Kurukshetra University Kurukshetra

assignment

On
Cadbury Indian ltd.

Submitted By :

Sumeet Singh
Roll No. (89)

Sr.No. Subject Covered Page No.

1 About Company
2 Heritage
Few Facts about Company
Some Achievements
Business Values
Strategy
Quality Maintenance
How Chololate Made
Pastle Analyses

About the Company

Cadbury India
Cadbury is a leading global confectionery company with an outstanding
portfolio of chocolate, gum and candy brands. They employ around 50,000
people and have direct operations in over 60 countries, selling our products in
almost every country around the world.

In India, Cadbury began its operations in 1948 by importing chocolates. After 60

years of existence, it today 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). The
corporate office is in Mumbai.

Their core purpose "creating brands people love" captures the spirit of what
we are trying to achieve as a business.

Currently Cadbury India operates in four categories viz. Chocolate

Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate
Confectionery business, Cadbury has maintained its undisputed leadership over
the years. Some of the key brands are Cadbury Dairy Milk, 5 Star, Perk, Éclairs
and Celebrations. Cadbury enjoys a value market share of over 70% - the
highest Cadbury brand share in the world! Our flagship brand Cadbury Dairy
Milk is considered the "gold standard" for chocolates in India. The pure taste of
CDM defines the chocolate taste for the Indian consumer.

In the Milk Food drinks segment our 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 gums
category with the launch of our worldwide dominant bubble gum brand
Bubbaloo. Bubbaloo is sold in 25 countries worldwide.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in
India. For over two decades, we have worked with the Kerala Agriculture
University to undertake cocoa research and released clones, hybrids that
improve the cocoa yield. Our Cocoa team visits farmers and advises them on
the cultivation aspects from planting to harvesting. We also conduct farmers
meetings & seminars to educate them on Cocoa cultivation aspects. Our 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!

Heritage

Cadbury starts back in 1824 when John Cadbury opened a shop in

Birmingham selling cocoa and chocolate. Since then they have expanded
their business throughout the world by a programme of organic and acquisition
led growth. On 7 May 2008, the separation of confectionery and Americas
Beverages businesses was completed creating Cadbury plc with a vision to be
the world's BIGGEST and BEST confectionery company.

A few facts and figures

 We make and sell three kinds of confectionery: chocolate, gum and candy
  We operate in over 60 countries. John Cadbury opened for business in
1824 – making us nearly 200 years young
 We work with around 35,000 direct and indirect suppliers
 We employ around 50,000 people
 Every day millions of people around the world enjoy our brands

We are performance driven, values led. Throughout changing times, our

constant values have inspired us to be pioneers in business and in corporate
responsibility. They help ensure we are proud of our company and are critical to
our core purpose of creating brands people love.

Major Achievements of Cadbury

 Worlds No 1 Confectionery company

 World's No 2 Gums company.
 World's No 3 beverage company.
 Cadbury Dairy Milk & Bournvita have been declared a "Consumer
Superbrand" for 2006-7 by Superbrands India

Business Values
Performance :
We are passionate about winning. We compete in a tough but fair way. We are
ambitious, hardworking and make the most of our abilities. We are prepared to
take risks and act with speed.

Quality :
We put quality and safety at the heart of all of our activities - our products, our
people, our partnerships and our performance.

Respect :
We genuinely care for our business and our colleagues. We listen, understand
and respond. We are open, friendly and welcoming. We embrace new ideas and
diverse customs and cultures.

Integrity :
We always strive to do the right thing. Honesty, openness and being
straightforward characterise the way we do business. We have clear principles
and do what we say we will do.

Responsibility:
We take accountability for our social, economic and environmental impact. In
this way we aim to make our business, our partners and our communities better
for the future.

Strategy

The business still has significant untapped potential – both in terms of top line
growth and returns. By exploiting the strength of our leadership positions to
continue to grow our market share and significantly increase our margins and
returns, we aim to achieve our vision of becoming the biggest and best
confectionery company in the world.
Vision into Action (VIA) plan for 2008 to 2011 aligns the energies and efforts of
our teams around the world behind a number of priorities which will make the
most impact on our revenue and margin performance.

In order to generate superior returns for our shareowners, our VIA will deliver
six financial targets. These are set out in our financial performance scorecard
below:

• Organic revenue growth of 4% - 6% every year

• Total confectionery share gain

• Mid-teens trading margins by 2011

• Strong dividend growth

• An efficient balance sheet Growth in Return on Invested Capital (ROIC)

To achieve these financial goals, we have a growth and efficiency strategy

which aligns behind our focus on fewer, faster, bigger and better. This focus is
being applied to all aspects of our business.

Quality And Food Safety

1. Market high quality, superior value products that consistently meet our
specifications and comply with local regulatory requirements, while
continuously improving and exceeding our consumers' expectations.

2. Guarantee that our customers and consumers come first by actively listening
and understanding their quality and value expectations at the points of
purchase and consumption.

3. Ensure that any representation of our company image, including our

products and trademarks, meet approved standards, reinforce our commitment
to quality and safeguard the reputation of Cadbury.

4. Maintain a “right first time” culture that consistently embraces quality and
food safety, where everyone understands their responsibilities and
accountabilities.

5. Operate audited quality management systems that continually improve

processes to deliver this policy and our standards.

6. Assign clear management accountability for setting and meeting measurable

goals and targets for quality and food safety.

7. Work with our supply chain and business partners to assure compliance with
our quality policy and systems, ensuring quality throughout our supply chain.

8. Place continuous improvement at the heart of our performance enabling us

to deliver superior products and service to our consumers and customers.
9. Create a passion for quality where success and achievement are
communicated,
recognised and celebrated.

10. Review and update this policy ensuring it continues to reflect our values
and the expectations of consumers

How chocolate made

The cocoa-bean -- the heart of the sweetest delicacy in the world -- is bitter!
This is why, up to the 18th century some native tribes ate only the sweetish
flesh of the cocoa fruit. They regarded the precious bean as waste or used it, as
was the case among the Aztecs, as a form of currency.

1. The Varieties

There are two quite different basic classifications of cocoa,

under which practically all varieties can be categorised: Criollo and
Forastero cocoas. The pure variety of the Criollo tree is found mainly in its
native Equador and Venezuela. The seeds are of finer quality than those of the
Forastero variety.

They have a particularly fine, mild aroma and are, therefore, used only in the
production of high-quality chocolate and for blending. However, Criollo cocoa
accounts for only 10% of the world crop. The remaining 90% is harvested from
trees of the Forastero family, with its many hybrids and varieties. The main
growing area is West Africa. The cocoa tree can flourish only in the hottest
regions of the world.

2. The Harvest: Immediately after harvesting, the fruit is treated

to prevent it from rotting. At fermentation sites either in the
plantation or at, collecting points, the fruit is opened.

3. Fermentation: The fermentation process is decisive in the production of

high quality raw cocoa. The technique varies depending on the growing region.

4. Drying: After fermentation, the raw cocoa still contains far too much water;
in fact about 60%. Most of this has to be removed. What could be more natural
than to spread the beans out to dry on the sun-soaked ground or on mats? After
a week or so, all but a small percentage of the water has evaporated.

5. Cleaning: Before the real processing begins, the raw cocoa is

thoroughly cleaned by passing through sieves, and by
brushing. Finally, the last vestiges of wood, jute fibres, sand and
even the finest dust are extracted by powerful vacuum equipment.
6. Roasting: The subsequent roasting process is primarily designed to develop
the aroma. The entire roasting process, during which the air in the nearly 10
feet high furnaces reaches a temperature of 130 °C, is carried out
automatically.

7. Crushing and shelling: The roasted beans are now broken into medium
sized pieces in the crushing machine.

8. Blending: Before grinding, the crushed beans are weighed and blended
according to special recipes. The secret of every chocolate factory lies in the
special mixing ratios which it has developed for different types of cocoa.

9.Grinding: The crushed cocoa beans, which are still fairly coarse are now pre-
ground by special milling equipment and then fed on to rollers where they are
ground into a fine paste. The heat generated by the resulting pressure and
friction causes the cocoa butter (approximately 50% of the bean) contained in
the beans to melt, producing a thick, liquid mixture.

This is dark brown in colour with a characteristic, strong odour. During cooling it
gradually sets: this is the cocoa paste.

At this point the production process divides into two paths, but which soon join
again. A part of the cocoa paste is taken to large presses, which extract the
cocoa butter. The other part passes through various blending and refining
processes, during which some of the cocoa butter is added to it. The two paths
have rejoined.

10. Cocoa Butter

The cocoa butter has important functions. It not only forms part
of every recipe, but it also later gives the chocolate its fine
structure, beautiful lustre and delicate, attractive glaze.

11. Cocoa Powder

After the cocoa butter has left the press, cocoa cakes are left which still contain
a 10 to 20% proportion of fat depending on the intensity of compression.
These cakes are crushed again, ground to powder and finely sifted
in several stages and we obtain a dark, strongly aromatic powder
which is excellent for the preparation of delicious drinks - cocoa.
Cocoa paste, cocoa butter, sugar and milk are the four basic ingredients for
making chocolate. By blending them in accordance with specific recipes
the three types of chocolate are obtained which form the basis of ever product
assortment, namely:

12. Kneading: In the case of milk chocolate for example, the cocoa paste,
cocoa butter, powdered or condensed milk, sugar and flavouring - maybe
vanilla - go into the mixer, where they are pulverized and kneaded.

13. Rolling
Depending on the design of the rolling mills, three or five
vertically mounted steel rollers rotate in opposite directions.
Under heavy pressure they pulverise the tiny particles of cocoa
and sugar down to a size of approx. 30 microns. (One micron is a thousandth
part of a millimetre.)

14. Conching
But still the chocolate paste is not smooth enough to satisfy our
palates. But within two or three days all that will have been put
right. For during this period the chocolate paste will be refined to
such an extent in the conches that it will flatter even the most discriminating
palate.

Conches (from the Spanish word "concha", meaning a shell) is the name given
to the troughs in which 100 to 1000 kilograms of chocolate paste at a time can
be heated up to 80 °C and, while being constantly stirred, is given a velvet
smoothness by the addition of certain amounts of cocoa butter. A kind of
aeration of the liquid chocolate paste then takes place in the conches: its bitter
taste gradually disappears and the flavour is fully developed. The chocolate no
longer seems sandy, but dissolves meltingly on the tongue. It has attained the
outstanding purity which gives it its reputation.
 PESTLE Analysis

1. Political – The Company’s strong advantage is the seniority in business. With

that the company can able to manage any adjustment needed in every country.

The seniority of the management enables the other foreign country also

welcomes the company’s existence because of its competence in the market.

2. Economic – There is no doubt that the Cadbury is making a big contribution in

the economies of the foreign country as well as in their own country. The high

level or rate of sweet-lovers, the company placed a label as the best choice of

the market. Another contradicting factor is the economic downturn that affects

all confectionery companies.

3. Social – The impact of the business in the society is really great because of it

became sweeteners after every meal. Therefore, many individuals can enjoy

the happiness it brings inside the house. In some instances, the other people

turned down the idea of eating chocolate because of some serious health

problems. In terms of valuing the people, Cadbury recognizes the rights of the

workforce and valued the ideas they might contribute for their progress.

4. Technology – From the traditional crafting of chocolates, the company also

recognized the importance of technology. From the production, Cadbury had

incorporated into many types of machinery that make their production be a

cost-efficient procedure.

5. Legal – The ideas of creating a specified taste to be available in the markets.

The competitors and the other company making the same nature of business
are unique. In terms of the merging and acquisition business, the company

recognized the legal aspect that is the basis of the right flow of the business.

6. Environment – The Company recognizes the certain impacts that they might

bring in the environment. There are available strategies and continuous

inspection came from the local officials to insure that the resource, as well as

the environment is not exploited.

DISTRIBUTION CHANNEL OF CADBURY

The size of the chocolate market in India is about 4,000 tonnes and is valued at
Rupees 6500 million (US$ 130 million). Cadbury India has the biggest market
share at 70 per cent while Nestle is the second largest at 20 per cent.1
Cadbury’s reaches 0.6 million retail outlets. Recently there was a crisis that
Cadbury’s had had to resolve when it was reported that worms were found in a
few of the Cadbury’s chocolates. Since then the company has invested in
upgrading packaging facilities and in making sure that the product’s quality and
integrity is maintained. Given that not all retailers have cold storage facilities,
the firm has to continue to try and educate channel members regarding proper
storage facilities
 Cadbury Reports Record 2008 Results Strong Growth in
Sales, Margins and Earnings

2008 Highlights
• Base business revenue up 7%; strong growth across emerging
markets and focus brands

o Good growth across all categories; chocolate up 6%, gum up 10%,

candy up 6%

o Emerging markets up 12%; five year compound average growth of

12%

o Focus brands up 8%; Cadbury Dairy Milk up 11%, Trident up 11%, and
Halls up 9%

• Underlying margins up 150 bps driven by Vision into Action cost

reduction initiatives
 o Reported margins up 180 bps to 11.9%

o Price realisation offset input cost increases

• Strong financial performance

o Performa EPS up 16%; up 30% at reported currency

o Recommended final dividend of 11.1p (2007: 10.5p); full year dividend

16.4p, up 6%

o Improved Return on Invested Capital, up 110 bps

o Secure financing – average maturity of long-term debt 6 years

• Transformation of the business into a category-led pure-play

confectionery company

o Demerger of Dr Pepper Snapple Group completed in May

o Announced a conditional agreement to sell Australia Beverages for

£550m

Todd Stitzer, Cadbury’s CEO said: “In 2008, Cadbury completed its
transformation into a pure-play confectionery company. Our strong revenue
growth and significant improvement in operating margin demonstrate the
relative resilience of our focused business model. Whilst we will not be immune
from the continued weak economic environment, at this early stage in 2009, we
expect to deliver revenue growth around the lower end of our 4-6% goal range
and to make good progress toward our goal of mid-teens margins by 2011.”

£m 2008 Re- Reported Constant

presented Currency Currency 3
2007 Growth % Growth %
Revenue 5,384 4,699 +15 +6

Underlying Profit from Operations2 638 473 +35 +22

Restructuring & other non- (250) (195)

underlying items
Profit from Operations 388 278

Underlying Profit before Tax2 559 430 +30 +17

Profit before Tax 400 254

£m 2008 Re- Reported Constant
presented Currency Currency 3
2007 Growth % Growth %
Discontinued Operations (4) 258

Underlying EPS Continuing Ops2 24.9p 14.7p

Reported EPS Continuing Ops 22.8p 7.0p

Reported EPS Continuing & 22.6p 19.4p

Discontinued Ops
Proforma EPS – Continuing Ops4 29.8p 23.0p +30 +16

Dividend per share 16.4p 15.5p +6

2008 RESULTS OVERVIEW

CONTINUING OPERATIONS

£m 2007 Base Acq/ Business Exchange 2008

Business Disposals Improvement
Costs

Revenue 4,699 324 (34) - 395 5,384

- year-on-year +7% -1% - +9% +15%

change
Underlying Profit 473 109 (4) (1) 61 638
from Operations
- year-on-year +23% -1% - +13% +35%
change
Underlying 10.1% +150bps +30bps 11.9%
Operating Margin

Cadbury performed well in 2008 with good growth in revenue and strong
growth in margin driving significant increases in underlying profit and earnings
per share. In addition, exchange rate movements increased revenue by 9% and
underlying operating profit by 13%, adding 30 basis points (bps) to underlying
operating margin.

Base business revenue growth of 7% was ahead of our 4% - 6% goal range.

Overall, acquisitions net of disposals had a modest negative impact in the year.
Exchange rate movements had a beneficial impact on revenue with reported
revenue ahead by 15%.

Revenue momentum remained good throughout the year. Price realisation and
mix benefits of around 6% complemented volume growth of 1%. Price
realisation, which includes price rises, adjustments in promotional frequency
and product and package resizing, has been essential to recover cost pressures
throughout the year, particularly in cocoa, sweeteners and oil based materials.

Business units
Our operations are split into seven business units:

• Britain and Ireland,

• Middle East and Africa (MEA),
• North America,
• South America,
• Europe,
• Asia, and
• Pacific.
 FUTURE PLANS

The world’s biggest sporting event comes to London in 2012 and Cadbury is
proud to be the Official Treat Provider to the 2012 Olympic and Paralympic
Games. In the UK only, this gives us exclusive marketing rights within our
category with London 2012, the British Olympic Association and Team GB and
Paralympics GB.

The London 2012 Games will be the biggest public event to happen in the UK
during our lives and we believe Cadbury’s support for London 2012 will be great
for Cadbury, the Games and for Britain.
Cadbury is an iconic British brand and British company. We are proud part of
the fabric of British society, its heritage and its future. People love our
products, have affection for our company and for what it stands.

We particularly recognise and value the special nature of an Olympic and

Paralympic Games held in Britain. Our products are treats, which bring a
moment of fun and pleasure and a smile to the face. We want to bring that
same fun, pleasure and smile to the 2012 Games. We want our support for
London 2012 to inspire and bring moments of pleasure to our consumers, our
customers, our colleagues and the communities in which we live and work. We
will be revealing more of our plans in the months to come.

We have done this before. We have an unrivalled and successful record of

community involvement, volunteering and support at the Sydney 2000 Olympic
Games, Manchester Commonwealth Games in 2002 and the Melbourne
Commonwealth Games in 2006.
Cadbury values are in line with the Olympic Games ethos of inspiration,
optimism and community and we will bring a spirit of fun, enthusiasm and
excitement to the Games.

Brands
Chocolates-

1. Cadbury Dairy Milk:

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K.,
but the journey with chocolate lovers in India began in 1948. Cadbury Dairy Milk
has been the market leader in the chocolate category for years. And has
participated and been a part of every Indian's moments
of happiness, joy and celebration. Today, Cadbury Dairy
Milk alone holds 30% value share of the Indian chocolate
market.
The variants are
 Fruit & Nut,
 Crackle
 Roast Almond,

2. 5 Star:

Launched in 1969 as a bar of chocolate that was hard outside with soft caramel
nougat inside, Cadbury 5 Star has re-invented itself over the years to keep
satisfying the consumers taste for a high quality & different chocolate eating
experience.

3. Perk:

A pretty teenager; a long line, and hunger! Rings a bell? That was how Cadbury
launched its new offering; Cadbury Perk in 1996. With its light chocolate and
wafer construct, Cadbury Perk targeted the casual snacking space that was
dominated primarily by chips & wafers.

4. Cadbury Celebrations:
Cadbury Celebrations was aimed at replacing traditional
gifting options like Mithai and dry- fruits during festive
seasons. Cadbury Celebrations is available in several
assortments: An assortment of chocolates like 5 Star, Perk,
Gems, Dairy Milk and Nutties and rich dry fruits enrobed in
Cadbury dairy milk chocolate in 5 variants, Almond magic,
raisin magic, cashew magic, nut butterscotch and caramels

5. Cadbury Temptation:
The Cadbury Temptations range is available in 5 delicious flavour variants
- Roast Almond Coffee, Honey Apricot, Mint Crunch, Black Forest and Old
Jamaica. With its international quality chocolate Temptations soon became a
popular brand for “chocoholics”.

6. Dairy Milk Eclairs:

In India, Cadbury Dairy Milk Eclairs has been the most preferred brand in
the Eclairs category for years and has always been a favourite with consumers.

7. Bytes:

Cadbury Bytes is a one of a kind snack, in that it is sweet and not salty, as compared to most of the
other snacks. It's a bite sized snack with a crunchy wafer and rich Choco cream filling. There are
three variants of Bytes available in the market - Regular, Coffee and Strawberry, at two price points-
Rs 5 and Rs 10.

8. Bournvita:

Cadbury was incorporated in India on July 19th, 1948 as a private limited

company under the name of Cadbury-Fry (India). Cadbury Bournvita was
launched during the same year.

9. Bubbaloo:

Bubbaloo is an innovative soft bubblegum with a centre filled liquid.

It is filled with a high level of a great tasting fruit flavoured liquid that floods
your mouth instantly

DEVELOP PRODUCT LIFE CYCLE OF CADBURY DAIRY

MILK.

• Products have limited life.

• Product sales passes through distinct stages, each posing different
challenges,
opportunities and problem to the seller.
• Profit raise and fall at different stages.
• Product required different marketing, financial, manufacturing, HR and
resource strategy in each life cycle stage.

SWOT Analysis of Cadbury India

SWOT Analysis is a strategic planning tool used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in any other
situation requiring a decision. Strengths and weaknesses are internal factors
and opportunities and threats are external factors.
As per as the Cadbury India is concern the SWOT analysis is as follow:
Strength:
• Brand Name: Cadbury has earned a reputation in the market for extending
quality products to the market vis-à-vis its competitors. It has maintained a
strong Brand name in confectionery market globally as company as in India.

• Market Share: Cadbury India has the largest market share of 70% in the
confectionery market across the country.

• Distribution Network: Huge distribution network across the country with

strong visual presence across all possible channels such as stores, Railway
stations, Malls, Gifting mix, etc. Visibility is created everywhere to promote
Cadbury products near schools and other places. Events such as Diwali and
Valentine Day are capitalized very smartly by CIL.

• Aggressive Marketing through media channel as company as Promotional

route i.e. has Amitabh as a brand ambassador for Cadbury Dairy milk and
provides plethora of schemes for all channel partner as company as for end
consumers.

• It is a global chocolate brand built upon a reputation for fine products and
services.

• Cadbury Schweppes plc was rated as one of the Fortune Top 100 Companies
to Work For in 2006. The company is a respected employer that values its
workforce.

• The organization has strong ethical values and an ethical mission statement

• Its Chocolate and MFD brands are well established in the Indian Markets.
Cadbury‟s Dairy Milk is the foremost name in the Indian Chocolate Market. 5
star is another very strong Cadbury brand in Chocolates. In case of Malted Food
Drinks, Cadbury’s Bournvita is the strongest Food beverage.
• Rich product mix.

• Support from the parent company i.e. Cadbury Schweppes plc. Cadbury
Schweppes plc is a very profitable organization, generated revenue of more
than £6,590 billion (2006).

Weaknesses:
• Cadbury main strength can be its biggest weakness. Cadbury has done a
rapid line extension in the recent years. Now it is selling well over 60 different
lines. Competitors can take advantage of this by identifying vulnerable spots in
this huge portfolio.

• Little Penetration in the rural sector.

Opportunities:
• Cadbury is very good at taking advantage of opportunities.

• The company has the opportunity to expand its global operations. New
markets with new products which are limited in particular region.

• Cadbury has decided to focus on a few of its key brands such as Cadbury
Dairy Milk, Bournvita, Eclairs and Halls to drive growth for the company.

• Co-branding with other manufacturers of food and drink, and brand

franchising to manufacturers of other goods and services both have potential.
Recent tie up with Kentucky Fried Chicken (KFC), for selling Ulta Perk is one
such example.

• Cadbury India is attempting to increase the declining market for chocolate

with innovation, one of which is its sweet snack, Bytes.

• Brand Ambassador Amitabh Bachchan for the advertisement of their New

Products.

Threats
• Cadbury is exposed to 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.

• Stiff competition in Confectionery segment

• The company has large exposure to foreign currency exchange rate risk,
mainly on account of imported cocoa beans and cocoa butter in US Dollar and
Pound Sterling.

• Storage problem: Given India's hot and humid climate, can there not be an
alternative in terms of storing and packaging? Given India's climate, chocolates
need to be stored in a cool, dry and hygienic place away from grains and
cereals. To this end, the Company provides retailers with storage dispensers
and visi-coolers to give adequate product protection. Additionally, every
Cadbury product label mentions the care instruction: 'Store in a cool, hygienic
and dry place.'