PROJECT REPORT

ON CADBURYS SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION 2009-2010 UNDER THE GUIDANCE OF

NEHA VERMA FACULTY, MAIMS

SUBMITTED BY:

Roll no____Batch No.(BBA SEM__Section) MAIMS LOGO Maharaja Agrasen Institute of Management Studies (Size 18, caps) Affiliated to Guru Gobind Singh Indraprastha University, Delhi PSP Area, Plot No. 1, Sector 22, Rohini Delhi 110086 STUDENT UNDERTAKING (On plain paper) This is to certify that I have completed the Project titled(title of the project) in (name of the organization) under the guidance of (name of the faculty guide) in partial fulfillment of the requirement for the award of degree of Bachelor of Business Administration at Maharaja Agrasen Institute of Management Studies, Delhi. This is an original piece of work & I have not submitted it earlier elsewhere.

NAI NA

Name of the Student

CERTIFICATE (In institutes letter head) This is to certify that the project titled ____________________

is an academic work done by __________________ submitted in the partial fulfillment of the requirement for the award of the degree of Bachelor Of Business Administration from Maharaja Agrasen Institute of Management Studies, Delhi, under my guidance & direction. To the best of my knowledge and belief the data & information presented by him/her in the project has not been submitted earlier. Name of the Faculty Guide

ACKNOWLEDGEMENT

This project work, which is my first step in the field of professionalism, has been successfully accomplished only because of timely support of my well wishers. I would like to pay my sincere regards and thanks to those, who directed me at every step in my project work. First of all, I would like to express my thanks toDr. KAKAR (director, MAIMS) for giving me such a wonderful opportunity to widen the horizons of my knowledge. I extend my thanks to my project guide Ms. NEHA VERMA for her scholarly guidance, constant supervision and encouragement. It is due to her personal interest and initiative that the project work is published in the present form. Last but not the least, I would also thank all the staff members of MAIMS, friends and parents who have directly or indirectly contributed in making this project a success. It is a tribute for there valuation. Despite all efforts, I have no doubt that error and obscurities remain that seen to afflict all writing projects and for which I am culpable.
NAINA

Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. We employ around 50,000 people and have direct operations in over 60 countries, selling our products in almost every country around the world. In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri

(Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai. Our core purpose "creating brands people love" captures the spirit of what we are trying to achieve as a business. We collaborate and work as teams to convert products into brands. Simply put, we spread happiness! Currently Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands are Cadbury Dairy Milk, 5 Star,Perk,clairs andCelebrations. Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world! Our flagship brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer. In the Milk Food drinks segment our main product isBournvita - the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy categoryH alls is the undisputed leader. We recently entered the gums category with the launch of our worldwide dominant bubble gum brand Bubbaloo. Bubbaloo is sold in 25 countries worldwide. Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, we have worked with the Kerala Agriculture University to undertake cocoa research and released clones, hybrids that improve the cocoa yield. Our Cocoa team visits farmers and advises them on the cultivation aspects from planting to harvesting. We also conduct farmers meetings & seminars to educate them on Cocoa cultivation aspects. Our efforts have increased cocoa productivity and touched the lives 5

of thousands of farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree! Today, we are poised in our leap towards quantum growth. We are a part of the Cadbury PLC, world's leading Confectionery Company. Yes, like we said we will continue to spread happiness!

INTRODUCTION
RELEVANCE OF STUDY Todays 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 Nestls 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 andPerk spurred volume growth in the mid 90's. These chocolates positioned as snack food rather than on the indulgence platform compete with biscuits and wafers. A strong volume growth was witnessed in the early 90's when Cadbury repositioned chocolates from children to adult consumption. The mid 90's saw the entry of new players like Nestle, which created categories like wafer chocolate and spurred growth. Chocolate Manufacturing Cocoa, common name for a powder derived from the fruit seeds of the cacao tree and for the beverage prepared by mixing the powder with milk. When cocoa is prepared, most of the cocoa butter is removed in the manufacturing process. After the fat is separated and the residue is ground, small percentages of various substances may be added, such as starch to prevent caking, or potassium bicarbonate to neutralize the natural acids and astringents and make the cocoa easy to dissolve in liquids. Cocoa has a high food value, containing as much as 20 percent protein, 40 percent carbohydrate, and 40 percent fat. It is also mildly stimulating because of the presence of Theo bromine, an alkaloid that is closely related to caffeine. The processing of the cacao seeds, better known as cocoa beans, is complex. The fruit harvest is cured or fermented in a pulpy state for three to nine days, during which the heat kills the seeds and turns them brown. The enzymes activated by fermentation impart the substances that will give the beans their characteristic chocolate flavor later during roasting. The beans are then dried in the sun and cleaned in special machines before they are roasted to bring out the chocolate flavor. They are then shelled in a crushing machine and ground into chocolate. During the grinding, the fat melts, producing a sticky liquid called chocolate liquor, which is used to make chocolate candy or is filtered to remove the fat and then cooled and ground to produce cocoa powder. The beans are sold in international markets. African countries harvest about twothirds of the total world output; Ghana, Cte d'Ivoire, Nigeria, and Cameroon are the leading African cocoa producers. Most of the remainder comes from South

American countries, chiefly Brazil and Ecuador. The crop is traded on international commodity futures markets. Attempts by producing countries to stabilize prices through international agreements have had little success. Types of chocolate Sweet chocolate, usually dark in colour is made with chocolate liquor, sugar, cocoa butter, and such flavourings as vanilla beans, vanillin, salt, spices and essential oils. Sweet chocolate usually contains at least 25-35% chocolate liquor content. The ingredients are blended, refined (ground to a smooth mass), and conched. Viscosity is then adjusted by the addition of more cocoa butter, lecithin (an emulsifier), or a combination of both. Milk chocolate is formulated by substituting whole milk solids for a portion of the chocolate liquor used in producing sweet chocolate. It usually contains at least 10% chocolate liquor and 12% whole milk solids. Manufacturers usually exceed these values, frequently going upto 12-15% chocolate liquor and 15-20% whole milk solids. Milk chocolates, usually lighter in colour than sweet chocolate, are milder in taste because of its lower content of bitter chocolate.
Products And Segmentation

Chocolate market can be segmented as follows: Large units bars/ slabs,

Count lines,

Panned varieties,

Small value added units. Confectionery products can be categorized as

Hard boiled sugar candies, lollipops, jellies

Toffees

Chewing candies

Breath freshners, digestives, throat relievers Gum based products are

Chewing gum

Bubble gum

Gum based products are

Chewing gum

Bubble gum
Chocolates and Confectionery Industry Chocolates

Bars/ Slabs Count lines Panned (Gems)

Eclairs Assorted
Sugar confectionery

Hard boiled Toffees Soft chew Jelly candies Deposit candies Lollipops Mints, etc.
Gum based

Chewing gum Sugar coated chewing gum Bubble gum

Gum based products are

Chewing gum

Bubble gum
Chocolate Segmentation

Chocolate market can be segmented into moulded chocolates, count chocolates, panned chocolates, clairs and assorted chocolates. Type of chocolates % Share in chocolate market Moulded 37% Count 30% Eclairs 20% Panned 10% Others 3%

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 Nestls Marbles. In panned segment, Cadbury dominates with over 95% market share. clairs (droplets of hard caramels with soft chocolate fillings) are a low unit priced product. Cadbury clairs was launched in 1972. Parle Products launched Melody in 1991. Nestle is a recent entrant in the segment. Nutrine's clairs has done extremely well in the market.
Chocolates Market Share

Cadbury is the market leader in all categories with over 65% market share. Its main competitor is Nestle India. Nestle has identified chocolate and confectionery as one of the thrust areas for growth. It has launched some of its international brands like Quality Street, After Eight, and Lions in India. In 1998, Cadbury launched a new count bar Picnic. Nestle immediately followed it with the launch of Charge. Gujarat Co-operative Milk Marketing Federation (GCMMF), which is normally known as Amul and Central Arecanut and Cocoa Manufactures and Processors Co-operative (CAMPCO) are other two significant players. Both are local manufacturers.
Market Share

Moulded segment Count segment clairs 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% 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, candysmooth, creamy, and easily chewed are fondants (the basis of chocolate creams) and

fudge; typical hard, noncrystalline candies are toffees and caramels. Other favorite confections include nougats, marshmallows, the various forms of chocolate (bars or molded pieces, sometimes filled), pastes and marzipan, cotton candy (spun sugar), popcorn, licorice, and chewing gum. Records show that confectionery was used as an offering to the gods of ancient Egypt. Honey was used as the sweetener until the introduction of sugar in medieval Europe. Among the oldest types of candies are licorice and ginger from the Far East and marzipan from Europe. Candy-making did not begin on a large scale 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 isMahalacto followed byAsay andKokonaka respectively. Total tonnage sold by Nutrine in the confectionery market is around 36650 tonnes. The second largest player, Parle has strong presence in orange candies (hard boiled) supported by its Melody toffees, Mango Bite and Kismi Toffee bar. Besides this the company also has brands like Rola Cola, Poppins, Peppermint etc. in its portfolio.It has market share of 16% in the total confectionery market with a tonnage of 16800 tonnes. It is number two in both HBC and Toffee market with 30% and 21% market share respectively Parry's has emerged as the third largest player in the market with 13% market share and a tonnage of 14500 tonnes.The company has brands like LactoKing, Coconut Punch, Madras Cafe, Coffy Bite etc. in its portfolio. Though in the over

all confectionery market it is at number three, it is at par with Parle in toffees market with 21% share. Cadbury has been one of the leaders with Cadbury eclairs with chocolate inside. It was the most successful in 1972 when it was launched because of its initial introductory 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.
Market shares in sugar confectionery market

Market share (%)Major brands Nutrine 24

Mahalacto, Kokonaka, HoneyFab, Aam Ras, Chuma- Chuma, Gulkand, Funda, Gum Yum, Ole, Nutrine Eclairs,SuperStar, Caramella, Wild Coffy, Dishum, Aasay,Naturo, Fruit Bar Parle's 16 Melody, Mango bite, Kismi, Poppins, Rola cola, LuxDairy, Peppermint, Rosemint Parry's 13 Coffy Bite, Lacto king, Coconut punch, Caramilk, Madras Cafe, Soft-Spot, Flavoured Candy, Mango, Sunshine, Shakti, Pineapple Cadbury's 11
Googly, Mocka, English toffee, Frutus, Gollum, Eclairs, Pops.

Nestle 8
Polo, Allen's Splash, Soothers, Toffo Butter, Fruit Rings, Fox's

Ravalgaon 7 Pan pasand, Mango mood, Coffee break, Hisoft, Supreme, Cherries, Juicy license from Trebor Bassett, UK. Googly was extended nationally in early 1997. Cadbury has also launched Mocka, a coffee based sugar confectionery.
Market shares 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 flavours. 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 2002 as compared to Rs 93.60 million for the quarter ended 17 June 2001. The total income has increased from Rs 1,206.80 million for JQ01 to Rs 1,363.40 million

for JQ02. 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 land, which measured about 27,520 square metres. The deal helped Cadbury unlock the value of its investments and helped it to shore up its bottomline. 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 supplychain 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. Brief Financials (in Rs. Mn.)

Detailed Quarterly
Period ending (months) 28-Dec-2003 (12) 29-Dec-2002 (12) 31-Dec-2001 (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)

Objective of the project

1. The study of pricing of Cadbury different products and which techniques they use to maximize the profit. 2. We study the how Cadbury increase their profit by introducing new product 3. We have done a comparison of Cadbury by its competitors. 4. The place Cadbury has in market. 5. We have studied the ongoing battle in the confinery market. 6. What are the difficulties, which Cadbury faces, in past years?