, which can be separated into cocoa butter, a smooth, solid fat used in both food and cosmetics, and cocoa powder. Cocoa butter and cocoa powder are combined in various proportions with other ingredients to produce chocolate.

Common varieties of chocolate are:

• Dark Chocolate

• Milk Chocolate

• White Chocolate

• Major consumers of chocolates apart from kids are teenagers and people between the age of 15 – 35

• And a recent study in Great Britain showed that 91% of females and 87% of males consume chocolate products.

• Chocolates which were considered expensive once have now become affordable by one and all. Most of the chocolate brands produce chocolates in different sizes that are priced according to their sizes.

• Due to the increasing levels of social consciousness people prefer gifting well wrapped chocolate packets rather than sweets on occasions and festivals.

• Taking advantage of this situation the top chocolate brands in India are now concentrating on the packaging and are introducing well packaged chocolates for specific occasions.

Some of the Top chocolate brands in the World

Market shareMARS• Global Market Share: 14.6%

Best-Selling Candies: M&Ms, Snickers, Milky Way

NESTLÉ• Global Market Share: 12.6%

Best-Selling Candies: Nestlé Crunch, Butterfinger

KRAFT• Global Market Share: 8.3%

Best-Selling Candies: Milka

FERRERO• Global Market Share: 7.3%

Best-Selling Candies: Ferrero Rocher

CADBURY• Global Market Share: 6.9%

Best-Selling Candies: Cadbury Creme Egg

HERSHEY• Global Market Share: 6.7%

Best-Selling Candies: Hershey's, Hershey's Kisses

Chocolate Industry in India• Initially chocolates were just limited to a few

flavors caramel and milk chocolate till recent years when the introduction of dry fruits in chocolates created waves in the chocolate industry in India

• Even dark chocolate which was not widely available in the Indian subcontinent till some time back has started gaining ground in the Indian chocolate market.

• The Chocolate market in India is currently estimated a` 1500 crores. Growing at a rate of almost 18-20% per annum the chocolate market in India is becoming one of the major industries in the country.

• India produces almost 30,000 tones of chocolate products annually. India's per capita consumption of chocolate is a whooping 300 grams.

• Out of which Over 70 per cent of the consumption takes place in the urban areas. Chocolate consumption in the rural areas is negligible in India

Top Chocolate Brands in India are:

• Cadbury

• Nestle

• Amul

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)

• Cadbury and Nestle has been dominating the chocolate industry in India over the last few decades due to their deep penetration levels and strong customer base.

• Cadbury over the years has become synonymous with chocolates in the country. Be it the quality of the chocolate, the packaging, the marketing or the advertising Cadbury has been ruling the chocolate industry since quite a few decades now. However as compared to these two brands Cadbury and Nestle, Amul is relatively new.

Cadbury

• Cadbury is a confectionery company owned by Kraft Foods and is the industry's second-largest globally after Mars, Incorporated. With its headquarters in Uxbridge, London, England, the company operates in more than 50 countries worldwide.

• Founder – John cadbury

• Cadbury's headquarters (Head Office UK) is the Cadbury House in the Uxbridge Business Park in Uxbridge, London Borough of Hillingdon, England

• The company was known as Cadbury Schweppes plc from 1969–2008

• At 2010 kraft foods take over the company

VISION & MISSION

VISION• Cadbury’s set out a vision to achieve “a Cadbury in every

pocket” dream by increasing the penetration of chocolates.

MISSION• Cadbury's means quality: this is our promise.

Ourreputation is built upon quality: Our commitment tocontinuous improvement will ensure that our promise is delivered'

Cadbury India

• Established in India – 1948

• Head quarters - Mumbai

• Manufacturing facilities at

1. Thane

2. Pune

3. Gwalior

4. Bangalore

5. Baddi (Himachal Pradesh)

• Cadbury India enjoys a value market share of over 70 percent in the chocolate category and brand Cadbury Dairy Milk (CDM) is considered the "gold standard" for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer.

Products1. Cadbury diary milk

2. 5-star

3. Perk

4. Celebrations

5. Temptations

6. Eclairs

7. Gems

8. Bubbalao

9. Bournville

10.Silk (diary milk)

Consumption of Cadbury products

Sales

Diary milk

5-star

gems

perk

bournville

silk

temptations

celebrations2%

PRICE• Second P of marketing is not another name for

blindly lowering prices and relying on this strategy alone to increase sales dramatically.

• The strategy used by Cadbury’s is for matching the value that customer pays to buy the product with the expectation they have about what the production is worth to them.

• Cadbury’s has launched various products which cater to all customer segments. So every customer segment has different price expectation from the product

• . Therefore maximizing the returns involves identifying right price level for each segment, and then progressively moving through them.Dairy Milk Rs. 15Perk Rs. 105 Star Rs. 10Fruit and Nut Rs. 22Gems Rs. 10Break Rs. 5Nutties Rs. 18Bournvita (500 gm) Rs. 104

PROMOTION

ADVERTISEMENTS

THE BIG B FACTOR

• PACKAGING

• The packaging was changed to include a sealed plastic wrapper inside the outside foil. Cadbury's launched a new 'purity-sealed' packaging for its flagship product, cadbury dairy milk. 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.

• Cadbury invested nearly rs 25 crore (rs 250 million) this year on new machinery for the proved packaging.

1905 1930s

1960s1970s

PACKAGING STYLES

PRESENT

• DISTRIBUTION• 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.

• Cadbury's distribution network used to encompasses 2100 distributors and 450,000 retailers

• 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

• INDIRECTEXPENSES) LIKE TRAVEL COSTS ANDHOTELSWERE ALSO BEING STUDIED

• NATURE OF RETAIL OUTLET

• chocolates are primarily sold through kiranastores, gift stores, medical stores, canteens, pan-bidi stores, bakeries, sweetshops 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

• 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. hires at kearney to curb costs .

• 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

Operates in India in 4 categories viz

1. Chocolate confectionary

2. Milk food drinks

3. Candy

4. Gum

DEMOGRAPHIC SEGMENTATION

• INCOME LEVEL- IN THE MIDDLE AND

• HIGHER INCOME GROUPS

• CHILDREN – 55%

• ADULTS – 12%

• YOUNG ADULTS- 33%

BUSINESS SEGMENTS

• CHOCOLATES

• SUGARCONFECTIONARY

• MALTED FOODS

• COCOA POWDER

• DRINKING CHOLOCATE& SMALL EXTRACT

Major competitors

• NESTLE (In terms of Chocolates)

• AMUL Ltd (In terms of Chocolates)

Market share

Sales

cadbury

amul

nestle

others

MARKETING STRATEGY OF CADBURY

• Attracting Shoppers Attention

• On Every Hand Everywhere

• Growing with Emerging Markets

• A strong foundation

• Growing with the market

• Functional advantage

• Affordable indulgence

• Importing success

Distribution channel

PROMOTIONAL TOOL : ADVERTISEMENTS

Basic purpose behind advertising is:

• To position the product as a

• “high quality brand” with a wide

• range of offering providing at anytime.

• To create awareness about new flavors

• Induce consumer trails. Build corporate image

• To undertake competitive advertisement

SWOT• STRENGTHS-Distribution Network-Market

Share-Aggressive Marketing-Rich product mix

• WEAKNESS- Little penetration in the rural sector

• THREATS-Rise in the cost of chocolate and dairy products.-Entry of many foreign players in the Indian Confectionary market, which are giving higher margins to the retailers

• OPPORTUNITIES Co-branding with other manufacturers of food and drink

Cadbury vs Nestle

• Nestle captures 36% of market

• Nestle munch have the maximum market share

• Kitkat comes 2nd place

• Cadbury captures 64% of market

• Cadbury diary milk have the maximum market share

• Five star comes 2th place

Cadbury brand ambassader

Nestle brand ambassador