Reinventing Cadbury

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Case Details:

Case Code : MKTG030
Case Length : 13 Pages
Period : 2002
Pub Date : 2002
Teaching Note : Available
Organization : Cadburys India Ltd
Industry : FMCG
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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No More 'Excuses' For Eating Chocolates Contd...

The TV commercials that were a part of this campaign featured the tagline, 'Saath Rahe Har Pal' (accompany you every moment). Many people in corporate circles wondered why CIL had abandoned its carefully built up and highly successful four-year-old "excuses" campaign. Few analysts felt that the company had been forced to reposition the CDM brand due to the severe competition from posed by archival Nestle India.

Others were commented that CIL was only trying to infuse fresh life into CDM and give it a contemporary image. However, this radical shift was necessitated not by external circumstances but by series of changes that had taken place within the company.

Background Note

CIL and the Cadbury's brand are synonymous with chocolate in the minds of Indian consumers. A part of the leading US-based global confectionery and beverages major, the Cadbury Schweppes group,² CIL has been the leader in the Indian chocolate market for many decades.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The company began manufacturing operations in Mumbai in 1946. CIL was initially incorporated as a wholly owned subsidiary of Cadbury Schweppes in 1948 and was called Cadbury Fry (India) Ltd. The first product to be launched in the country was the globally successful brand, CDM.

In the early 1960s, CIL shifted its manufacturing base to a plant in Thane, Maharashtra. The plant, which expanded substantially over the years, manufactured a range of CIL products.

The company's R&D and engineering development divisions were also located in Thane. In the 1960s, CIL launched a range of products such as Crackle, 5 Star, Gems, Tiffins, Nutties, Butterscotch and Caramels.

Most of these products became instant successes and led to rapid growth in chocolate consumption in India. Following this, the company launched Cadbury's Eclairs in 1972, priced at 25 paise.³

Eclairs, Cadbury chocolate, was a runaway success, despite being priced higher than the available sugar confectioneries in the market at that time. In 1978, Cadbury Schweppes had to dilute 60% of its equity in Cadbury Fry to comply with FERA guidelines.⁴ Cadbury Schweppes's stake in CIL was further diluted to 40% in 1999...

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2] In 2002, Cadbury Schweppes had operations in more than 190 countries across the globe. Some of its leading brands are Dairy Milk, Timeout, Perk, Hazel Nut and Twirl in confectionery/chocolate segment; and Crush, Canada Dry, Crystal Light, Dr. Pepper and Indian Tonic Water in the beverages market. Cadbury Schweppes acquired over 90% of CIL's equity by late 2001 and planned to delist the stock from Indian stock markets.

3] 100 paise = Re 1. In August 2002, Rs 48 equalled 1 US $.

4] The erstwhile Foreign Exchange Regulations Act (FERA) was formulated to regulate dealings in foreign exchange and foreign securities. As per FERA, MNCs operating in India had to either exit the country, or dilute their stake in the companies concerned.