EXECUTIVE SUMMARY

The first chapter deals with introduction of chocolate. The chapter reveals the

history of chocolate from the year 1585 to the year 1945. The chapter also helps us

understand how chocolate is manufactured & what are the different types of chocolate.

The chapter also reveals market share of each type of chocolate & segmentation of each

chocolate. The chapter also informs about growth in chocolate market in the last 10

years.

The next chapter deals with information of Cadbury chocolate. The chapter reveals the

history of Cadbury, Cadburys success story in India, Cadburys industrial setup. The

chapter also informs us about the strength, weaknesses, opportunities & threats which are

faced by Cadbury.

The next chapter deals with information of Nestle chocolate. The chapter reveals the

history of Nestle, Nestles success story in India, Nestles industrial setup. The chapter also

informs us about the strength, weaknesses, opportunities & threats which are faced by

Nestle.

The next chapter reveals the information about Amul chocolate and their success

story. The chapter also reveals strength, weaknesses, opportunities & threats which are

faced by Amul.

The next chapter informs us about the different marketing strategies of three giants of the

Indian chocolate industries.

1

CHAPTER 1

INTRODUCTION TO CHOCOLATE

History Of Chocolate

1585

The first official Spanish shipment of cacao beans arrived from Veracruz, Mexico, at the

port of Seville. Religious leaders found them engaged in arguments about whether

chocolate were a beverage or a food. Religious fasts forbade the taking of nourishment,

and yet chocolate had become popular among those who were fasting precisely because it

eased their hunger. Most people, including all of the popes consulted during the course of

the debate (from Gregory XIII to Benedict XIV) agreed that, since one drank it, it did not

break the fast. Nevertheless, there were many who took a more puritanical view,

maintaining that it was far too nourishing and sustaining to be permissible.

1600 – 1650

By the mid-17th century, chocolate were known as a beverage in Britain. Interestingly,

the appearance of chocolate coincided with the arrival of coffee from the Middle East and

tea from China. Chocolate remained expensive long after the other two beverages were

affordable to the middle classes, but it was one of the offerings commonly found in

British coffeehouses. A tall pot was developed for serving chocolate beverages. Known

as a chocolatiere, the lid had a small hole in the top where a plunger-like molinillo

(moulinet in French) was fitted. 

1765

In 1765 the Englishman James Watt invented the steam engine and in doing so set in

motion what we now refer to as the Industrial Revolution. Around the same time in the

colony of Massachusetts one of the first machine oriented chocolate manufacturing

businesses was being established. The partnership of John Hannon, an Irishman, and Dr.

James Baker of the Massachusetts colony formed the company Hannon's Best Chocolate.

Through the use of an old grist mill, cacao beans were ground into chocolate liquor,

pressed into cakes of paste for eventual use as a chocolate beverage. During a routine

2

trading mission to the West Indies, Hannon was presumed dead when his ship failed to

return. The name of the company subsequently changed to the Baker Company. It was

not until 1927 that the Baker family sold their business to General Foods. 

1879

During the same period that Cadbury was developing into a formidable chocolate force, a

Swiss chocolate manufacturer was struggling to find a way to combine chocolate with

milk. Daniel Peter could not produce something with a smooth consistency because the

milk and chocolate never mixed right. Coincidently a fellow Swiss named Henri Nestle

was hard at work investigating ways in which milk could be made more shelf-stable for

use as baby formula. The product of Nestle's experimentation was a sweetened condensed

milk. The new milk, which had less water, was mixable with chocolate and made a

product that would not spoil easily. Henri Nestle and Daniel Peter formed a company in

1879. The largest food company in the world today is Nestle.

1945

As the other countries were developing India felt the scope of chocolate and jumped in

the chocolate segment. The Gujarat Cooperative Milk Marketing Federation (GCMMF)

or known as Amul is an India’s largest food product marketing organisation. It is a state

level apex body of milk cooperatives including chocolates in Gujarat that aims to provide

remunerative returns to the farmers and also serve the interest of consumers by providing

quality products, which are good value for money. In India Amul chocolates has a major

share of the market. Today, GCMMF's Amul brand of chocolate products receives

business queries from dozens of countries, ranging from the U.S. and the Netherlands to

Singapore and New Zealand.  For 30 odd years the Utterly Butterly girl of Amul has

managed to keep her fan following intact. So much so that the ads are now ready to enter

the Guinness Book of World Records for being the longest running campaign ever.

Later in the same period the other foreign companies like Cadburys and Nestle entered in

Indian market. So since 1500B.C. there has been use of cocoa or chocolate in various

ways and was consumed which even today is used in various ways.

3

Preparation's

Cocoa, common name for a powder derived from the fruit seeds of the cacao tree and for

the beverage prepared by mixing the powder with milk. When cocoa is prepared, most of

the cocoa butter is removed in the manufacturing process. After the fat is separated and

the residue is ground, small percentages of various substances may be added, such as

starch to prevent caking, or potassium bicarbonate to neutralize the natural acids and

astringents and make the cocoa easy to dissolve in liquids. Cocoa has a high food value,

containing as much as 20 percent protein, 40 percent carbohydrate, and 40 percent fat. It

is also mildly stimulating because of the presence of Theo bromine, an alkaloid that is

closely related to caffeine.

The processing of the cacao seeds, better known as cocoa beans, is complex. The fruit

harvest is cured or fermented in a pulpy state for three to nine days, during which the heat

kills the seeds and turns them brown. The enzymes activated by fermentation impart the

substances that will give the beans their characteristic chocolate flavor later during

roasting. The beans are then dried in the sun and cleaned in special machines before they

are roasted to bring out the chocolate flavor. They are then shelled in a crushing machine

and ground into chocolate. During the grinding, the fat melts, producing a sticky liquid

called chocolate liquor, which is used to make chocolate candy or is filtered to remove

the fat and then cooled and ground to produce cocoa powder.

The beans are sold in international markets. African countries harvest about two-

thirds of the total world output; Ghana, Côte d'Ivoire, Nigeria, and Cameroon are the

leading African cocoa producers. Most of the remainder comes from South American

countries, chiefly Brazil and Ecuador. Attempts by producing countries to stabilize prices

through international agreements have had little success.

4

Types of chocolate

Sweet chocolate, usually dark in colour is made with chocolate liquor,

sugar, cocoa butter, and such flavourings as vanilla beans, vanillin, salt, spices and

essential oils. Sweet chocolate usually contains at least 25-35% chocolate liquor content.

The ingredients are blended, refined (ground to a smooth mass), and conched. Viscosity

is then adjusted by the addition of more cocoa butter, lecithin (an emulsifier), or a

combination of both.

Milk chocolate is formulated by substituting whole milk solids for a

portion of the chocolate liquor used in producing sweet chocolate. It usually contains at

least 10% chocolate liquor and 12% whole milk solids. Manufacturers usually exceed

these values, frequently going upto 12-15% chocolate liquor and 15-20% whole milk

solids. Milk chocolates, usually lighter in colour than sweet chocolate, are milder in taste

because of its lower content of bitter chocolate.

Confectionery

Confectionery, processed food based on a sweetener, which may be sugar or

honey, to which are added other ingredients such as flavorings and spices, nuts,

fruits, fats and oils, gelatin, emulsifiers, colorings, eggs, milk products, and

chocolate or cocoa. Confectionery, usually called candy in the United States, or

sweets in Great Britain, can be divided into two kinds according to their preparation

and based on the fact that sugar, when boiled, goes through different stages from

soft to hard in the crystallization process. Typical of soft, or crystalline, candy—

smooth, creamy, and easily chewed—are fondants (the basis of chocolate creams)

and fudge; typical hard, noncrystalline candies are toffees and caramels. Other

favorite confections include nougats, marshmallows, the various forms of chocolate

(bars or molded pieces, sometimes filled), pastes and marzipan, cotton candy (spun

sugar), popcorn, licorice, and chewing gum.

Records show that confectionery was used as an offering to the gods of

ancient Egypt. Honey was used as the sweetener until the introduction of sugar in

medieval Europe. Among the oldest types of candies are licorice and ginger from the

Far East and marzipan from Europe. Candy-making did not begin on a large scale

5

until the early 19th century, when with the development of special candy-making

machinery it became a British specialty. In the U.S. the candy industry began to grow

rapidly during the mid-19th century with the invention of improved machinery and a

cheaper process for powdering sugar. In 1911 the first candy bars were sold in

baseball parks; by 1960 candy bars made up almost half of U.S. confectionery

production. By the 1980s annual world production of confectionery totaled many

millions of kilograms.

Confectionery Preparation

Key raw materials for sugar confectionery are sugar (60-65% of the raw

material volume), glucose, citric acid and flavoured essences. For chewing/ bubble

gums, most leading MNC players import gum base. Other key raw materials include

sugar, glucose and emulsifying agents. All the ingredients are mixed in a mixer and

heated. An extruder converts the mixture into a long rope, which is then cooled and

flattened. The gum is cut into pieces and wrapped.

World over, confectionery products contain animal gelatin, use of which is

banned in India. This has prevented development of categories such as jellies and

superior chewing gums.

Sugar Confectionery

In confectionery products, retailer margin varies from 15% to 30%, including

trade discount and incentive schemes. Distributor margin varies from 5% to 10%.

Sales tax averages at around 10%. Freight, handling and distribution cost is minor at

about 2%. Excise duty on sugar confectionery is 8%, whereas gums and chocolates

attract 16% excise duty. Contribution margins vary between 30% and 60% depending

upon the product. Advertisement and promotion costs are very high

Organized market for sugar confectionery/gums is estimated to be 139,000 ton

pa. Hard boiled confectionery and toffees account for 69%, 5% by eclairs, 18%

contributed by gums (chewing gums/ bubble gums) and rest by mints, lozenges etc.

6

The confectionery market has undergone a metamorphosis, during the last 3-4

years. From a commodity market controlled by local players, it is changing to a

branded products market with strong presence of MNC players. These MNCs

Offer superior product ingredients with support of global technology

Offer better packaging and ensure better distribution

Invest heavily in building brands. New MNC players are trying to

create

Customer pull by advertisements and retail displays.

Dealers push incentives by higher margins, promotional schemes, etc, on

which local brands relied upon earlier, still remains the main form of marketing in the

confectionery market dominated by the unorganized segment.

7

Product Segmentation

Chocolate market can be segmented as follows

Large unit's bars/ slabs,

Count lines,

Panned varieties,

Small value added units.

Confectionery products

Hard boiled sugar candies, lollipops, jellies

Toffees

Chewing candies

Breath freshners, digestives, throat relievers

Gum based products

Chewing gum

Bubble gum

8

Chocolate market Segmentation

Chocolate market can be segmented into moulded chocolates, count chocolates,

panned chocolates, eclairs and assorted chocolates.

Type of chocolates % Share in chocolate market

Moulded 37%

Count 30%

Eclairs 20%

Panned 10%

Others 3%

Moulded37%

Count30%

Eclairs20%

Panned10%

Others3%

Moulded

Count

Eclairs

Panned

Others

9

Chocolates Market Share

Cadbury is the market leader in all categories with over 72% market share. Its

main competitor is Nestle India. Nestle has identified chocolate and confectionery as one

of the thrust areas for growth. It has launched some of its international brands like

Quality Street, After Eight, and Lions in India. In 1998, Cadbury launched a new count

bar Picnic. Nestle immediately followed it with the launch of Charge. Gujarat Co-

operative Milk Marketing Federation (GCMMF), which is normally known as Amul and

Central Arecanut and Cocoa Manufactures and Processors Co-operative (CAMPCO) are

other two significant players. Both are local manufacturers.

Distribution, in the case of chocolates, is a major deterrent to new entrants as the

product has to be kept cool in summer and also has to be adapted to suit local tropical

conditions. With removal of QRs all the major international chocolate brands especially

Swiss brands would become freely available in the market.

Market Share

Moulded segment Count segment Eclairs

Cadbury 70% Cadbury 76% Cadbury 49%

Nestle 23% Nestle 20% Nutrine 37%

GCMMF 5% Campco 3% Nestle 12%

Others 2% Others 1% Parry's 1%

        Others 1%

10

Confectionery Market Share

The confectionery market is highly fragmented with several players with strong

regional presence. Leading national players are Nutrine, Parry's, Parle, Cadbury, Nestle,

Ravalgon, Candico, Perfetti, Wrigleys and Joyco India. The entire market can be divided

into 7 major categories, namely Hard Boiled Candies(HBC), Toffees, Eclairs, Chewing

Gum, Bubble Gum, Mints and Lozenges. While HBCs form 51% of the entire market,

18% is formed by toffees and 18% by chewing gum & bubble gum collectively. Eclairs

form just 5% of the entire market. Mints and Lozenges form 4% and 3% of the market

respectively.

Nutrine with a strong base in southern India has emerged as the reigning number

one player in the sugar confectionery market with 24% share. Over last one year or so it

has launched various products in the sugar confectionery market. It is the market leader

in hard-boiled confectionery as well as toffees. It has share of 37% in eclairs market and

is reigning at second position behind Cadbury's. Nutrine gets around 50% of its turnover

from southern India, 20% from Eastern region and rest equally from westerns and

northern region. Its biggest brand is Mahalacto followed by Asay and Kokonaka

respectively. Total tonnage sold by Nutrine in the confectionery market is around 36650

tonnes.

The second largest player, Parle has strong presence in orange candies (hard

boiled) supported by its Melody toffees, Mango Bite and Kismi Toffee bar. Besides this

the company also has brands like Rola Cola, Poppins, Peppermint etc. in its portfolio.It

has  market share of 16% in the total confectionery market with a tonnage of 16800

tonnes. It is number two in both HBC and Toffee market with 30% and 21% market share

respectively.

Parry's has emerged as the third largest player in the market with 13% market

share and a tonnage of 14500 tonnes.The company has brands like LactoKing, Coconut

Punch, Madras Cafe, Coffy Bite etc. in its portfolio. Though in the over all confectionery

market it is at number three, it is at par with Parle in  toffees market with 21% share.

Cadbury has been one of the leaders with Cadbury eclairs with chocolate inside. It

was the most successful in 1972 when it was launched because of its initial introductory

11

price of 25 paise and was instant hit. It continues to be one of the biggest brands.

Cadbury made a foray into the sugar confectionery segment with Googly, a hardboiled

sweet in late 1996.Googly the tangy, fizzy candy, Cadbury took the market by surprise

and marked the entry of Trebor into the fast growing Indian market. The product is sold

under license from Trebor Bassett, UK. Googly was extended nationally in early 1997.

Cadbury has also launched Mocka, a coffee based sugar confectionery.

Nestle is a major player in the growing confectionary market. The company has

brands like Polo, Allen's Splash, Soothers, Toffo Butter, and Fruit Rings, Fox’s etc. in its

portfolio. In recent years there has been a tremendous increase in the consumption of Fox

in India. It is easily available everywhere and its cool taste is popular among consumers.

It has a share of 8% in the market.

Ravalgaon too is a significant player in the confectionery market. It has a share of

7% in the market with tonnage of 8000 tonnes. Some of the leading brands in its portfolio

are Pan Pasand, Mango Mood, Coffee Break etc. It is third largest player in the toffee

market with 11% share.

Joyco's Boomer has emerged as the leading brand in the bubblegum category.

Joyco pioneered the soft chew category with launch of its Bonkers. However the soft

chew category has a minuscule market in India. Other brand available in this segment is

Van Melle's Mentos. Perfetti has become a significant player with   the success of its

bubble gum Big Babol and hard boiled confectionery Alpenliebe. . Alpenliebe has also

been a huge success and has become a Rs600m brand within one year of launch.

Candico India Ltd , the confectionery division of the erstwhile Bakeman's

Industries has been aggressively launching new brands post spin off as a separate

confectionery company in April 1997. While Mint-O is Candico's largest brand, its other

brands#include Candy King, Americano. Mint-O Fresh, After Smoke, etc. Candico and

Joyco both have same share of 42% each in the bubble gum market.Perfetti is way behind

in this segment at 13% share. In the overall confectionery market however the company

has 3% share.

12

Wrigley's is the leading chewing gum brand in the world. In India the company

operates through a 100% subsidiary. The company initially marked its brands through a

distribution tie-up with Parry's which was later discontinued.

In the bubble gum segment, Perfetti has a 13% market share.  Other Perfetti

brands like Chlormint and Golia have not received encouraging response. The company

has a 2% market share in the total confectionery market.

13

Market shares in sugar confectionery market

Company Market share (%) Major brands

Nutrine 24

Mahalacto, Kokonaka, HoneyFab, Aam Ras,

Chuma- Chuma, Gulkand, Funda, Gum Yum,

Ole, Nutrine Eclairs,SuperStar, Caramella,

Wild Coffy, Dishum, Aasay,Naturo, Fruit Bar

Parle's 16Melody, Mango bite, Kismi, Poppins, Rola

cola, LuxDairy,  Peppermint, Rosemint

Parry's 13

Coffy Bite, Lacto king, Coconut punch,

Caramilk, Madras Cafe, Soft-Spot, Flavoured

Candy, Mango, Sunshine, Shakti, Pineapple

Cadbury's 11Googly, Mocka, English toffee,

Frutus, Gollum, Eclairs, Pops.

Nestle 8Polo, Allen's Splash, Soothers, Toffo Butter,

Fruit Rings,  Fox's

Ravalgaon 7Pan pasand, Mango mood, Coffee break, Hi-

soft, Supreme, Cherries, Juicy

GDC/ Joyco 5Boomer, Bonkers, Donalds, PimPom,

Mickey, Bonkers

Candico 3

Minto, After smoke, Candy king, Americano,

Orange-tutti frutti, Drum Beat, Vanilla Roll,

Elaichi roll, Big Freedom, Jumbo-Gumbo,

LocoPoco, Minto-Fresh

Wrigley 3Wrigley's chewing gum, Spearmint, Boomer,

Juicy Fruit Double mint Spearmint.

14

Perfetti 2Brooklyn, Big Babool, Alpenliebe, Center

Fresh, Chlor Mint, Golia, Cofitos

Anticold/other OTC brands also sold as confectionery

CompanyMarket Share

(%)Major brands

Dabur 3 Hajmola

P & G 2.5 Vicks

Warner Lambert 2.5 Halls, Chiclets, Clorets

Anti-cold/OTC brands such as Halls, Vicks, Clorets, etc are increasingly being

sold on the fun positioning rather than for their medicinal properties, competing directly

with other confectionery brands. Halls and Vicks are available in various flavours.

Nutrine24%

Parle's16%

Parry's13%

Cadbury's11%

Nestle8%

Ravalgaon7%

Others21%

Nutrine Parle's Parry's Cadbury's Nestle

Ravalgaon Others

15

Consumer Habits And Practices

Chocolates are consumed as indulgence and not as snack food, Almost 75%

chocolates and 90% confectionery are impulse purchases.

Chocolates are bought predominantly by adults and gifted to children. Direct

consumption by adults has also increased.

In contrast, over 90% of confectionery products are purchased by children

between the age of 6 and 14, directly. In most cases, parents do not approve of

confectionery consumption, and children buy out of their pocket money.

Chocolate consumption is concentrated largely in metropolitan cities.

Confectionery consumption is wide spread. The unorganized sector has a greater

dominance in rural areas.

Confectionery consumption has a seasonal pattern. Sales peak of confectionery is

in winter months from November to February. Off-take is lowest in the summer months

as schools are closed and therefore children's pocket money is lower. Also in monsoon

consumption falls as children are out of home for lesser time. Between February and

April pressure of examinations causes lower sales.

Brand loyalties are weak in confectionery products. Children look for novelty and

excitement. Most purchases are impulse driven and POP retail displays (dispensers, etc)

play an important role. Promotions such as stickers, cricketer/ star pictures have

tremendous impact.

Cross elasticity of demand - Different products amongst confectionery such as

hard boiled sugar candy, bubble gum etc compete inter se and also with ice cream and

chocolates.

16

Confectionery market is extremely price sensitive. In India, 50 paise unit price has

been the largest segment, followed by 25 paise segment. Re1 is considered premium

pricing. When raw material prices escalate, marketers find it difficult to pass on the same

due to problems of coinage, as price increase has to be in steps of 25 paise.

Chewing gum consumption faces a major problem of disposal, as the gum residue

has a tendency to stick. To keep public places clean, some countries like Singapore have

banned use of gum-based confectionery. Consumption of chewing gum is significantly

higher in the Western countries.

Children consume bubble gums whereas chewing gums by teenagers and adults.

In India, consumption of chewing gum has been very low due to non-availability

of superior quality products till a few years ago. During the last few years, market for

bubble gum has exploded. It is expected that similar growth would be witnessed in

chewing gum as the current generation grows up with the habit of gum chewing.

Grown up adults feel guilty about eating chocolate, akin to stealing a child's food.

Now days the consumption of chocolates has even more decreased because of preparing

of chocolates at house. Many people for fun sake or during occasions prepare chocolates

rather than bringing for market. Women has started classes for teaching preparation of

chocolates at home which is comparatively cheaper and looks good if given to guest by

name of home made rather than a market chocolate. Many people has also started it as a

business by selling on small scale and even selling to local shops for cheaper rates.

17

Consumer trends

1. Mithai- the traditional Indian sweats is getting substituted by chocolates among

upwardly mobile Indians. Instead of buying sweats on Raksha Bandhan, sisters prefer

offering chocolates to their brothers. This is the reason for sudden spurt in advertisement

between July & Sep by most of the companies

2. The range and variety of chocolates available in malls seems to be growing day by day,

which leads to lot of impulse sales for chocolate companies

3. Chocolates which use to be unaffordable, is now considered mid-priced. Convenience

over Mithai in terms of packaging and shelf life in making both middle class and rich

Indians opt for chocolates

4. Designer chocolates have become status symbols. They are linked to one’s aspiration

and lifestyle and malls are perfect points of sale as people usually are happy and gay at

these destinations

5. Cadbury initial communication for Celebrations was concentrated on occasions like

Diwali and Rakshabandhan. Over the last seven to eight years, the brand emerged as a

good gift proposition for occasions and enabled people to come closer. Research done by

Cadbury suggested that they should extend the plank of occasion-based gifting to social

gifting i.e. all-year-round gifting options

6. Consumers can choose from wide range of chocolates, which initially was limited to

Milk chocolates like DairyMilk and MilkyBar. In past few years we have seen so many

SKUs with almonds, raisins and all sort of nuts. And how can we forget latest 5 star

crunchy and Ulta Perk, which has opened new windows for consumers

7. In past, consumers had negligible inclination for dark chocolates. But now we have

seen a change in the Indian palate, which is increasing the base of this sub-segment

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10-year data showing market growth of chocolate

In one of the most remarkable demonstrations of acceleration, the chocolate

market, after creeping up at an average rate of 6 per cent per annum between 1998 &

2000 and climbing to 9.55 per cent in 1995, suddenly raced up to 18.77 per cent in the

year 2001-2003. A flurry of new launches which saw the introduction of 32 new brands,

5 brand extensions, 100 new variants and 122 new pack-sizes, added up to an

unparalleled excitement in what was till then a one – kind fits – all product category.

1998-1999

1999-2000

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

21002700

3500

4500

5850

7600

9500

If we have to locate current position on the product life cycle we can say that

chocolate is somewhere in the growth stage of the brand life cycle. This can be

comprehended from the brand market shares in the past few years. The market shares of

Cadbury in the total chocolate market convey an encouraging story. The market share of

Cadbury in market is 70% and Nestle is having 20% followed by 5% Amul and 5% for

others.

It can be seen that sales of chocolate in Indian market is increasing, from the table and it

is forecasted that it is growing to increase tremendously in near future. The demand in

1998-1999 has increased from 2100 to 2700 in 1993-94 and then 3500 in 1999-2000.

Then the increase rate has been increased fast with 4500 in 2000-2001 to 5850 in 2002-

19

2003 and then it increased to 7600 in 2003-2004. Then in the year 2004-2005 the growth

had been upto 9500 and had been growing up since then. It is foreseen that sales growth

should have approximately 16% increase in the demand by year 2008.

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Today’s Indian chocolate market

1. Chocolate market is estimated to be around 1500 crores (ACNielson) growing at 18-

20% per annum

2. Cadbury is the market leader with 72% market share

3. The per capita consumption of chocolate in India is 300 gram compared with 1.9

kilograms in developed markets such as the United Kingdom

4. Over 70 per cent of the consumption takes place in the urban markets

5. Margins in the chocolate industry range between 10 and 20 per cent, depending on the

price point at which the product is placed

6. Chocolate sales have risen by 15% in 2007 to reach 36000 tonnes according to one

estimate. Another estimate puts the figure at 25000 tonnes

7. The chocolate wafer market (Ulta Perk etc) is around 35 % of the total chocolate

market and has been growing at around 13% annually

8. Indian candy market is currently valued at around USD 664 million, with about 70%,

or USD 461 million, in sugar confectionery and the remaining 30%, or USD 203 million,

in chocolate confectionery

9. Entire Celebrations range marketshare is 6.5%

10. The global chocolate market is worth $75 billion annually

Chocolate consumption in India is extremely low. Cadbury dominates the

chocolate market with about 72% market share. Nestle has emerged as a significant

competitor with about 20% market share. Key competition in the chocolate segment is

from co-operative owned Amul and Campco, besides a host of unorganized sector

players. There exists a large unorganized market in the confectionery segment too.

Leading national players are Parry's, Ravalgaon, Candico and Nutrine. MNC's like

Cadbury, Nestle, Perfetti, are recent entrants in the sugar confectionery market. Other

competing brands such as GCMMF's Badam bar and Nestle's Bar One have minor

market shares.

21

Chocolate consumption in India is extremely low. Per capita consumption is around

160gms in the urban areas, compared to 8-10kg in the developed countries. In rural areas,

it is even lower. Chocolates in India are consumed as indulgence and not as a snack food.

Indian chocolate market grew at the rate of 10% pa in 70's and 80's, driven mainly by the

children segment. In the late 80's, when the market started stagnating, Cadbury

repositioned its Dairy Milk to any time product rather than an occasional luxury. Its

advertisement focused on adults rather than children. Cadbury's Five Star, the first count

chocolate, was launched in 1968. Due to its resistance to temperature, the chocolate has

become one of the most widely distributed chocolate in the country.

In the early 90's, high cocoa prices compelled manufacturers to raise product

prices and reduce their advertisement budget affecting the volumes significantly. The

launch of wafer chocolates Kit Kat and Perk spurred volume growth in the mid 90's.

These chocolates positioned as snack food rather than on the indulgence platform

compete with biscuits and wafers. A strong volume growth was witnessed in the early

90's when Cadbury repositioned chocolates from children to adult consumption. The mid

90's saw the entry of new players like Nestle, which created categories like wafer

chocolate and spurred growth.

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CHAPTER 2

CADBURY’S OVERVIEW

Half a century of constant innovation, constant value addition, constant success. Cadbury

India Ltd. (CIL), a part of the Cadbury Schweppes group, is India's leading confectionery

manufacturer with a 70% volume share of the chocolate market. And is synonymous with

chocolate in the minds of countless Indians - young and old. The company is also a key

player in the malted food drink and sugar confectionery markets in the country. Today,

the governing objective for Cadbury India is to deliver Superior Shareholder Value and to

see the brand in every pocket, in every home.

23

History of Cadbury

The Cadbury story is a fascinating story of a family business that grew into one of the

biggest, most loved chocolate brands in the world. A story that you will remember as the

story of the real taste of life as the business grew, it was moved to a larger factory in

Bridge Street in 1847. John Cadbury then took his brother Benjamin into a partnership.

And the business came to be 'Cadbury Brothers, Birmingham". In 1853, the Cadbury

Brothers received a royal warrant as chocolate manufacturers to Queen Victoria a royal

appointment that the company holds to this day.

22-year-old John Cadbury opened a one-man grocery business in Birmingham, selling

tea, coffee, hops, mustard and cocoa. To this list he soon added drinking chocolate which

he prepared using a mortar and pestle. Young Cadbury had a considerable flair for

advertisement, which inspired him to install a pate glass window in his store - the first in

Birmingham. This along with a Chinaman in native costume presiding over the counter

created quite a stir and drew a lot of attention. The growing sales and popularity of

Cadbury's 'superior quality cocoa and chocolates resulted in the business shifting to a

larger warehouse in Crooked Street in 1831.

Dissatisfied with the quality of products produced by all manufacturers, including

their own, the brothers Cadbury took a momentous step which was to change the way the

chocolate business was done in England. Following a visit to Van Houten in Holland,

they introduced a process for pressing the cocoa butter from the beans to produce cocoa

essence, which was really the forerunner of the cocoa we know today. This essence was

advertised as - 'Absolutely Pure, Therefore Best'. From the mid 1860's, Cadbury

introduced many new kinds of eating chocolate. Not only the more refined forms of plain

chocolate but chocolate cremes - fruit flavoured centres covered with chocolate. These

exotic chocolates were sold in decorated boxes, which Richard Cadbury with his distinct

artistic talent designed. In fact, many of his original designs still exist. Elaborate

chocolate boxes were extremely popular with the late Victorians, with designs extending

from superb velvet covered caskets with beveled mirrors, to pretty boxes showing kittens,

flowers, landscapes or beautiful girls.

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As the company prospered, the brothers implemented new ideas in their work practices

like, office picnics to the country, a sports field, kitchen and well heated dressing rooms

for the workers. While these practices are common in organisations today, they were

unheard of in the 19th century. Among the many innovations in the factory was the

appointment of Frederic Kinchelman, a master confectioner from the continent, who was

engaged to impart the secrets of his craft to Bournville. Cadbury was soon making

nougats, pistache, pate b'abricot, avelines and other delights. All of the quality that

'Fredric the Frenchman', as he was known, was renowned for. Over the next few years,

Cadbury opened up chocolate markets in Australia, New Zealand, South Africa, India,

the West Indies, South America, the United States and Canada.

Every successful company has its famous brands and Dairy Milk, today one of the most

popular moulded chocolates in the world, is one of the biggest Cadbury success stories.

Cadbury has grown from strength to strength with new technologies being introduced to

make the Cadbury confectionery business one of the most efficient in the world. The

merger in 1969 with Schweppes and the subsequent development of the business have led

to Cadbury Schweppes taking the lead in both the confectionery and soft drinks markets

in the UK and becoming a major force in international markets. Cadbury Schweppes

today manufactures products in 60 countries and trades in over a staggering 120.

Cadbury in India

Fifty years ago, the real taste of chocolate as we know it today, landed on Indian shores.

An event that carried forward the entrepreneurship and vision born as far back as 1824,

when John Cadbury set up shop in Birmingham (UK) to sell among other things - his

own cocoa invention. From these modest beginnings emerged Cadbury Schweppes - that

is today the leading manufacturer of confectionery and beverages in the United Kingdom.

A company that has its presence in over 200 countries worldwide and has made the name

'Cadbury' synonymous with cocoa products in countries across the planet.

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This is the brand that came to India in 1947 - to a nation that was in its infancy, a

market that was ready for the world and a people that were open to new ideas, new

products.

Within a year of being set up as a trading concern, Cadbury Fry India was

incorporated as a Private Limited company, set up for processing imported chocolates

and Bournvita. The same year saw the launch of Cadbury's Milk Chocolate - a brand that

till today defines the taste of chocolate for millions of Indians.

Through 50 years of investment in capital and marketing, the scale and scope of

their operations has expanded to cover a range of brands in the chocolate, sugar

confectionery and malted food drinks segments. They have a majority share in the Indian

chocolate market and a significant presence in sugar confectionery and food drinks.

Today Cadbury India Ltd., a subsidiary of Cadbury Schweppes employs over

2000 people across the country. And operates in one of the fastest growing chocolate

markets for the Cadbury Schweppes group across the globe.

Cadbury’s went in for intelligent diversification as any other successful company.

Cadbury’s adopted concentric diversification adding new but related products to its

existing product line. The company has leading brands in all segments i.e. 5 Star (count

lines), Dairy milk (bars), Gems (panned chocolates), Eclairs (toffees), Perk (wafer

chocolate), Bournvita (malted food drinks).

List of products: 5 Star, Bournvita, Cocoa Powder, Crackle, Dairy Milk, Éclairs,

Fruit And Nut, Gems, Googly, Nut Butterscotch, Perk, Picnic, Tiffins, Truffle, Nutties,

Bubbaloo, Cadbury Bytes, Halls, Celebrations, Temptations, Bournvita, etc.

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Industrial Production and Setup

Cadbury India's first manufacturing facility was set up at Thane (Mumbai) in

1966. Today, the factory has grown manifold and manufactures a range of products that

include Cadbury Dairy Milk, 5 Star, Nutties, Gems and Bournvita. The factory employs

about 750 people and houses the R&D and engineering development facilities of the

company.

In a move towards backward integration, Cadbury bought Induri Diary farm in

Pune in 1964. Recently, a major investment program resulted in the installation of

modern moulding, crumb and chocolate making facilities. Today, the Induri Factory

manufactures intermediate products like milk crumb and a range of finished chocolates.

In 1989, they began operations in their newest and most modern plant at

Malanpur. Equipped with state-of-the-art technology and backed by constant investment,

this unit manufactures Eclairs, Gems, Perk, Picnic, 5-star, etc.

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SWOT analysis of Cadburys

Strength

Cadbury is the largest global confectionery supplier, with 9.9% of global market share.

Cadbury is a company, which is reputed internationally as the topmost provider in the world.

Advantage that it is totally focused on chocolate, candy, chewing gum, unique understanding of consumer in these segments.

Successfully grown through its acquisition strategy. Recent acquisitions, including Adams, 2003, enabled it to expand into important markets like the US market.

The brand is well known to people & they can easily identify it from others.

Cadbury the world leaders in chocolate, is a well-known force in marketing and distribution.

Users have a positive perception about the qualities of the brand.

Cadbury main strength is Dairy milk. Dairy milk is the most consumed chocolate in India.

By using popular models like Cyrus Brocha, Preety Zinta, Amitabh Bachhan and others .

The famous advertisements are Kuch meetha ho jaye, Pappu pass ho gaya, Khush hai zamana aaj pehli tarikh hai, etc .

Cadburys has managed to portray a young and sporty image, which has resulted in converting buyers of other brands to become its staunch loyalists.

Cadbury has well adjusted itself to Indian custom.

It has properly repositioned itself in India whenever required i.e. from children to adults, togetherness bar to energizing bar for young ones etc.

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Weaknesses

There is lack of penetration in the rural market where people tend to dismiss it as

a high end product. It is mainly found in urban and semi-urban areas.

It has been relatively high priced brand, which is turning the price conscious

customer away.

Possible lack of understanding of the new emerging markets compared to

competitors.

People avoid having their chocolate thinking about the egg ingredients.

The company is dependent on the confectionery and beverage market, whereas

other competitors e.g. Nestle have a more diverse product portfolio, where profits

can be used to invest in other areas of the business and R&D.

Other competitors have greater international experience - Cadbury has

traditionally been strong in Europe. New to the US

Opportunities

The chocolate market has seen one of the greatest increases in the recent times

(almost @ 30%)

There is a lot of potential for growth and a huge population who do not eat

chocolates even today that can be converted as new users.

New markets. Significant opportunities exist to expand into the emerging markets

of China, Russia, India, where populations are growing, consumer wealth is

increasing and demand for confectionery products is increasing.

The confectionery market is characterized by a high degree of merger and

acquisition activity in recent years. Opportunities exist to increase share through

targeted acquisitions.

Key to survival within the FMCG market is increasing efficiency and reducing

costs. Cadbury Fuel for Growth and cost efficiency programmes seek to bring

cost savings by: 1) Moving production to low cost countries, where raw materials

and labour is cheaper ii) reduce internal costs - supply chain efficiency, global

sourcing and procurement, and wise investment in R&D.

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Innovation is key driver. To respond to changes in consumer tastes and

preferences - healthier snacks with lower calories need to be developed. R&D and

product launches have led to sugar-free & center filled chewing gum varieties and

Cadbury premium indulgence treat. Low-fat, organic and natural confectionery

demand appears strong.

Threat

There exists no brand loyalty in the chocolate market and consumers frequently

shift their brands.

New brands are coming and existing brands are introducing new variants to add

up to an already overcrowded market.

Worldwide - there is an increasingly demanding cost environment, particularly for

energy, transport, packaging and sugar. Global supply chain in low cost locations.

Competitive pressures from other branded suppliers (national and global).

Aggressive price and promotion activity by competitors - possible price wars in

developed markets.

Social changes - Rising obesity and consumers obsession with calories counting.

Nutrition and healthier lifestyles affecting demand for core Cadbury products.

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CHAPTER 3

NESTLE'S OVERVIEW

Nestlé world’s largest food company and Switzerland’s largest industrial company.

Nestlé makes and markets a wide variety of foods and beverages, including chocolate,

confectionery, instant and roasted coffee, powdered milk, infant and baby food, mineral

water, pet food, breakfast cereals, ice cream and frozen desserts, frozen meals,

condiments, sauces, soups, and pasta. The company also makes Alcon eye-care products

and is a major shareholder in L’Oréal, one of the world’s largest manufacturers of

cosmetics. Nestlé is based in Vevey, Switzerland, but derives only a tiny portion of its

revenues from sales in Switzerland. Its largest market is the United States. The company

operates production facilities in numerous countries around the world.

Nestlé’s well-known confectioneries include Nestlé and Nestlé Crunch chocolate

bars, Baby Ruth and Butterfinger candy bars, Kit Kat wafer bar, Rolo caramels, and Toll

House chocolate chips. Its line of beverages includes Nescafé and Taster’s Choice instant

coffees, Nestlé Quick and Milo chocolate-based drinks, Nestea iced tea, Perrier mineral

water, and Carnation evaporated milk. Other well-known Nestlé brands include Maggi

soups and bouillons; Alpo and Friskies pet foods, Stouffer’s frozen entrees, and Libby’s

canned foods and sauces.

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History of Nestle

In the mid-1860s Henri Nestlé, a pharmacist, led efforts to find a healthy

alternative to breast milk. He hoped to reduce mortality among infants who could not be

breast-fed. Nestlé developed an infant cereal that combined cow’s milk, wheat flour, and

sugar and in 1867 tested it on a sick, premature baby boy who had refused his mother’s

milk. The baby accepted the formula and recovered. Later that year Nestlé formed his

own company, Farine Lactée Henri Nestlé, in Vevey, to manufacture the infant formula,

called Farine Lactée Nestlé.Only a year earlier, in 1866, Americans Charles and George

Page had founded the Anglo-Swiss Condensed Milk Company in Cham, Switzerland, to

sell canned milk in Europe. It expanded in the mid-1870s to include infant formulas,

entering into direct competition with Nestlé’s company. In 1875 Nestlé sold his company

to three local business executives.

The company began selling chocolate in 1904 when it acquired the Swiss General

Chocolate Company. In 1905 Farine Lactée Henri Nestlé merged with the Anglo-Swiss

Condensed Milk Company to become the Nestlé and Anglo-Swiss Milk Company.

Increased demand for dairy products during World War I (1914-1918) led the

company to expand rapidly overseas. By the war’s end Nestle had 40 factories

worldwide, and its production had more than doubled since 1914. In the 1920s the

company introduced a stream of new products: malted milk, Milo powdered drink, and

powdered buttermilk for infants. In 1929 Nestlé acquired chocolate company Peter,

Cailler, Kohler Chocolats Suisses S.A., whose founder, Daniel Peter, invented milk

chocolate in 1875. In 1938 Nestlé introduced Nescafé, a powdered instant coffee. A

staple for Allied soldiers during World War II (1939-1945), Nescafé changed coffee-

drinking habits worldwide and fueled Nestlé’s expansion in the postwar era.

In 1947 Nestlé merged with Alimentana S.A., the manufacturer of Maggi

seasonings and soups, becoming Nestlé Alimentana Company. In the following decades

Nestle acquired numerous companies, including Crosse & Blackwell, a British

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manufacturer of preserves and canned foods; Findus, a maker of frozen foods; Libby,

McNeill & Libby, a maker of frozen and canned foods; frozen food manufacturer

Stouffer Corporation; mineral water company Source Perrier; and American food giant

Carnation, which made milk, pet foods, and other products. The company changed its

name to Nestlé S.A. in 1977.

In 1977 international activist groups launched a boycott against Nestlé for its

methods of marketing infant formula in developing countries, alleging that it distributed

free samples in maternity hospitals and that its promotional materials failed to recognize

breast-feeding as the best form of infant nutrition. Health officials asserted that poor and

uneducated women using the formula often mixed it with contaminated water, leading to

diarrhea, malnutrition, and death of the infant. The boycott was lifted in 1984 after Nestlé

agreed to comply with infant formula marketing codes established by the World Health

Organization (WHO). However, calls for boycotts resurfaced in the 1990s amid charges

from the United Nations Children’s Fund (UNICEF) and other groups that Nestlé

continued to violate the WHO codes in some countries.

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Historic Development

1866  

 

Company's foundation

1905  Merger between Nestlé and Anglo-Swiss Condensed Milk Company

1929  Merger with Peter-Cailler-Kohler Chocolats Suisses S.A.

1947  Merger with Alimentana S.A. (Maggi)

1971  Merger with Ursina-Franck (Switzerland)

1985  Acquisition of Carnation (USA)

1988  Acquisition of Buitoni-Perugina (Italy)

1988  Acquisition of Rowntree (GB)

1992  Acquisition of Perrier (France)

1995  Nestlé acquires Victor Schmidt & Söhne, Austria's oldest producer of

confectionery, including the famous 'Mozartkugeln'.

1997  Nestlé, through the Perrier Vittel Group, expands its mineral water

activities with the outright acquisition of San Pellegrino.

1998  Nestlé acquires Spillers Petfoods of the UK and strengthens position in

the petfood business which began in 1985 with the acquisition of the

Carnation Friskies brand.

1999  Divestiture of Findus brand (except in Switzerland and Italy) and parts

of Nestlé's frozen food business in Europe. Divestiture of Hills Bros,

MJB and Chase & Sanborn roast and ground coffee brands (USA).

2000  Acquisition of PowerBar.

2007 Nestle is the world’s largest and diversified company.

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Industrial Setup

With a total workforce of approximately 224,541 people in some 509 factories

worldwide, Nestlé is not only Switzerland's largest industrial company, but it is also the

World's Largest Food Company. Nestlé products are available in nearly every country

around the world. Nestle has a presence in 83 countries worldwide. It has a total number

of 509 factories out of which 220 are located in Europe, 153 in America and 136 in

Africa, Asia and Oceania

Nestle started its manufacturing operations with Milkmaid in 1962 at Moga factory.

Manufacturing of Nescafe started in 1964 at the same factory. The company set up

another factory at Cherambadi in Tamil Nadu, for manufacture of infant foods, coffee etc.

For almost two decades there were no new additions of manufacturing facilities due to

restrictive policy environment. The company set up its Nanjangad (Karnataka) factory in

1989 and the Samlakha (Haryana) factory in 1992. The Ponda (Goa) factory started

operations in 1995. The Company set up its sixth manufacturing unit in 1997 at Bicholim

in Goa.

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Nestle in India

Nestle, has a broad based presence in the foods sector with leading market shares in

instant coffee, infant foods, milk products and noodles. It has also consolidated its

presence in chocolates; confectioneries and other semi processed food products.

The processed foods sector, which currently accounts for less than 1-2% of total

food consumption, is slated to grow at a fast pace. Historically, the policy framework

favored small and unorganized players while the MNC players were restricted from

adding capacities. This led to the mushrooming of a vast unorganized sector. Large

players with strong marketing network and brand equity, were forced to source a large

part of their requirements from third party producers.

Current scenario: During the last two years, however, several food products have

been de-reserved from small-scale sector. Many MNC as well as domestic players have

made aggressive investments in the sector. Also quantitative restrictions on several food

products have been lifted/ will be lifted in the next one year. This will lead to growth

spurred by greater availability of imported products.

Nestlé's leading brands include Cerelac, Nestum, Nescafe, Maggie, Kitkat, Munch

and Milkmaid. To strengthen its presence, it has been the company's endeavor to launch

new products at a brisk pace and has been quite successful in its launches.

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SWOT analysis of Nestle

Strength

Parent support - Nestle India has a strong support from its parent company, which is the world’s largest processed food and beverage company, with a presence in almost every country. The company has access to the parent’s hugely successful global folio of products and brands.

Brand strength - In India, Nestle has some very strong brands like Nescafe, Maggi and Cerelac. These brands are almost generic to their product categories.

Product innovation - The company has been continuously introducing new products for its Indian patrons on a frequent basis, thus expanding its product offerings.

Weaknesses

Exports – The company’s exports stood at Rs 2,571 m at the end of 2003 (11% of

revenues) and continue to grow at a decent pace. But a major portion of this comprises of

Coffee (around 67% of the exports were that of Nescafe instant to Russia). This

constitutes a big chunk of the total exports to a single location. Historically, Russia has

been a very volatile market for Nestle, and its overall performance takes a hit often due to

this factor

Supply chain - The company has a complex supply chain management and the main

issue for Nestle India is traceability. The food industry requires high standards of

hygiene, quality of edible inputs and personnel. The fragmented nature of the Indian

market place complicates things more.

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Opportunities

Expansion - The company has the potential to expand to smaller towns and other geographies. Existing markets are not fully tapped and the company can increase presence by penetrating further. With India's demographic profile changing in favour of the consuming class, the per capita consumption of most FMCG products is likely to grow. Nestle will have the inherent advantage of this trend.

Product offerings - The company has the option to expand its product folio by introducing more brands which its parents are famed for like breakfast cereals, Smarties Chocolates, Carnation, etc.

Global hub - Since manufacturing of some products is cheaper in India than in other South East Asian countries, Nestle India could become an export hub for the parent in certain product categories.

Threat

Competition - The company faces immense competition from the organised as well as the unorganised sectors. Off late, to liberalise its trade and investment policies to enable the country to better function in the globalised economy, the Indian Government has reduced the import duty of food segments thus intensifying the battle.

Changing consumer trends - Trend of increased consumer spends on consumer durables resulting in lower spending on FMCG products. In the past 2-3 years, the performance of the FMCG sector has been lackluster, despite the economy growing at a decent pace. Although, off late the situation has been improving, the dependence on monsoon is very high.

Sectoral woes - Rising prices of raw materials and fuels, and inturn, increasing packaging and manufacturing costs. But the companies’ may not be able to pass on the full burden of these onto the customers.

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CHAPTER 4

GCMMF (AMUL): AN OVERVIEW

Gujarat Cooperative Milk Marketing Federation

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food

products marketing organisation. It is a state level apex body of milk cooperatives in

Gujarat which aims to provide remunerative returns to the farmers and also serve the

interest of consumers by providing quality products which are good value for money.

Members: 12 district cooperative milk producers' Union

No. Of Producer Members: 2.12 million

No. Of Village Societies: 10,411

Total Milk handling capacity: 6.1 million liters per day

Milk collection (Total - 1999-00): 1.59 billion liters

Milk collection (Daily Average 1999-00): 4.47 million liters

Milk Drying Capacity: 450 metric Tons per day

Amul products was launched in market by Kaira District Co-operative Producers

Union ltd. the union choose Amul as brand name a variant of Amulya. AMUL means

"priceless" in Sanskrit. A quality control expert Anand suggested the brand name

“Amul,” from the Sanskrit “Amoolya”. Variants, all meaning "priceless", are found in

several Indian languages. Amul products have been in use in millions of homes since

1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul

Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have

made Amul a leading food brand in India. The product was initially advertised on

hoardings as main medium. The “Utterly Butterly” ad campaign soon became popular. In

1973 an apex organisation was formed GCMMF ltd., which integrated activities of

district unions to oversee the marketing of their product.

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GCMMF set up a network of thousands of stockiest catering to over 4 lakh retail

outlets throughout in India. GCMMF has invested nearly Rs. 100 crore in establishing

cold chain from Gujarat to rest of the country. Products like Amul Butter, Amul Milk

Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand,

Amul Ice cream, Nutramul, Amul Milk etc. were transported over long distances in its

refrigerated vans and through its 39 C&F agents and 17000 distributors. Few

multinationals were successful in competing with multinational even in relatively high

end products categories such as milk products, infant foods, and chocolates where it

managed to price its products competitively.

(Turnover: Rs.18.8 billion in 1997-98). Today Amul is a symbol of many things,

of high-quality products sold at reasonable prices, of the genesis of a vast co-operative

network, of the triumph of indigenous technology, of the marketing savvy of a farmers'

organisation and have a proven model for dairy development.

It had its roots in a strike of milk producers' unions against the British colonial

administration over 50 years ago. A few decades later, the Gujarat Cooperative Milk

Marketing Federation (GCMMF) became India's largest food products marketing

organisation. 

Today, GCMMF's Amul brand of milk products receives business queries from

dozens of countries, ranging from the U.S. and the Netherlands to Singapore and New

Zealand - thanks to an innovative marketing campaign on the World Wide Web. 

Advertising on the Internet has helped them develop business contacts in many

countries. They have invited us to visit their site to get a first hand understanding of their

operations, product range, and of course, the advertisements.

The round-eyed, chubby-cheeked Amul Moppet has been a wildly popular

advertising fixture, with its punchy one-liners amusing Indian viewers from bus stands,

lamp kiosks and billboards for over thirty years. Amul's Web site was launched in March

1996 by an initiative of the marketing department, in consultation with the information

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systems division; the site is designed and hosted by Mumbai-based Ravi Database

Consultants (which also hosts the India-World and India-Line sites). Created in 1966 by

an advertising team headed by Sylvester daCunha.  For 30 odd years the Utterly Butterly

girl has managed to keep her fan following intact. So much so that the ads are now ready

to enter the Guinness Book of World Records for being the longest running campaign

ever.

The ultimate compliment to the butter came when a British company recently

launched butter and called it Utterly Butterly, a fitting recognition of the "Thoroughbred,

Utterly Butterly Delicious Amul." Every week, Amul's topical ads for its butter products

are posted on its Web site, along with recipes for Indian dishes featuring Amul products.

Archives of hundreds of topical dating back to 1979 are available on the site. The topical

have also been carried every day on the India-World home page. 

From the Sixties to the Nineties, the Amul ads have come a long way. While most

people agree that the Amul ads were at their peak in the Eighties they still maintain that

the Amul ads continue to tease laughter out of them. Where does Amul's magic actually

lie? Many believe that the charm lies in the catchy lines. That we laugh because the

humour is what anybody would enjoy. They don't pander to your nationality or certain

sentiments. It is pure and simple, everyday fun.

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SWOT analysis of Amul (GCMMF)

Strengths

The company is having Indian origin thus creating feeling of oneness in the mind

of the customers.

It manufactures only milk and milk products, which is purely vegetarian thus

providing quality confidence in the minds of the customers.

It is aiming at rural segment, which covers a large area of loyal customers, which

other companies had failed to do.

People are quite confident for the quality products provided by Amul.

Amul has its base in India with its butter and so can easily promote chocolates

without fearing of loses.

The prices of chocolates of Nestles are comparatively cheap as compared to other

companies.

Weaknesses

There are various big players in the chocolate market, which acts as major

competitors restricting their growth.

Lack of capital invested as compared to other companies.

Improper distribution channel in India.

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Opportunities

There is a lot of potential for growth and development as huge population stay in

rural market where other companies are not targeting.

The chocolate market is at growth stage with very less competition so by

introducing new brand and intensive advertising there can be a very good scope in

future.

Threats

The major threat is from other companies who hold the majority share of

consumers in Indian market i.e. Cadburys and Nestle.

There exists no brand loyalty in the chocolate market and consumers frequently

shift their brands.

New companies’ entering in Indian market like Fantasie fine poses lot problems

for Amul.

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CHAPTER 5

STRATEGIES OF THREE GIANTS IN THE INDUSTRY

Since its inception, Cadbury in India has stayed ahead thanks to their constant

marketing initiatives, that have at all points in time understood the needs of and

opportunities in a changing nation but Nestle had stood firm in second position

resulting from their responsibilities and providing quality products. Amul an Indian

company has been able to create brand quality and thus selling their product through

their name.

Wide variety of brands:

The '60s was a decade which saw the launch of brands that are etched in

the hearts of generations of Indians - Tiffins, Nut Butterscotch, Caramels,

Crackle, 5 Star and Gems. It was a strategy that introduced consumers to

a variety of tastes and product forms leading to a rapid increase in

chocolate consumption.

Nestle has been continuously working on the new products as per the

needs of the consumers. Since the launch they have introduced many new

products, which has placed a sweet taste in the heart of the customers.

They have provided various products with different taste such as- Nestle

classic, Bar one, Kit Kat, Fox, Crunch, Milky bar, Nestle éclairs etc.

Amul in India knows the exact requirement of the Indian customers and

has been able to fulfill the requirements with wide variety of products.

Amul has provided all types of chocolate products like- Amul crisp,

Amul crunch, Amul orange, Badambar, Amul milk chocolate, etc.

Quality products at low price:

Cadbury's Eclairs was launched in 1972, at the then princely sum of

0.25p and was an instant hit. It continues to be one of the biggest brands

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in the Cadbury portfolio and offers the lowest price point at which

consumers can experience the real taste of chocolate. But as compared to

other companies the price are very high because of lack of competition.

Quality is the cornerstone of the success of the Nestlé Company. Every

day, millions of people all over the world show their trust in the company

by choosing Nestlé products. This trust comes from a quality image that

has been built up for over a century. They provide products of all range

i.e. for Polo the price changes from 1 Rs. to 3 Rs. and 7 Rs. Also.

Amul has been able to build trust in India as an Indian origin and

providing absolutely pure vegetarian and best quality product. Amul aims

to create value for consumers that can be sustained over the long term by

offering a wide variety of high quality, safe food products, at affordable

prices. Amul provides chocolate for all customers that are even a person

with low income can effort it. The prices of the products are far less if

compared to other companies.

Innovative & attractive packaging:

In the years that followed, Cadbury invested in technology and made an

impact through innovative packaging. This decade experienced a

continuous growth in volumes as Cadbury launched a flurry of brands

with different pack sizes, at various price points. The now ubiquitous

Sheet Metal Dispenser seen on cash counters of thousands of shops for

dispensing chocolates was an innovation that helped brand the colour

purple in the minds of the Indian consumer.

Even though Amul has not been able to be so successful but it has been

able to have a great impact through its special designer packaging. The

mopped girl was an innovation for the Indian mind living an impact in

minds of the people. The special festival packs with great designer packs

have also attracted the customer.

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Timely expansion of market:

In the 90's Cadbury realised both the scope and the need to expand the

market. Hitherto perceived only as a children's product, Cadbury

'universalized' the chocolate market. The multi-award winning advertising

campaign - 'The Real Taste of Life' - was launched, capturing the childlike

spontaneity in every adult.

Moulded chocolate and éclairs also showed satisfactory growth. This has

also helped in improving the infrastructure and distribution reach of the

company in chocolate and confectionery segment.

Amul has previously launched chocolates aiming at the children as the

consumers but later they switched their marketing positioning to children

as well as adults. They are having the punch line as “A gift for someone

you love”. They have shown mopped girl sitting in corner with Amul

chocolates and a mother presenting the Amul chocolate to her child, which

shows the dearness and love in the heart of consumers.

Introducing new products:

Cadbury 5 Star with its “Energizing Bar” campaign targeted the youth,

offering them a mind and body charge. While pre-empting competition,

Cadbury Perk - the light chocolate snack - pushed chocolates into the

wider area of snacking by promising 'Thodi Si Pet Pooja Kabhi Bhi Kahin

Bhi' (anytime, anywhere) and has introduced new flavours like ‘Mint

Hint’, ‘Mango Tango’, Very Strawberry’. It has also introduced various

new chocolates like Gollum and Frutus in recent years.

Nestle has been continuously coming up with new products providing

different taste to the products. They recently introduced polo the

refreshing chocolate. For the competition they also introduced Kit Kat the

wafer chocolate that was successful and pushed the market in great

competition. It has recently introduced the Milkybar éclair facing the

competition of Cadbury éclairs even then able to remain the consumers

one of the favourite.

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Constant diversification:

Faced with rapidly changing markets and increased competition, Cadbury

launched Truffle to hit the high ground of great tasting chocolate. This

was followed by Picnic in 1998, which with its unique, multi-ingredient

construct, promises to take chocolates straight into the realm of snacks.

With the introduction of Gollum and Frutus Cadbury has taken the market

by surprise.

In the area of chocolate and confectionery Nestle Munch wafer biscuit

with chocolayer, which was launched in select markets in 1999, was rolled

out nationally during 2000 and had good growth. Continuing with the

efforts to meet consumer expectation on price points, the pricing of KitKat

was also reduced during the later half of the year.

Because of increasing competition Amul had to look in new segment. Amul products mainly included milk and milk products but now they have placed themselves in chocolate market with various tastes in this segment. They had introduced wide variety of products and now they have small packs of all its products i.e. 18 grams packs.

Commitment of expansion:

With the launch of Trebor Googly, the tangy, fizzy candy, Cadbury took

the market by surprise and marked the entry of Trebor into the fast

growing Indian sugar confectionery market. The extension of Googly to a

Mint flavour reinforces Cadbury's commitment to establish the Trebor

name as a strong player in the value added sugar confectionery market.

Nestle who initially developed their market in urban areas is now

expanding in the semi-urban and rural markets. They are providing

various products at very low price. They had polo a mint with hole and

now they have the remains of the hole of polo in cachets.

Amul has been able to constantly expand in Indian market. They have

Introduced Badambar and Amul crisp, Amul orange and Amul milk

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chocolate. They have captured various rural markets and introduced

themselves on self of almost all retailers.

Awards:

Cadbury is the first FMCG Company in India to have successfully

implemented SAP R/3 as an Enterprise Resource Planning tool. SAP

awarded Cadbury India the SAP Star Customer Award in 1998 for the

successful implementation of SAP R/3 and for the invaluable support

extended to SAP and the SAP user community. This is the 4th year of

ERP since the financials went live with SAP, beginning 1996. In 1999

plans are on for the completion of the supply chain module within SAP

R/3 by implementing production systems, thereby integrating major

functions and gaining a quantum jump in efficiencies.

For 30 odd years the Utterly Butterly girl has managed to keep her fan

following intact. So much so that the ads are now ready to enter the

Guinness Book of World Records for being the longest running campaign

ever.

Samalkha factory received the Haryana State Safety and Welfare Award

from the Labour Department, Government of Haryana, an award intended

to encourage industries to excel in safety and environmental efforts.

Special strategies:

Amul has set up small telephone booth at various places where they also

provide their products for sale. Thus the customer coming to make a call gets

attracted to the chocolates and is tempted to purchase it.

Cadbury has come up with wrapper collection contest. The wrapper of any

Cadbury product had a specific point based on the cost of the product.

Consumer who submitted the wrapper within a specific period of the tome

would get prices on the basis of points received by them for collecting the

wrappers.

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Nestle has launched exciting and educational offering like Tarzan jigsaw

puzzle and classic tale series with the packs of the chocolates for the children.

They also give balls of cricket and lawn tennis with the family pack of the

chocolate and this can be seen in Kit Kat at present.

Festival packaging:

Amul being an Indian company know the importance of festival in India and

can foresee the profit in the festival that can be generated. They make festival

packages for special festivals for customers to be gifted to beloved ones. They

recently had introduced Utsav as a festival pack. They have also designed the

family pack with Rajput and Maharajas.

According to Cadbury, chocolate is also specially suited to Indian festivals.

The year 2000 saw brother’s gift Bandhan packs to sisters on the day of

Raksha Bandhan. It saw young suitors buy their loved ones boxes of heart

shaped chocolate for Valentine’s Day. It saw families gift each other

chocolates for diwali, a shift from the conventional ghee-laden mithai of yore.

The gifting market for chocolates provides a great potential for growth. Nestle

has played a key role in tapping this market through dominant presence in the

diwali retail and the institutional gifting segment. Gifting initiatives were

extended to other festivals and occasions like Raksha Bandhan and

Valentine’s Day in an effort to get the chocolate category into the Indian

consumers life space.

New products:

Cadburys has been continuously introducing new products in the market. As

per the need the Cadbury Company has introduced various products. At

present Cadbury is introducing temptation in the market.

Nestles had also been working for new product since long time. For standing

the competition nestle introduced nestle éclairs and recently introduced nestle

munch and had introduced KitKat.

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Amul also is working for its products and is now introducing small packs of

all the Amul chocolates. The pack is of 16 gms. and is also affordable by all.

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CHAPTER 6

FINDINGS OF SURVEY

The surveyor conducted a survey on consumption of chocolate in India between

the age group of 10-75 and found the following facts.

Out of 30 people questioned 27 replied that they consume chocolate and 18 of

them consume chocolate on daily basis and remaining consume chocolate on weekly

basis.

The survey also stated that 21 out of the total chocolate consumers { 27 }

preferred Cadbury chocolate over other brands, and the balance 6 preferred other brands

ie Nestle, Amul

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27

3

Yes

No

21

6

Cad...

CHAPTER 7

SUGGESTIONS

Of the person who consumes chocolate normally answered that they look out for

great taste and is delicious to eat. The very second feature said is that it is healthy and

nutritious but it can be said this answer is mainly because of shyness. Many say it is for ,

foreignbrands, etc fun moments and also freshens your mood. Many consider its

price,quality and attractive packaging also.

The survey also asked the respondents the kind of changes or variants in

chocolates they would like to have. The following are some of the suggestions made by

the respondents:

Chocolate should be available everywhere.

They should introduce calorie free or low calorie chocolate.

They should provide packs of all sizes so that it can be afforded by anyone.

The chocolate should have attractive packaging.

The chocolate should be energizing and healthy to eat.

Provide different taste of chocolates.

Inform about the ingredients on back of all packs. They should make

absolutely vegetarian chocolates.

Price should be kept low even when the chocolate is successful.

It should be able to replace snack if consumed i.e. heavy when eaten.

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CHAPTER 8

CONCLUSION

Now on the basis of survey and SWOT analysis done we can reposition the chocolate in

the Indian market as per the needs of the customers.

Distribution

Chocolate should be available in all i.e. even a small store in India. Even

the rural market should be aimed at providing chocolates everywhere in India.

Awareness

Customer should be made aware about their presence. Creating brand

image in the market can do this. Name of the company should be made trust

worthy in the minds of the consumers and also non-consumers. Company should

be able to make consumers brand loyal by its name. There should be sustained

growth of their market share through aggressive product development. They

should broaden their consumer appeal and extend their reach to newer markets.

Promotion

Since the Indian chocolate market is in growth stage there should be

exclusive advertising on T.V., radio, magazines, hoardings, posters, cinema, shop

displays etc. should be done to promote the product in the market.

Product

They should provide quality products as per the needs of the consumers.

They should take care of the Indian customs by providing pure vegetarian

products. Their product should be distinguishable among other brands in the

market. They should be striving for international quality in their products and

processes.

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Price

The price of the product should be kept low as compared to its

competitors. The product should be purchasable by all i.e. even a middle class

family people can buy it. They should provide value for the money paid for the

product. Initially they should cut on profits and keep prices low.

Packaging

The packaging of the product should be very attractive. By looking at the

packet consumer should be tempted to buy it. The product should also be

available in various sizes. The product package should create an image in the

minds of the people like purple colour for Cadburys.

Responsibilities

They should fulfill all their responsibilities among the consumers,

employees, shareholders, society, government, and others involved with them.

They should also take care of the environment and provide environment friendly

products and the covers should be recyclable. People should be encouraged to

recycle and reuse the packets of the product.

Collecting feedback

Company should encourage its customers to give their feedback (as to the

level of their satisfaction) regarding the product. On the wrapper of the product

the company suggests the customer to contact them either by mail or phone in

case the consumer are dissatisfied with the product.

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The top 10 qualities that people look out for in a chocolate

Have a perfect taste or delicious to eat

Nutritious and healthy

For fun filled moment

Is value for money

Freshens you up

Price

Quality

Packaging

Replace snack

Able to be gifted or family chocolate

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BIBLIOGRAPHY

www.google.com

www.yahoo.com

www.cadbury.com

www.nestle.com

www.amul.com

www.cacaoweb.net/chocolate

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