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INTRODUCTION

RELEVANCE OF STUDY

Today’s Indian chocolate market, an overview:

Chocolate consumption in India is extremely low. Cadbury dominates the chocolate

market with about 70% 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 Nestlé’s Bar One have minor market shares.

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

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the entry of new players like Nestle, which created categories like wafer chocolate and
spurred growth.

Types of chocolate

Sweet chocolate are usually dark in color and made with chocolate liquor, sugar, cocoa
butter, and such flavorings 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.

Products And Segmentation

Chocolate market can be segmented as follows:

Large units bars/ slabs,

• Count lines,
• Panned varieties,
• Small value added units.

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Confectionery products can be categorized as

• Hard boiled sugar candies, lollipops, jellies

• Toffees
• Chewing candies
• Breath fresheners, digestives, throat relievers

Gum based products are

• Chewing gum
• Bubble gum

Chocolates and Confectionery Industry

Chocolates Sugar confectionery Gum based

Bars/ Slabs Hard boiled Chewing gum

Count lines Toffees Sugar coated chewing gum

Panned (Gems) Soft chew Bubble gum

Eclairs Jelly candies

Assorted Deposit candies

Lollipops

Mints, etc.

TABLE 1.01

Chocolates and Confectionery Industry

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Chocolate Segmentation

Chocolate market can be segmented into moulded chocolates, count chocolates, panned
chocolates, éclairs and assorted chocolates.

Type of chocolates % Share in chocolate market

Moulded 37%
Count 30%
Eclairs 20%
Panned 10%
Others 3%

TABLE 1.02

SHARE OF CHOCLATES IN THE MARKET

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CHART 1.01

SHARE OF CHOCLATE IN THE MARKET

Moulded chocolates, like Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium,
Nestle Milky Bar, is the largest segment accounting for more than 1/3rd of the market.

Count lines (5 Star, Perk, Kit Kat, and Picnic) are the second largest segment accounting
for 30% of the volumes. The Count Line segment has been growing at a faster pace
during the last three years driven by growth in Perk and Kit Kat volumes.

Panned products include Cadburys' Gems, Nutties, and Nestlé’s Marbles. In panned
segment, Cadbury dominates with over 95% market share.

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Éclairs (droplets of hard caramels with soft chocolate fillings) are a low unit priced
product. Cadbury Éclairs was launched in 1972. Parle Products launched Melody in
1991. Nestle is a recent entrant in the segment. Nutrine's Éclairs has done extremely well
in the market.

Moulded segment Count segment Éclairs

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%

TABLE 1.03

MARKET SHARE

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.

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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 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 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.

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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 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

Company Market share (%) Major brands

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 Mahalacto, Kokonaka, HoneyFab, Aam Ras,
Chuma- Chuma, Gulkand, Funda, Gum Yum,
Nutrine 24%
Ole, Nutrine Eclairs,SuperStar, Caramella,
Wild Coffee, Dishum, Aasay,Naturo, Fruit Bar
Melody, Mango bite, Kismi, Poppins, Rola
Parle's 16%
cola, LuxDairy, Peppermint, Rosemint
Coffee Bite, Lacto king, Coconut punch,
Parry's 13% Caramilk, Madras Cafe, Soft-Spot, Flavoured
Candy, Mango, Sunshine, Shakti, Pineapple
Googly, Mocha, English toffee,
Cadbury's 11%
Frutus, Gollum, Eclairs, Pops.
Polo, Allen's Splash, Soothers, Toffo Butter,
Nestle 8%
Fruit Rings, Fox's
Pan pasand, Mango mood, Coffee break, Hi-
Ravalgaon 7%
soft, Supreme, Cherries, Juicy

Company Market Share Major brands

Dabur 3% Hajmola
P&G 2.5% Vicks
Warner Lambert 2.5% Halls, Chiclets, Clorets

TABLE1.04

SHARE IN SUGAR CONFECTIONERY MARKET

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 flavors.

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 Others Nutrine
21% 24%
Ravalgaon
7%

Nestle
8% Parle's
Cadbury's Parry's 16%
11% 13%

Nutrine Parle's Parry's Cadbury's

Nestle Ravalgaon Others

CHART 1.02
SHARE IN SUGAR CONFECTIONERY MARKET
Financial Analysis

Cadbury India net profit at Rs 190 million.

Mumbai:

Cadbury India Ltd has posted a net profit of Rs 190 million for the quarter ended 16 June
2008 as compared to Rs 93.60 million for the quarter ended 17 June 2007.

The total income has increased from Rs 1,206.80 million for JQ07 to Rs 1,363.40 million
for JQ08. The other income for the current quarter is at Rs 127.70 million (corresponding
quarter last fiscal: Rs 21.90 million) out of which Rs 107.70 million is on account of the
profit on sale of excess immovable property at Thane, Maharashtra.

Cadbury had sold the land near its factory at Thane for Rs 11 crore early this year. The
company says it has struck an agreement with Kalpataru Properties, Thane, for selling the

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land, which measured about 27,520 square meters. The deal helped Cadbury unlock the
value of its investments and helped it to shore up its bottom line.

Recently Cadbury India also refurbished its old office block in Mumbai and is now
planning to lease out the extra space available after the renovation, with a view of earning
some funds.

Cadbury India has three factories, which it operates on its own, while three other facilities
are run through arrangements with third parties.

To overcome the negative impact of sluggishness in the fast-moving consumer goods

market on its performance, the company undertook cost-cutting exercises over the past
one year, say analysts. “As a future strategy, it plans to reduce manufacturing and supply-
chain costs.” During the past few months, Cadbury India had offered a voluntary
retirement scheme to 29 employees in order to bring down costs.

Cadbury Schweppes recently hiked its stake in the Indian company to 90 per cent by
buying out around 39 per cent of the public shareholding. Cadbury India has already
made an application for delisting.

Cadbury India Ltd

Brief Financials (in Rs. Mn.)

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TABLE 1.05

Period ending (months) 28-Dec-2008 29-Dec-2007 (12) 31-Dec-2006

(12) (12)
Net sales 7298.11 6846.58 6258.34
Other Income 93.32 11.45 13.98
Total Income 7391.43 6858.03 6272.32
Cost of goods sold 6293.08 5683.02 5163.55
OPBDIT 1098.34 1175.01 1108.77
PAT 456.50 727.21 595.40
Gross Block 3267.69 2860.47 2690.13
Equity capital 357.10 357.10 357.10
EPS (Rs.) 12.78 20.36 16.67
DPS (Rs.) 2.00 2.00 6.00
BV (Rs.) 99.78 89.71 70.73
P/E range (x) 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
Debt / Equity (x) 0.03 0.04 0.03
Operating margin (% of OI) 14.9 17.1 17.7
Net margin (% of OI) 6.2 10.6 9.5

OBJECTIVE OF THE PROJECT

1. To study the pricing of different products produced by Cadbury.

2. To know the techniques adopted by Cadbury to maximize profit.

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 3. To study the strategy of Cadbury of increasing their profit by introducing new
product in market.
4. The study and comparison of Cadbury and its competitors in market.

RESEARCH METHODOLOGY

A research design is the arrangement of condition for collection and analysis of data in a
manner that to combine relevance to research purpose with economy in procedure".

Research design is a conceptual structure within which research is conducted. It

constitutes the blueprint for the collection, measurement and analysis of data. Research
design is needed because it facilitates the smooth sailing of the various research
operations, thereby making research as efficient as possible yielding maximum
information with minimum effort, time and money. Research design stands for advance
planning of methods to be used for collecting the relevant data and the techniques to be
used in their analyses. Preparation of research design should be done with great care as

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any error may upset the entire project. Therefore it is imperative that an efficient design
must be prepared before starting research operations. The design helps the researcher to
organize his ideas in a form whereby it will be possible for him to look for flaws and
inadequacies. It refers to the method adopted to collect the relevant data and other
information, which forms the basis of the thesis writing. So for the effective writing of
the thesis report, the data must be quality oriented.

The following questions have to be answered in a research design:

1. What is the study about?

2. Why is the study being made?

3. Where will the study be carried out?

4. What type of data is required?

5. Where can the required data be found?

6. What periods of time will the study include?

7. What will be the sample design?

8. What techniques of data collection will be used?

9. How will the data be analyzed?

It refers to the method adopted to collect the relevant data and other information, which
forms the basis of the thesis writing. So for the effective writing of the thesis report, the
data must be quality oriented. My research is divided into two stages:

STAGE I: Data Source.

Secondary Data- Information was collected from secondary sources such as
Public libraries, newspapers, business magazines.
Beside these the use of Internet was also made in collecting relevant
information. The data collected from the above mentioned sources has been
adequately structured and used at appropriate places in the report. This

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particular way of data collection was used because of its low cost (except data
collected through surfing the internet) and less time consumption.
Secondary data represents information that already exists somewhere, having been
collected for another purpose.
The secondary data sources that came to be utilized by me in these were as follows-
I Internal Sources-
- In-house magazine
- Annual Reports of the banks
- Corporate magazines etc
II. External Sources-
- British council library
- College library
- Internet services
STAGE II: Analysis- In this stage all the collected data had been analyzed and then a
Report had been written.

LIMITATIONS

This study provides the data for only Cadbury pricing.

• The following study does not represent overall idea of any company.
• Two months time is not sufficient for study of the topic.
• The data collected is from secondary source hence it is not 100% accurate.
• There can be a chance of biasness in the data selection.

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17
 PROFILE OF THE ORGANISATION

Throughout history chocolate has been associated with romance and sharing.
Today the richness and smoothness of Cadbury chocolate is what makes it one of the
world's favorite treats.

Discover everything here that you want to know about Cadbury and chocolate, from
historical facts to delicious recipes.
You’ll also find facts about our exciting new product such as Cadbury snaps and Cadbury
dairy milk wafer.

Think delicious chocolate, think Cadbury.

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 History of the company

Cadbury has been synonymous with chocolate since 1824, when John Cadbury opened
his first shop, establishing a flourishing dynasty that today provides the world with many
of its favorite brands of chocolate.

Learn about the fascinating history of chocolate:

How cacao is the Mayan word for ‘God Food’; when and how chocolate was first
introduced to Europe; how ‘xocolatl – a bitter frothy drink, beloved by Montezuma-
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made the transaction into food centuries later, how it’s reputation for heightening
pleasure made it the stuff of myth and legend.

Discover the history of Cadbury, from its social pioneering to the perfection of the recipe
for Cadbury Dairy Milk; first launched in 1905, and still a market leader today. Find out
all there is to know about making chocolate, and amaze yourself with the brand stories
and brand timeline that show how many Cadbury brands have been favorites since the
early 1900s

When chocolate finally reached England in the 1650s, the high import duties on cocoa
beans meant it was a drink only for the wealthy. Chocolate cost the equivalent of 50-75
pence a pound (approximately 400g), when pound sterling was worth considerably more
than it is today. Gradually chocolate became more freely available. In 1657, London's
first Chocolate House was opened by a Frenchman, who produced the first advertisement
for the chocolate drink to be seen in London:

The history of Cadbury as manufacturers of chocolate products in Birmingham dates

back to the early part of the 19th century, when John Cadbury opened a shop in the centre
of the city, trading as a coffee and tea dealer. Soon a new sideline was introduced - cocoa
and drinking chocolate, which he prepared himself using a mortar and pestle. His lifelong
involvement with the Temperance Society led him to provide tea, coffee and cocoa as an
alternative to alcohol, believed to be one of the causes of so much misery and deprivation
amongst working people in Britain at that time.

Fashionable chocolate houses were soon opened where the people could meet friends and
enjoy various rich chocolate drinks, many of which were rather bitter to taste, while
discussing the serious political, social and business affairs of the day or gossiping

The Cadbury family were closely involved in the evolution of drinking chocolate. From
his grocery shop in Birmingham, where he sold mainly tea and coffee, John Cadbury

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started preparing cocoa and drinking chocolate, using cocoa beans imported from South
and Central America and the West Indies. He experimented with a mortar and pestle to
produce a range of cocoa and drinking chocolates with added sugar.

By 1831 the cocoa and drinking chocolate side of the business had expanded, so he
rented a small factory in Crooked Lane not far from his shop and became a 'manufacturer
of drinking chocolate and cocoa'. This was the real foundation of the Cadbury
manufacturing business as it is today. The earliest preserved price list of 1842 shows that
John Cadbury sold sixteen lines of drinking chocolate and cocoa in cake and powder
forms. Customers would scrape a little off the block and mix it with hot milk or water. A
solid chocolate for eating was introduced by John Cadbury in 1849, which by today's
standards wouldn't be considered very palatable.

In 1866 George Cadbury (John 's son) brought to England a press developed in Holland
by Van Houten. The press changed the face of cocoa and chocolate production, as it was
designed to remove some of the cocoa butter, enabling a less rich and more palatable
drink to be produced. There was no longer any need to add the various types of flour and
Cadbury's new cocoa essence was advertised as 'Absolutely pure...therefore Best'.

Established by Richard and George Cadbury, two Victorian businessmen with great
industrial and social vision, Bourneville Village is a story of industrial organization and
community planning covering well over a century. It embraces the building of a factory
in a pleasant 'green' environment (in stark contrast to the oppressive conditions of the
Victorian industrial scene), the enhancement of employees' working conditions and
overall quality of life and the creation of a village community with a balanced residential
mix (both employees and non-employees).

George Cadbury was a housing reformer interested in improving the living conditions of
working people in addition to advancing working practices. Having built some houses for
key workers when the Bourneville factory was built, in 1895 he bought 120 acres near the

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works and began to build houses in line with the ideals of the embryonic Garden City
movement.
Motivation for building the Bourneville Village was two-fold. George Cadbury wanted to
provide affordable housing in pleasant surroundings for wage earners. But as the
Bourneville factory grew, local land increased in value and was ready to fall into the
hands of developers. The last thing the brothers wanted was that their 'factory in a garden'
would be hemmed in by monotonous streets.

Dame Elizabeth Cadbury was involved in the planning of Bourneville with her husband,
George. Her memoirs tell us how these plans became reality:

"When I first came to Birmingham and we were living at Wood Brooke, morning after
morning I would walk across the fields and farmland between our home and the Works
planning how a village could be developed, where the roads should run and the type of
cottages and buildings.

Gradually this dream became reality, houses arose and many of the first tenants being
men in Mr Cadbury's Adult School Class - which met every Sunday morning at 8.00am
in Bristol Street - who had previously lived in the centre of the city and had never had a
garden. Also workers in the factory became tenants.

They too enjoyed their homes in the healthy surroundings, cultivating their gardens,
rewarded in many instances by splendid crops of apples from the belt of apple trees
which each tenant found at the bottom of his garden."

The consequent availability of cocoa butter led to the development of the smooth creamy
chocolate we know today.

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Manufacturing process:

Cadbury makes a variety of chocolates for different purposes but the two main types are
Cadbury Dairy Milk, milk chocolate and Cadbury Bourneville plain chocolate.

The taste and texture of Cadbury chocolate are based on long traditions of expertise in
recipe and processing unique to Cadbury. Techniques are improving all the time and new
technology enables the whole process to be finely tuned to match evolving tastes and
preferences.

Production starts at the Chirk cocoa factory, where the highest quality cocoa beans are
processed to produce cocoa mass containing 55% cocoa butter plus extracted cocoa
butter, the basis for all chocolate products.

When plain chocolate is made the 'mass' goes straight to the Bourneville factory in
Birmingham while the 'mass' for milk chocolate production is taken to the Cadbury milk
factory at Marl brook, Herefordshire, in the heart of English dairy country.

At the milk processing factory fresh liquid full cream milk is cooked with sugar and
condensed to a thick liquid. Cocoa mass is added, making a rich creamy chocolate liquid,
which is then evaporated to make milk chocolate crumb. As these ingredients are cooked
together the very special rich creamy taste of Cadbury chocolate is produced. 95,000
tonnes of crumb a year are produced at Marl brook to be made into chocolate at the
Cadbury chocolate factories at Bourneville, Birmingham and Somerdale, Bristol.

On arrival at the chocolate factory the crumb is pulverized by heavy rollers and mixed
with additional cocoa butter and special chocolate flavorings. The amount of cocoa butter
added depends on the consistency of the chocolate required: thick chocolate is needed for
molded bars, while a thinner consistency is used for assortments and covered bars.

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In the UK up to 5% vegetable fat is added to compensate for variations in cocoa butter,
allowing the melting properties of the chocolate to be controlled to a precise standard,
and preserving the full taste and texture of the chocolate. Cadbury use carefully selected
vegetable oils similar in nature to cocoa butter: African Shea, Indian Sal and Malaysian
Palm oils are all part of the recipe.

Both milk and plain chocolate, which has had sugar and cocoa butter added to the mass
before pulverizing, undergo the same final special production stages, producing the
famous smoothness, gloss and snap of Cadbury chocolate.

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 CADBURY PRODUCTS

Cadbury 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. With a catchy jingle and tongue in cheek advertising, this 'anytime, anywhere'
snack zoomed right into the hearts of teenagers.

Raageshwari started the trend of advertising that featured mischievous, bubbly teenagers
getting out of their 'stuck and hungry' situations by having a Cadbury Perk. Cadbury Perk
became the new mini snack in town and its proposition "Thodi si pet pooja" went on to
define its role in the category.

As the years progressed, so did the messaging, which changed with changes in the
consumers' way of life. To compliment Cadbury Perk's values, the bubbly and vivacious
Preity Zinta became the new face of Perk with the 'hunger strike' commercial in the mid
90's.

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In the new millennium, Cadbury Perk moved beyond just owning 'hunger' to a "Kabhi bhi
kaise bhi" position, because the urge for Cadbury Perk could strike anytime and
anywhere.

With the rise of more value-for-money brands in the wafer chocolate segment, Cadbury
Perk unveiled two new offerings - Perk XL and XXL.

The temptation to have more of Cadbury Perk was made even greater with the launch of
Cadbury Perk Minis in 2003 for just Rs. 2/-

In 2004, with an added dose of 'Real Cadbury Dairy Milk' and improved wafer', Perk
became even more irresistible. The product was supported in the market with a new look
and a new campaign. The advertisement spoke of the irresistible aspect of the brand, with
'Baaki sab Bhoola de' becoming the new mantra for Cadbury Perk.

Did you know:

Cadbury Perk advertising has been a launch pad for Bollywood stars - Preity Zinta,
Raageshwari, Gayatri Joshi and Amrita Rao, were all Perk models before they made it
big on cinema screens.

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Cadbury Five Star:

Chocolate lovers for a quarter of a century have indulged

their taste buds with a Cadbury 5 Star. A leading knight in the Cadbury portfolio and the
second largest after Cadbury Dairy Milk with a market share of 14%, Cadbury 5 Star
moves from strength to strength every year by increasing its user base.

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.

One of the key properties that Cadbury 5 Star was associated with was its classic Gold
color. And through the passage of time, this was one property that both, the brand and the
consumer stuck to as a valuable association.

Cadbury 5 Star was always unique because of its format and any communication
highlighting this uniqueness, went down well with the audiences. From 'deliciously rich,
you'd hate to share it' in the 70's, to the 'lingering taste of togetherness' & 'Soft and
Chewy 5 Star' in the late 80's, the communication always paid homage to the product
format.

More recently, to give consumers another reason to come into the Cadbury 5 Star fold,
Cadbury 5 Star Crunchy was launched. The same delicious Cadbury 5 Star was now
available with a dash of rice crispies.

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Cadbury 5 Star & Cadbury 5 Star Crunchy now aim to continue the upward trend. This
different and delightfully tasty chocolate is well poised to rule the market as an extremely
successful brand.

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.

The pure taste of Cadbury Dairy Milk is the taste most Indians crave for when they think
of Cadbury Dairy Milk.

The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of
Cadbury Dairy Milk with a variety of ingredients and are very popular amongst teens &
adults.

Recently, Cadbury Dairy Milk Desserts was launched, specifically to cater to the urge for
'something sweet' after meals.

Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk Wowie,
chocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a

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delightful combination of milk chocolate and white chocolate. Giving consumers an
exciting reason to keep coming back into the fun filled world of Cadbury.

Our Journey:

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.

In the early 90's, chocolates were seen as 'meant for kids', usually a reward or a bribe for
children. In the Mid 90's the category was re-defined by the very popular `Real Taste of
Life' campaign, shifting the focus from `just for kids' to the `kid in all of us'. It appealed
to the child in every adult. And Cadbury Dairy Milk became the perfect expression of
'spontaneity' and 'shared good feelings'.

The 'Real Taste of Life' campaign had many memorable executions, which people still
fondly remember. However, the one with the "girl dancing on the cricket field" has
remained etched in everyone's memory, as the most spontaneous & un-inhibited
expression of happiness.

This campaign went on to be awarded 'The Campaign of the Century', in India at the
Abby (Ad Club, Mumbai) awards.

In the late 90's, to further expand the category, the focus shifted towards widening
chocolate consumption amongst the masses, through the 'Khanewalon Ko Khane Ka
Bahana Chahiye' campaign. This campaign built social acceptance for chocolate
consumption amongst adults, by showcasing collective and shared moments.

More recently, the 'Kuch Meetha Ho Jaaye' campaign associated Cadbury Dairy Milk
with celebratory occasions and the phrase "Pappu Pass Ho Gaya" became part of street
language. It has been adopted by consumers and today is used extensively to express joy
in a moment of achievement / success.

29
The interactive campaign for "Pappu Pass Ho Gaya" bagged a Bronze Lion at the
prestigious Cannes Advertising Festival 2006 for 'Best use of internet and new media'.
The idea involved a tie-up with Reliance India Mobile service and allowed students to
check their exam results using their mobile service and encouraged those who passed
their examinations to celebrate with Cadbury Dairy Milk.

The 'Pappu Pass Ho Gaya' campaign also went on to win Silver for The Best Integrated
Marketing Campaign and Gold in the Consumer Products category at the EFFIES 2006
(global benchmark for effective advertising campaigns) awards.

During the 1st World War, Cadbury Dairy Milk supported the war effort. Over 2,000
male employees joined the armed forces and Cadbury sent books, warm clothes and
chocolates to the front.

Cadbury's big Bytes:

Kuch meetha ho jaye suggests Cadbury India, its brand ambassador Amitabh Bachchan
smiling down the hoardings lined along Mumbai's Marine Drive right down to the
company's corporate head office at Mahalakshmi. While the chocolate major is waiting
for Diwali to see a turnaround in its business after the worm’s controversy, at the moment

30
it's all about driving growth for the category, which has seen a decline since the first
quarter of this year.

Being the market leader in chocolates with a 70 per cent share, the company has
attempted to stretch the boundaries within chocolate confectionery. It has also been
adventurous in unleashing a brand new category within chocolate early this year.
Introducing the concept of sweet snacking, it launched Cadbury Bytes in the south with
the positioning `Snacking ka meetha funda.' The product is a crunchy wafer pillow with a
choco-cream centre and is being rolled out nationally.

Explaining the need to introduce this new category, Bharat Puri, Managing Director,
Cadbury India, says, "While we were sure of our core competencies, there was need for
innovation to deliver double-digit growth. What we found was that we were under-
represented in the area of snacking on the go and that there was a need for a light crunchy
snack." While entry into salted snacks was ruled out, sweet snacks were the obvious
choice, and Bytes is unique to the chocolate major's Indian portfolio.

Getting the right product and packaging was a challenge for the company. It has sub-
contracted the product to get the volumes and is poised for a national launch. Adds Puri,
"After all this was the first category anywhere in the world that Cadbury was entering and
we did not have the expertise. So the best way was to test-market the product and today
we find that it has already bagged five per cent of the chocolate market."

The company has no apprehensions of cannibalization of its chocolate brands. It believes

that while its chocolates are more of indulgence products, Bytes is about snacking when
one is hungry and can be treated as a snack in between meals.

31
In the past when Cadbury tried out a biscuit brand, Chocobix, there was fear about some
amount of cannibalization. After all, it was simply a biscuit coated in chocolate, and was
perceived to be another chocolate brand in Cadbury's portfolio.

Stresses Puri, "Cadbury Bytes is adjacent to chocolates and in the markets that we have
launched it, there has been no cannibalization. Chocolates is largely an indulgence
product while Bytes is about between-meals snacking. A product which is consumed
when one is feeling hungry or peckish."

Another thrust area Cadbury has been re-evaluating is confectionery. While growth rates
in this segment are healthier compared to chocolates, it has always been a difficult market
to crack. Cadbury's own experiences have led it to withdraw certain brands but now with
Warner's Lambert's international kitty under its fold, there are chances of reconsidering
the segment once again.

"Through the acquisition of Warner Lambert, there is a great set of brands already
available to us. We are still examining which are the right brands for the Indian market,"
says Puri. Cadbury has already identified Halls as the strongest brand in Warner

32
Lambert's portfolio and re-launched the brand early this year. Adds Puri, "Halls was not
doing well for a while so we re-launched it this year. When you have the existing assets,
it is necessary to get them right first. Halls is the first brand that we have revived and it is
now doing well."

In April 2003, Cadbury India's foreign parent acquired Pfizer's interests in the
confectionery business for $4.2 billion. That included the Warner-Lambert product
portfolio, known best for Halls, Clorets and Chiclets. The acquisition is now poised to
become a growth area for Cadbury India, whose confectionery brands include Éclairs and
Googly. But instead of selling confectionery through its existing chocolate network,
Cadbury has set up an entirely new network.

While Halls has been revived with new packaging, there has been no change in the status
of its other brands. Chiclets had been discontinued long before it belonged to Cadbury
and Clorets continues to sell with a small franchise. But now Cadbury is looking closely
at Warner Lambert's gums portfolio (it is one of the world's largest gum manufacturers)
and is considering its viability for the Indian market. Sugarless gum brands such as
Dentyne Ice and Trident White have been known for their functional benefits worldwide
but steep pricing may be a deterrent to their entry into the country.

"The gum market has not done well in India. But gum has functional properties and is not
merely a breath freshener. We are now evaluating whether there is a market for them in
India and whether it is going to be worth our while," says Puri.

The confectionery market may be huge in volumes but making money on it remains a
tough task with its low margins. Governed by price points, one can sell at only at a Re 1
or 50 paise unit price. "The issue is not of garnering volumes but making money out of
those volumes. The offer should be one which can get you both top and bottom lines,"
states Puri. Having shifted focus from Googly, Cadbury has tasted success with its age-
old Éclairs which continue to bag almost 50 per cent of the market.

"There is scope in the market. Our Éclairs has been growing and this has been evident in
our past numbers," claims Puri. At the same time the sugar confectionery market is
33
highly competitive and it's all about finding the right consumer proposition and a
business model that can deliver both top line and bottom line growth.

In spite of the new categories being explored by Cadbury, its star brand remains Cadbury
Dairy Milk (CDM), which continues to corner almost 30 per cent of the chocolate
market. It is followed by brands such as 5-star, perk and Gems. Each of these has been
revamped over the years to generate excitement for the category. For instance, recently
Perk was rejuvenated as a crunchier wafer while CDM came up as a white-and-brown
variant in the market.

"The chocolates category thrives on excitement. It's all about giving the consumer a
choice and taste which they enjoy," adds Puri. For instance, in beverages, in spite of its
malted food brand Bournvita, Cadbury decided to introduce a milk additive brand such as
Delite, just to give its consumers the real taste of chocolate. Delite has added flavors such
as strawberry and mango and is not expected to encroach upon Bournvita’s shares.
According to Puri, "There is still a large section of people who do not add anything to
milk. This will apply to children for whom milk is a problem and having an additive will
make it a pleasurable experience."

Making changes in its distribution network, Cadbury split its sales and marketing team
between its mass (confectionery) and core brands last year. "Chocolates needed to get
retailed at larger and better outlets while all the products below Rs 3 needed a different
distribution network," says Puri. Today Cadbury's distribution network reaches out to six
lakh outlets each for its confectionery and chocolate brands.

With the worm’s episode behind it, there are other issues bothering the company,
especially that of the rising input costs of cocoa, sugar and milk. Although Cadbury has
been able to maintain prices, it is still grappling with the upward trend in prices for its
basic raw materials. But its challenge remains that of growing the chocolate market in
spite of the odds. Posting a turnover of Rs 729 crore last year, Cadbury is waiting for
Diwali to make a turnaround for both itself and the category which has been through
troubled times.

34
Pricing battle:

Cadbury's efforts to exploit untapped potential and reach every pocket have a lot to do
with outwitting Nestle in the war of the wafers.

Its latest annual report states: `Cadbury is all set to satisfy untapped potential. With brand
launches, re-launches and new products, the thrust is on reaching every individual,
satisfying different palates and being within varying budgets. Basing its operations on
this vision, Cadbury is charting a new course of action. With the product, place, price and
promotion synergies working in tandem, it won't be long before we find a Cadbury in
every pocket.'

This may sound like a reiteration of its earlier claims, but in its heart of hearts, Cadbury
India, in spite of being the leader in the chocolate market, is still trying to settle scores
with Nestle in the wafer-coated chocolate market, where it has yet to grab a dominant
share.

Creating new launches and extensions may be an ongoing exercise for the Rs 511-crore
chocolate multinational, but lately it has set its sights on the Swiss food giant, Nestle,
which is going through a rough patch with its flagship brand, Kit Kat.

In fact, the wafer chocolate war started in 1995 when both Perk (from Cadbury) and Kit
Kat (from Nestle) were launched. It had Cadbury running for cover to protect its largest
brand, Cadbury's Dairy Milk, which it did by extending its positioning on the adult

35
platform. The power-packed campaign from HTA (`Have a Break') did wonders for the
Kit Kat brand at that point of time, but its premium pricing proved to be the main hitch,
which has seen its volumes dipping from 15 per cent in 1997 to 9.5 per cent this June, as
per ORG-Marg figures.

Despite its share of the volumes coming down, Kit Kat still has a dominant share in the
market while Cadbury's Perk has seen steady shares between 2000 and 2006 with present
volume shares at 8.8 per cent, as per ORG-Marg figures. Perk has also stretched itself to
variants such as Mango, Strawberry and Mint to generate some excitement around the
brand.

So, while Kit Kat has taken a battering with its premium pricing and image, Cadbury
India is taking this chance to put its might behind its wafer category, with Perk and the
newly-launched Milk Treat, to beat Nestle in this category.

But then, the price points in the wafer chocolate category were redefined by Nestle when
it launched Munch at Rs 5 last year. Cadbury had to react to this lowering of price within
the wafer chocolates category and had to stretch Perk-to-Perk Slims at Rs 5 to counter it.

Explains Rajat Sabharwal, an analyst with Kotak Securities, ``the growth rates have come
to a standstill in wafer chocolates and the market is not buoyant in this category. With
Nestle coming out with a lesser-priced brand, Cadbury is responding now.'' So, despite
Nestlé’s flagship brand suffering to a certain extent, a flanking brand such as Munch has
taken care of the dipping shares.

Highlights Nirav Sheth, an analyst with SSKI Securities, ``In the first three years since
the launch of Kit Kat, its price rise has been too fast and this has backfired. Today, its
price cuts have been prompted by competitive pressures and the purpose is obviously to
gather volumes.'' But then, the prices of cocoa have also been crashing, perhaps helping
Nestle absorb the price cuts, which, possibly it would not have been in a position to do
otherwise.

36
Today, Nestle seems content with its strategy and admits that though shares of Kit Kat
have dipped, Munch has succeeded in doing what it was expected to do. Says Sanjay
Sehgal, Executive Vice-President (Marketing), Nestle India, ``Cadbury has reacted to us.
In fact, Munch could also be responsible for eating into the shares of Kit Kat along with
Cadbury's own brand. There has been a redefinition of pricing strategy for Kit Kat and
we are hoping it will show.''

Kit Kat continues to sell at a slight premium to Perk though it is now offering a price
discount of nearly 20 per cent, which indicates that Nestle either had great margins on the
brand earlier, or is in trouble.

For Cadbury, Perk is basically a fighter brand being used to flank the mother brand. In
fact, the fight is almost similar to what HLL did with Wheel (though it was not making
money on the brand) to counter Nirma in the detergent market while Surf sat pretty as the
mother brand in Lever's portfolio.

However, in the case of wafer chocolates, it is not a very happening category since
consumers have realized that they are not paying for pure chocolate, but for a chocolate-
coated biscuit. For Cadbury, its cash cow will always remain its Cadbury's Dairy Milk.
Both are players fighting with their higher reserves, trying to establish themselves with a
dominant share in the wafer chocolate category.

The new Perk has four wafer layers covered with chocolate and is lighter and crisper. Its
packaging has also undergone a change and has used Cadbury's trademark purple
background with the dark brown wave of chocolate on the wrapper, indicating the
presence of pure dairy milk chocolate, to set it apart from a common biscuit chocolate.

Cadbury is targeting a 12 per cent volume share for the Perk brand after this relaunch and
expects to overhaul Kit Kat. As Bharat Puri, Director (Sales & Marketing), Cadbury
India, declares: ``our objective is to be the largest wafer-coated brand in the country.''

37
A new campaign has been developed for the relaunch of the brand where through three
commercials the differences in the new Perk are highlighted through dialogues alluding
to match fixing -- Khule Aam Khayiye. Kabhi Bhi. Kahin Bhi.

Explains Piyush Pandey, National Creative Director, Ogilvy & Mather, ``Through the
commercials we are trying to bring out various explanations about the changes in Perk.''
The original campaign of Thodi Si Pet Pooja, Kabhi Bhi, Kahin Bhi will continue
through another new commercial, of a lady secretly eating Perk on the occasion of Karwa
Chauth.

Meanwhile, another wafer chocolate brand that has been targeting kids is Milk Treat, four
wafers with butterscotch-flavored cream embedded in milky white chocolate. Though
Cadbury did have a white bar, Creamy Bar, it was never treated as a major brand. Milk
Treat is pitted against Nestlé’s Milky Bar though it is in a moulded form unlike the
former, which is in count form. There are expected to be more variants under the Milk
Treat brand for children. Both Milk Treat and Perk are priced on par at Rs 10 for 27 gm.

Despite all the action in the chocolate wafer segment, growth for Cadbury has always
come from its mother brand - the Rs 117-crore Cadbury's Dairy Milk which today
straddles all possible price points.

Explains an analyst with Motilal Oswal Securities, ``For Cadbury, its growth has been
coming from Cadbury's Dairy Milk and what it is doing to Perk is just to gather
momentum in the chocolate market which thrives on innovation and excitement.''

In 2007, Cadbury recorded an eight per cent turnover growth in chocolate confectionery
led by its flagship brand Cadbury's Dairy Milk, which registered a growth of over 40 per
cent. The malted food drinks category reported a growth of 14 per cent while the sugar
confectionery segment rose a mere three per cent. The Éclairs brand grew by a healthy 14
per cent.

In fact, Cadbury has consciously stayed away from meddling too much with its heritage
chocolate brands -- Dairy Milk and 5 Star. Explains Puri, ``As a marketer, it is best not to

38
do too much to these heritage brands which already have strong equity. Not that we will
never relaunch them but right now they enjoy a strong equity.''

But, it did relaunch its heritage brand of malted drinks, Bournvita, last year when it lost
share to the white drinks segment. There are plans to extend this strong brand in the
future, about which Cadbury does not want to reveal its plans right now. Interestingly,
there already exists a similar sounding dark chocolate brand for adults, Bourneville, in its
kitty for many years, which has not seen much advertising.

While its chocolate brands are continuing to get broad based, its sugar confectionery
brands will get upgraded to higher price points. For instance, its hard-boiled sweets such
as Googly, Mocka and English Toffee are gradually being phased out, while the new
brands such as Frutus, a chewy sweet (Re 1) and the jelly, Gollups (Rs 2), are expected to
see some healthy growth. Adds Puri, ``It is not possible to build brands at such low price
points. While there are volumes, the margins are thin in this category.''

Besides, the latest Budget has hiked the duties of sugar confectionery products from eight
per cent to 16 per cent, which in any case has led to an increase in prices and thereby
affected brands such as Googly.

But one thing that Cadbury has realized through all this is that it has got cheaper with
more products in the Rs 3-5 category. Its premium brands such as Cadbury Gold, Truffle
and even Picnic have never really been accepted in the chocolate market. Today, Cadbury
is constantly looking at pushing volumes at the lower end of the market and brands such
as Relish, Break, 5 Star and Dairy Milk have Rs 5 variants catering to this lowest price
point. Perk Slims is the latest Rs 5 brand to be added to this list.

As for taking the chocolate wafer war to the enemy camp, it might take a while because
Nestle also has deep pockets and has established itself in the chocolate wafer category in
spite of dipping shares. However, Cadbury will always be the leader with its heritage
brands. As Rajat Sabharwal, an analyst with Kotak Securities states, ``Nestle may be a
key player in the Indian chocolate market but there is no possibility of it emerging as a
category leader.''
39
 Cadbury faces prosecution

Bureaus in Mumbai

Laboratory tests by the Maharashtra Food and Drug Administration of samples of

Cadbury's products confirmed the presence of two dead and one live organisms. The
unspecified product was manufactured by Cadbury's factory near Pune.

Cadbury India is now liable to be booked under the provisions of the food adulteration
law. Confirming this, FDA Commissioner Uttam Khobargade told Business Standard:
"As per FDA norms this is a clear case of adulteration. We will charge the manufacturer.
We have not found any instance of this adulteration in the Thane unit of Cadbury India."

Khobargade added that while the company had offered the plea that faulty storage by a
dealer was responsible for the incident, it was the manufacturer's responsibility to ensure
that quality storage conditions were available with the dealers.

In a late night media release, Cadbury said: "We are not aware which samples have been
tested by the Food and Drugs Administration. Neither have we received any official
report from their office. We would therefore not like to comment until we have had a
chance to see the formal report. However, we have checked the relevant factory control
samples and have found them to be of good quality and free of any traces of infestation."

On October 3, acting on a consumer complaint, the Maharashtra FDA seized stocks of

Dairy Milk chocolates in Maharashtra. A consumer found worms in a Dairy Milk
chocolate bar, bought from a shop in Mumbai's western suburb of Andheri.

Cadbury Dairy Milk, the flagship brand, contributed 30 per cent to the company's Rs
687.30 crore (Rs 6.87 billion) turnover in 2002.

40
More infested Cadbury chocolates found:

Ten Cadbury chocolate bars were on Monday sent to the Maharashtra Food and Drug
Administration laboratory in Dadar, Mumbai, for testing whether they contained worms.

The move came three days after the state government expressed satisfaction at the
'hygienic condition' being maintained at the manufacturing unit of Cadbury.

FDA sources said the chocolates, from a shop in Kurla, central Mumbai, were handed
over to police, who in turn deposited them with the FDA at around 1530 IST.

The chocolates were found to have holes in them, they said. On October 10, Minister of
State for Food and Drug Administration Anil Deshmukh had said that the judiciary would
decide whether to prohibit the sale of the seized stock.

Meanwhile, FDA Commissioner Uttam Khobragade alleged that Cadbury officials were
trying to put political pressure on him.

But "I will not come under any political pressure", he said.

Khobragade said, "Instead of admitting their fault, Cadbury are saying that it's dealer's
fault. Why are they forgetting that those are their dealer so it's their responsibility to
make the product safe?"

He also said he would not visit the Cadbury factory. "I have no business to visit their
factory. What I want is that the products coming into the market should be perfect."

Asked if it was lobbying the government, a Cadbury official told rediff.com: "We
reiterate that we will continue to cooperate with the authorities."

She said the company was confident that "our products are of the highest standards".

41
Asked why Cadbury had not followed the FDA commissioner's suggestion to withdraw
its products from the market and repack them, she said, "As a part of our standard
procedure we regularly take back any damaged or date expired stocks back from our
retailers."

She said the company had not received any intimation about a case being registered
against it. "However, we will continue to extend all cooperation to the authorities because
like the FDA, Cadbury is also conscious of its commitment to society in general and
consumers in particular."

Regarding Deshmukh's visit to the Cadbury plant, she said the minister "inspected the
hygiene standards and manufacturing practices adhered to" by the company.

She admitted the controversy would affect the sales during the festival season. "However,
we would like to reiterate that all through the 55 years of leadership in India, Cadbury has
remained synonymous with chocolates and we have remained committed to high quality
and consumer satisfaction.

Cadbury's loss is Amul's gain:

As Cadbury India finds itself mired in the worm’s controversy, Gujarat Co-operative
Milk Marketing Federation, which makes Amul chocolates, has witnessed a surge in
sales.

After selling 60 tonnes of chocolate in September, the company was on course to report
sales of 150 tonnes in October and had projected sales of 250 tonnes in November, a
GCMMF executive told Business Standard.

In Mumbai, which accounts for almost 10 per cent of the 4,000 tonne, Rs 650 crore (Rs
6.50 billion) a year chocolate market in India, the company plans to raise its market share
from 2 per cent in the beginning of October to 15 per cent by the end of the month.

42
"We will sell 20 tonnes this month in Mumbai, against only 2 tonnes in October last
year," the GCMMF executive said.

According to the executive, while 20 per cent of the growth in Amul's sales in recent days
has been because of the Cadbury factor, the recent brand launches by the company and
the increased focus of GCMMF on chocolates have contributed 40 per cent each to the
rise in the numbers.

In an attempt to boost sales, the company has launched three new chocolates in Mumbai
under the brands Fundoo, Bindaas and Almond Bar. While the first two have been priced
at Rs 10 for a 30 gm stick, Almond Bar carries a price tag of Rs 10 for a 35 gm chocolate.

As a result, the company's festival season pack "Rejoice" now comes with six chocolates
in the city, up from three during the festive season last year.

"A national launch of the three brands is likely to happen in a month's time," the official
added.

Encouraged by the rising numbers, GCMMF has drawn up plans to make its chocolate
business a separate division of the company.

"We think that the business requires a special focus and this is the best way to do it," the
official added. Cadbury India is the largest player in the Indian chocolate market,
followed by Nestle India and Amul.

43
Cadbury bids to worm way into public good books with Big B endorsement

The Big B is going to promote the Big C in the chocolate business - Cadbury in India.
Indian cine superstar Amitabh Bachchan has signed on to become the brand ambassador
of the chocolate major for two years.

AB will play a pivotal role in all communication relating to Cadbury's products and
brands, be it in print, on television or the great outdoors, the company's managing
director Bharat Puri has been quoted as saying in media reports

Cadbury India Ltd has announced that mega star Amitabh Bachchan will be the
company's new brand ambassador.

He will endorse and promote Cadbury chocolates for a period of two years. As brand
ambassador, he will play a key role in brand and product communication on television, in
print and outdoor media.

Cadbury has launched a strengthened, new 'purity sealed' packaging for Cadbury Dairy
Milk. The new packaging for 13g (Rs 5) is double wrapped for maximum protection. The
chocolate is wrapped in aluminum foil and enclosed in a poly flow pack, which is
completely sealed on all sides. In the second phase, the larger Cadbury Dairy Milk packs
will come in poly-coated aluminium foil, which will be heat-sealed and then wrapped in
the branded outer package. Both these steps are a 'first ever' in chocolate packaging in
India.
Amitabh Bachchan is Cadbury brand ambassador.

Cadbury India Ltd has announced that mega star Amitabh Bachchan will be the
company's new brand ambassador.

He will endorse and promote Cadbury chocolates for a period of two years. As brand
ambassador

"Over the last few months, we have had some cases of infestation due to improper
storage conditions. As a company committed to ensuring that our consumers enjoy a
44
pristine bar of chocolate each time, we decided to take steps to reduce dependency on
storage conditions to the extent possible," said Bharat Puri, managing director, Cadbury
India Ltd. "Cadbury will do everything it can to ensure that every bar of chocolate that a
consumer buys comes full of goodness and rich taste."

Commenting on Amitabh Bachchan as brand ambassador for Cadbury chocolates, Puri

said, "There is a perfect fit between Amitabh Bachchan and Cadbury chocolates - their
timelessness, and the love and trust they both share with the people across India, makes
this an ideal partnership.

Moreover, Mr Bachchan has a universal appeal that extends to everyone from 6 to 60,
just as our chocolates do. We believe his endorsement of Cadbury Dairy Milk will go a
long way towards our objective of increasing chocolate consumption among all ages of
consumers."

Amitabh Bachchan said, "Most of you may not know this, but I have been a brand
ambassador for Cadbury for the last 55 years. Only, now it is official. Bringing smiles,
spreading happiness and joy amongst millions of people in India is what Cadbury and I
shall be continuously working towards."

The new 13g (Rs 5) Cadbury Dairy Milk packaging is currently available only in
Maharashtra and the national rollout will take place over the next three weeks. New
packaging for the larger bars of Cadbury Dairy Milk, Fruit & Nut, Crackle, Bournville,
Caramello, and Double Deck will be completed in six weeks.

CADBURY’S PRICING

Organizational structure of Cadbury:

Hierarchical structure is based on distinct chain of commands from Managing director to

Clerical Support assistants (according to Cadbury). Decisions are made at the top and

45
pass down. Such organizational are usually based on clearly defined procedures and
roles.

• Cadbury organization is based on more democratic. Decisions are made

as a result of a consultation process involving various members of the
organization (Cadbury). Ideas would be discussed and thought through
collectively.

• Within Cadbury organization we can find a Democratic structure,

Because Cadbury tends to be found in situation were it is felt to be
important for all members of the organization to understand what they
are doing, were decisions require individual initiative, and where
member of staff need to work as a team.

How management style, Culture and Organizational structure

interrelate:

•Management style, culture and organizational structure interrelate

together in Cadbury because they all work together to help the business
to achieve its objectives; in order to lead a successful business.

•Cadbury has strategies for the organization, continually to motivate

members of staff to support this process, and market change within the
organization.

•Management style, culture and organizational structure interrelate

together in Cadbury because they all work together to:

UNDERSTANDING COSTS AND PRICING FOR SUCCESS:

We have many ways of pricing our products or services. The first thing to understand is
the cost elements that make up our offering. This unbundling of cost must be known prior
to setting prices, however it may have only limited influence in the price finally set. You
may deliberately price an element at a loss, and another at a huge profit because the
market with bear this. The loss leading offering maybe the carrot required to differentiate

46
you from your competition, make your offering seem fresh and market leading, and your
competitions offering, old hat. But if you haven’t done your forecasts and understood
your cost models properly before going to market, then the end result of your sales
success could be a huge loss.

And in pricing, you need to look clearly at your business goals. Do you want to:
- Sell your products or services?
- Dominate the market?
- Force the market to purchase your product?
- Have fun?
You may try different strategies at different times depending on what result you are after.
If you a new to a market, then you may employ an “early adopter” strategy to achieve
some presence and reference. Later in the lifecycle, you may use a strategy that achieves
greater returns in a more traditional manner.

With our LINC product in 1980, we identified we had only four potential clients – IBM,
Burroughs, NCR, and Digital. So we had to prepare strategies, which would achieve the
business goals we wanted – to establish our company as a developer of good
development and deployment environments, and to earn and excellent stream of
profitable revenue for several years. We sold LINC to Burroughs for US$1 plus the rights
to continue manufacturing new feature content for on a predefined costed basis and to
provide product support. Thus profitability was guaranteed so long as product quality
levels were maintained. So knowing your costs is important if you wish to position your
prices for profitability.

But knowing your costs is not enough. You also need to know all about yourselves as a
company and position your business. You need to:
- Know what exactly is your business solution?
- Who exactly are your potential clients?
- What is your unique customer advantage?
- What is your business identity?

47
- What is your elevator statement?

Without this business knowledge, you do not have a hope of pricing your product to meet
your business goals and to effectively compete in the market place.

In my days in the fishing industry, selling Orange Roughy frozen fish fillets, we were one
of several players in a market place for a variety of fish that was not a household name
but was distinctive. We needed to differentiate ourselves as the product to be sought after
ahead of other fish brands, and competitor products. Our objective was to be the fish fillet
provider of choice in the Great Lakes region of the United States of America. We
launched our Fletcher Quality Orange Roughy brand at a 10% premium price over our
competitors. We launched as the top quality product, a USA hygienic clean white fish
meat (some would say “tasteless”), in a special display pack. And in a market where
everyone delivers late, delivery on time. So our differentiators were top quality, special
display pack and delivery on time. Orange Roughy was a distinctive name. People were
amazed that such a good-looking fish fillet could have such a horrid name, yet if we
could get them to try the fish, they would love it and would tell all their neighbours and
friends. The name “Orange Roughy” was a memorable name and by making the fish look
in a class of its own in the shop window display pack, we captured a strong market.
Within a year, Fletcher brand Orange Roughy was commanding a 30% margin and was
selling ahead of any other brands.

So knowing your business, your unique customer advantage, who you are, and what you
are pitching is vital to your success.

WHAT IS ALSO IMPORTANT IS THE DETAIL OF HOW YOU APPLY YOUR

PRICING?

In software, the key pricing ingredients we can unbundled are:

1. Product licence

48
 2. Support
3. Training
4. Documentation
5. Consultancy

And we are not the only industry that unbundled our investment. The best known
unbundled today is the motor vehicle industry where a simple $7995 on the windscreen
represents $10,000 plus when you add registration, bullbars, CDStacker, leather trim,
electric aerial, insurance, 3 year warranty etc.

In our software industry the best unbundlers I have come across are Oracle. I have never
really met anyone who could understand easily what the Oracle purchase components
would add up to for a particular configuration. Just as well Oracle ASAP arrived as a
fixed price deal to reduce the confusion.

But back to the components, each of these ingredients has its own equation, which sends
a message to a prospective purchaser:

PRODUCT LICENCE – could be purchase, lease, and rental, bundled with another
element. You will all no doubt remember when OS2 was it and Windows was the small
player with a lower level of capability. Microsoft’s master stroke was to almost give their
Office suite of products away to Windows users to get them to use their Windows
operating system and ensure that it became the international leader.
SUPPORT – in some cases, the cost of a product in insignificant beside the level of
support cost, which shows the ability to have an ongoing relationship with a supplier
when using a product. In a development, a high level of support content may denote a
low quality initial development.
TRAINING – in the case of a development environment such as Jade, VB or C++,
people need to be trained to make effective use of your product. It is the concept of a
“fool with a tool still being a fool” unless he/she has effective training in the skills to use
the tool. The first introduction course is always justifiable by a company so you can price

49
this well. What businesses struggle with is justifying an “Advanced Course”. They feel
that if they are training a developer in a new product, then the developer should be able to
pick the balance of the product up by themselves. People such as Microsoft and Cisco
have got around this by putting together an Academy programmed including a tiered
hierarchy of courses clearly differentiated in content and adding to become a package of
knowledge. A clever move.
DOCUMENTATION – nobody reads it but without it, no prospective purchaser will
purchase your product. So what is it worth to a purchaser? Certainly not what it costs.
And if you priced it based upon hours of use by a purchaser, it would be a highly variable
commodity. Most treat it as a nominal cost and unbundled it, or pay third party providers
to build documentation for them. One of the better books I have seen recently is the
Python Cookbook, which is a very easy “how to” for their development environment and
published by a third party.
CONSULTANCY – you don’t need it, but if you have it you may make progress much
quicker than you would without it. So consultancy should be priced to cover costs and
allow a margin. If you do not charge enough, it is likely not to be valued by the client
enough.

OTHER ISSUES WITH PRICING – THE INTERNATIONAL PRICE

In Jade, we decided to get too clever. We believed the market could bear a higher price in
some countries than in others. So we established NZ, Australian, UK and US pricing.
Now, how do you put all this on the website and appear international and professional?
The answer is that you can’t. So we didn’t publish a price at all.
We have had thousands of queries for the price of Jade, but we have no idea how many
thousands of hits have just turned away, believing the price was outside their price range.
This is not the case for all products – let’s look at the Bentley luxury car. The Bentley
Motors website does not list prices. But it is a superb site and if you are looking for the
extravagance of a Bentley, then price is not an issue. The site looks like you pay a fortune
and it would be crass to publish a price – “if you have to ask, then you are unlikely to be

50
a likely purchaser”. Jade have learned their lesson and from June 15 this year, Jade comes
out at an international price where a development licence is at no charge and different,
clearly defined levels of support can be obtained. From June 15, the international price
for a Jade development licence is zero dollars.

OTHER ISSUES WITH PRICING – DISTRIBUTOR MARGINS

Many product and service sellers leave insufficient money in the pot for the distributor to
do what they have to do to be effective. If they don’t have enough margin for market
spend, sales activity, and support, then they will not be effective. Too many pricing
strategies do not consider the way the product is going to be distributed internationally
and what the financial position will be of those distributors and resellers doing that task.
They are an extension of your sales force so they need to be considered as being a part of
your company with appropriate cost structures.

OTHER PRICING OPTIONS:

PARTNERING – For Independent Solutions Vendors developing their own
applications, Jade offers clients the option of no end user charges but instead the option
of a royalty on revenue earned from the sale of the application to an end client?
MESSY - Another option is a charge for a server product but no charge for client use?
This means that changing the configuration will result in changes to end user charges.
FIXED - A fixed monthly rental for use of an application?
USAGE BASED - Sale of a library package for schools based upon the usage calculated
on a multiplier on the number of kids in the school?
FIXED FEE PLUS - A support fee for services with a cap over which a premium is
paid?
SUCCESS BASED - A dollar for every successful car rental processed through an
application? Truly sharing in the success of the company
SERVICE LEVEL OPTIONS – Platinum, Gold, Silver, Bronze, pay as you go. It is
probably better to sell a service contract up front than to hit clients credit cards with
charges when they are having a tough time with bugs in your product.

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Making a change to your price /market position:
Sometimes the strategies to go from where you are now to where you want to be are very
simple.
We suggested to the client in Case 1 – the successful one – that he add a zero on the right
hand end of his price, rename the product to sound grand, and take it out to market as the
enterprise release. He told us it would never work. We struck a deal and he now has a
new product, selling extremely well, providing him with good margin which has enabled
him to set up a team of international distributors. He is starting his slide to retirement by
travelling around the world assisting his distributors to install the application and getting
some holidays in nice places on the side. He is 50 years old. He describes it as a holiday
with business, rather than a business holiday.

The second case. With the company who has built a product to help students learn
English more quickly and better has changed their market, target distribution, and
widened his market.
They are now not selling their product to a limited number of NZ English language
colleges. They are now promoting their product to students using the English language
colleges as their distributors.
The deal they now take out is a distribution offer to colleges to make money selling their
product. And not just through NZ colleges but as an international offering. They have had
to readjust their expectations on price to allow for single student use, change their
security structure to give the required control, and have had to forgo some of their
distribution margin. But they have more multipliers in place, more feet on the ground,
and their product is being offered to millions of people in more countries than they had
ever hoped to holiday in. The jury is out on the charges but the opportunity looks solid
and the distribution network is enthusiastic.

The third case was the developer who was barely covering costs. He proposed the
development of a new application for an existing client where he budgeted to make a

52
40% profit. He planned the project properly, outlined the phases and costs for each and
the timeline for these, and, was accused by the client of holding the client to ransom. He
offered to take some phases out of the equation and asked which phases the client wished
him to remove.
The client did not know how to respond to this. Acceptance testing was discussed as a
possible option, but the caveat on this was that support cost increases and likely
application instability were then discussed. The developer had decided to forgo the client
rather than to do the job on any other basis than that he has proposed.
Hard ball. The client finally agreed but then wanted the system installed earlier. The
developer asked the client which phases of the project he would agree could be done
without.
The development finished on the original time, the client is happy and is now a reference
site, the application is delivering sound business results, and another two applications are
under development on the same new basis. The client is learning to respect the value of
what is being delivered, and has a vastly better understanding of the elements which
make up a successful application implementation.
The fourth case is “work in progress” at present. This was the company that had set its
price based on the report from a Big 5 consultant. Nothing wrong with the report or its
accuracy. But lots wrong with the brief proposed to the consultants as regards the
business goals and market positioning the pricing strategy was to assist with. As I
mentioned earlier, the pricing strategy for Jade has changed dramatically. Large numbers
of pre-alerted international clients were set to download Jade from the Jade website
from15 June.
Price is only one of the factors that are changing to take Jade from being an
internationally boutique product into the realm of being a pervasive and widely used
development and deployment environment. Yes, some of the costs are being unbundled
but access to the development environment will be free. I look forward to reporting on
the success of this strategy in a year or so.
Pricing is an art where if you are challenged with “Is your price right?”, you can
truthfully respond “It depends”.
Pricing is an important key to your business success, but not the only key.

53
Cadbury is going to need all the help it can get in the coming years. Last year the
company initiated its major foray into one of the toughest consumer markets in this
country: the Rs 1,600-crore sugar confectionery industry. Sugar confectionery
contributed 13% to its 1998 turnover, of which 9% came in from the leading brand in the
éclair market, Cadbury's Éclair. So far the confectionery foray has been watchful and
conservative. All of that is set to change this year. A spanking new plant in Pune
(Maharashtra) was set up at a cost of Rs 8 crore to bring in some of its international
confectionery brands. In December 1999, the company introduced two new products in
the confectionery segment, a chewy sweet called Frutus (Rs 1) and a jelly called Googly
(Rs 2). Says Puri: "Our focus is going to be on launching value-added products during the
year."
A value-added product is not merely a nice marketing term to bandy about. In this
industry it is often a case of survival. Since most of the industry functions around the 50-
paise price point (Rs 1 is premium pricing), margins are painfully low. But there are other
attributes that go into making it a complicated market.

It functions on a 'you-eye-it-you-buy-it' syndrome which means that retail penetration is

very important. Most purchases, such as chocolate, are impulse-driven so retail displays
and dispensers are very important. Brand loyalty is non-existent, the market is
notoriously price-sensitive and different products among confectionery -- hard-boiled
sweets, ice creams and bubble gums -- often compete with each other. Since it caters to
the most fickle of consumer categories -- children -- the category needs a constant frisson
of excitement to keep interest alive. Last but not least is the fact that about 25-30% of the
Rs 1,600-crore market is catered to by the unorganized sector. Couple this with the fact
that it has strong competition in this market through Parry's Confectionery, Ravalgaon
Sugar Farm and multinationals like Perfetti, and it's easy to see that Cadbury has got its
work cut out. What perhaps makes things worse is that the latest budget has hiked excise
duties of sugar confectionery products from 8% to 16% and this may result in an upward
movement of prices, which in turn may affect volumes adversely. For Bakshi, it's been a
momentous two years at the helm of Cadbury's affairs. He has all along felt that the best
way to drive up volumes in this business is to expand the consumer base. One way of

54
doing it is to take the company's products down the price line. That exercise is well
underway. The other is to make chocolates appeal to a wider audience (read adults). This
is a tactic that's close to Bakshi's heart and now that the company is in fine trim, will
perhaps be his next big challenge.

Cocoa surplus helps sustain chocolate prices :

PRICES of branded chocolates have displayed divergent trends over the past year. On
one hand, there has been an increase in the maximum retail prices (MRPs) of the larger
pack sizes of established brands. On the other hand, the MRP of the popular pack sizes
and brands appear to be heading southwards.

For instance, between September 1999 and September 2000, the MRP of Cadbury's Dairy
Milk (80 g) was hiked from Rs 26 to Rs 30. Cadbury's Éclairs and Cadbury's Fruit and
Nut also saw price increases. But, Cadbury's Perk, Picnic and Nestlé’s Kit Kat have all
seen their price lines revised downward.

The past couple of years have seen the availability of a large number of imported brands,
and intensifying competition in the domestic chocolate market. Pricing strategies have
largely responded to this situation. The two major domestic players -- Cadbury India and
Nestle India -- have adopted a major strategy to pep up their flagging volume growth.
They have focused on lower price points.

In the recent times, both players have tried to expand the number of products available in
the popular price points of Rs 5 and Rs 10.

Over the past year, Cadbury India has introduced smaller pack weights of its Perk and
Picnic range in order to reduce the MRPs of these brands to the Rs 5 and Rs 10 range.

Similarly, Nestle India has retaliated with the launch of Rs 10 versions of its brands,
Munch and Charge.

Meanwhile, declining prices of the key input for chocolate -- cocoa, have probably
helped the players a great deal in sustaining this pricing strategy. A global cocoa surplus

55
for the year, coupled with the forecast of high cocoa output for the 2006-2007 (October to
September) season, has helped bring about a steady decline in cocoa prices over the past
one-and-a-half years.

International prices have declined from around $1,200 per tonne in March last to levels of
around $800 per tonne at present.

Since both Cadbury and Nestle outsource a substantial portion of their cocoa
requirements, the decline in cocoa prices has probably given both players a larger leeway
when it comes to reducing their price levels.

56
57
 Analysis And Interpretation Of Data

1. Taste of the same product often differs from country to country.

The composition of export lines is always as near as possible to that of the UK product.
However, they have to comply with the food laws in the country in which the product is
being sold. This does affect the end result where food laws differ significantly from the
UK.

2. Taste of the same product often differs from brand to brand.

The way chocolate is stored can affect the taste. For instance chocolate stored in a warm
environment will become stale more quickly than chocolate stored in a refrigerator.

Although the recipe and ingredients for our chocolates are always controlled to tight
recipe standards, on occasions ingredients are sourced from different areas, and milk
particularly can taste differently when bought from different areas of the country.

Chocolate recipes and textures are different. For instance a bar of Cadbury Dairy Milk
tastes quite different to a Flake or a Wispa because they have different recipes.

3. Purpose of the Cadbury website.

The Cadbury website provides a variety of information about the world of chocolate and
Cadbury's vital role in that ever popular market. It has attracted millions of visitors since
its launch in March 1996.

Although the Cadbury site is a popular stop for Internet surfers, it was not designed as a
promotional tool for its brands but rather as an educational and informative source for
interested surfers from educational establishments to chocolate-loving members of the
public.

58
4. Cadbury makes low fat or diabetic chocolate bars.

DIABETIC CHOCOLATE:

Unfortunately they do not manufacture chocolates suitable for Diabetics under the
Cadbury label. Trebor Bassett confectionery however, which is an associate company of
Cadbury Ltd sells Diabetic chocolate under the Ernest Jackson "Special Recipe" label.

There are a variety of flavours and products within the range, and these bars are generally
available in larger chemists throughout the country. Chemists are also able to order these
bars from their suppliers given a little notice.

LOW FAT CHOCOLATE:

They don't specialize currently in the manufacture of low fat bars. You may be interested
to learn however that our Fry's Turkish delight bars are 92% fat free! They also produce a
range of treat size and snack size bars, which are smaller than their standard
bars. Although they have no immediate plans to launch a low fat bar there is always a
possibility that they may do so in the future.

5. Sponsor other sites or take advertising on other sites:

In general it is not our policy to sponsor other sites or take advertising space.

6. Where do product names come from?

MILK TRAY:

The name "Tray" came from the special pack in which the milk chocolate assortment was
delivered to the shops. Originally Milk Tray was packed in 5.5lb boxes and arranged on
trays from which it was sold loose to customers.

DOUBLE DECKER:

The Double Decker name was inspired by the British obsession with double Decker
buses in the 1970's
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FLAKE 99:

The real reason for "99" Flake being so called has been lost in the mists of time, but this
is an extract from an article which appeared in a Cadbury works paper many years ago.

At a recent Sales conference Mr Berry, a sales manager, told a story of how Flake
became associated with ice cream and how "99" Flake came by its name.

"When I first came north in 1928 I found that some of the Italian soft ice cream makers in
County Durham were trying ways of introducing other lines to increase their sales, which
in those days were largely in the form of sandwich wafers. The possibilities were obvious
if we could get a suitable line, both in shape and size and texture - and the most
promising was Flake, which at that time only sold as a 2d line, and therefore had to be cut
with a knife to reduce its size.” It proved very successful and its popularity quickly
spread. After successive introductions of half penny and 1d Flake, both of which were
sold with ice cream, the Sales Committee finally agreed to produce a special size to fit
the sandwich and Mr Berry visited a number of Italian customers in the area. After this of
course the cornet with the Flake placed temptingly in the top of the ice cream became
very popular.

In the days of the monarchy in Italy the King has a specially chosen guard consisting of
99 men, and subsequently anything really special or first class was known as "99" - and
that his how "99" Flake came by its name.

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7. An idea for a new product.

Here at Cadbury they have a Research and Development Team who, in partnership with
the Marketing Department continually investigate new product ideas.

Development of a new chocolate product requires tremendous investment, both in time

and financial resources.

For every new product that reaches the market place, fifty or more will have failed to
meet expectations somewhere during development. New products have to be carefully
researched to ensure they have mass appeal, and the decision to introduce a new Cadbury
chocolate product is always based on the results of extensive market research.

Unfortunately for these reasons they are not able to use any ideas from members of the
public.

Brand which gets higher preference?

8%

12% Cadbury
45% Nestle
Amul
35% Others

CHART 3.01

Products preferred by public.

61
 factor considerd while purchasing a product

25% price
35%
quality
brand andorsement
10%
taste

30%

CHART 3.02

Factor considered while purchasing a product.

Product of cadbury liked all over

60
50
40
30
20
10
0 Series1
Series1
Dairy Percentage
Five
m ilk Nuties
star Byets

product

GRAPH 3.01

Different products of Cadburys

62
 Ratio Analysis:

Financial statements can be analyzed by shareholders, the financial press, and others to
check how well a company is performing. Ratios are determined from a company's
financial information and used for comparison purposes, e.g. operating profit to sales.
This can be set out in the form:

Operating Profit: Revenue

Alternatively, it can be set out as a percentage.

Operating Profit Margin=Operating profit x 100

Revenue
This is very helpful because it shows how much profit is made for each £1 of sales made.
An improvement in Operating Profit margin would see this figure rising over time -
showing that Cadbury Schweppes' customers are prepared to pay more for their
purchases and/or that the company has made savings by improving the way it makes or
ships its products. The operating profit margin of Cadbury Schweppes can be compared
from year to year e.g. comparing 2006, 2007 etc, with 2008. Cadbury Schweppes' profit
margin can also be compared with that of other companies.

If you refer back to the Profit and Loss Account, you can see that the operating profit
margin was:

143x100=14.27%
1002

The figure above is crucial to Cadbury Schweppes as it relates to the second performance
goal.

Here is another ratio you will find in your current course. This ratio shows whether the
company owes more money to its suppliers and bankers than the assets it holds in the

63
form of stocks, debtors and cash. If this number is less than 1, then the company's short-
term or liquid assets are greater then its short-term liabilities.

Current asset
CURRENT RATIO =
Current liability

If you refer back to the Balance sheet, you can see that the current ratio for Cadbury
Schweppes is: 2040/2313=0.88

This ratio is used in different ways for small and large companies. Businessmen and
women considering whether to trade with a new small company would prefer to see this
figure at 1.5 or above - as an indication that the company is solvent and will be able to
pay its debts. For large established companies with good credit ratings, a lower ratio
indicates an efficient use of capital.

In addition to the Balance Sheet and Income Statement, Cadbury Schweppes values the
information provided in its Cash Flow Statement. This statement simply sets out the
incomings and outgoings of cash in a business during a particular period of time e.g. one
year. It shows how the main categories of cash flow have changed the cash balance in
particular periods.

In 2007, Cadbury Schweppes achieved free cash flow generation of £265 million. Cash
flow is very important to the company because cash enables the business to pay its bills,
pay dividends to its shareholders and, in addition, to make acquisitions.

In recent times Cadbury Schweppes has focused on acquiring new businesses, increasing
sales and innovation, cutting costs, and integrating existing businesses to achieve its aims
of:

64
Higher sales growth

• Improved operating profit margins

• Higher levels of free cash flow.

Through efficient financial management Cadbury Schweppes is able to continually invest

in making sure that customers are supplied with the brands that they enjoy.

Analysis

Cadbury prepares financial statements because:

• As a listed company, it is legally required to do so.

• Cadbury wants to communicate a true and fair picture of the financial state of the
company to its shareowners and external analysts.

• The company values transparency and honesty and aims to reflect this is all its
communications, both internally and externally.

Cadbury won the Communication of Corporate Strategy Award at the

PricewaterhouseCoopers 'Building Public Trust' awards in 2005. This publicly
recognized the high standards of the company's reporting: 'a highly accessible overview
of its short-term strategy, major markets and measurable targets.'

65
66
 CONCLUSION

• Price plays an important role in the purchase of a product like dairy milk they
have introduced dairy milk the most popular chocolate in Rs.5 also which is
within the reach of every customer.
• Consumer prefers quality goods at lower price like Cadbury people just
introduced bytes, which is a snack, which is sweet.
• Consumer is loyal to brand so it’s necessary to pay attention to the brand image.
In today’s world most of the people see the image of the product and then
purchase it. So it’s necessary to make an image in market.
• Consumer prefers those goods whose advertisements are shown on television.
• Price should be according to the competitor’s price .i.e. the price of Cadbury
should be less or same as the competitors price.

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 RECOMENDATION

There should be difference in pricing strategy of Cadbury i.e. in term of rural and urban
areas.
It should show more and more ad of the chocolates that it is offering. For Example,
Cadbury only emphasis on Dairy milk chocolate the most and not the other
products.
• It should introduce different schemes like giving mask to the children with their
product to attract children the most.
• The packaging of the Cadbury product should be made more attractive so that
more and more people gets attracted towards it. Every customer likes changes if
not they get used to it but they should take risk.

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 BIBLIOGRAPHY

Books:
 Kotler Philip, Marketing Management, 13th Edition, 2009, published by
Dorling Kindersley Pvt. Ltd., licensees of Pearson Education in South Asia.
 Gupta CB, 12th Edition 2009, published by Sultan Chand & Sons.

Web Sites
 www.cadburyindia.com
 www.findarticles.com
 www.cadbury.co.uk
 www.economictimes .com
 www.wikipedia.org
 www.indiataodaygroup.com
 www.google.com

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