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What was Cadbury's standing in India prior to the KFI acquisition? Was it Spectacular? Was this a reason to go for the acquisition route? Justify.
Cadburys standing in India prior to the KFI acquisition: Enjoyed 70% market share- the highest Cadbury brand share in the world in the chocolate segment of the confectionery industry CDM had been the market leader in the chocolate category for years and in March 2011 enjoyed a market share of 30 percent Cadbury Bournvita launched in 1948 enjoyed a market share of 17 % in 2011 Launched Halls in 1968 and was the undisputed leader in the medicated candy market
Cont.
Launched brand Cadbury Bytes in snack market in 2004-05 In 2007, Cadbury launched bubble gum brand Bubbaloo in the gum category and within 3 months of launch captured 30% of the bubblegum market
Cont.
Cadbury presence in over 550,000 independent retail outlets throughout the country gave it extensive market reach To reduce competition from Nestle and Mars Acquisition would save $300 million in economies of scale in manufacturing, $200 million in administration, and $125 million in marketing and media Cadburys contribution whooping 90 % of the total revenues
Dec June Revenue 24% $540 m 30% $13.8 bn
Top 12 emerging markets account for 80% of emerging market retail sales Market share
Why does KFI appear hesitant to use Cadbury's to launch its own global brands in India? Asses the strategic importance of this.
Many acquired brands get reduced to ghosts of their illustrious past. Some are even exorcised. e.g. Air Deccan, Daewoo Mati but case of Coca-cola underestimating Thumps up Cadburys strong brand recognition in India, while Kraft brand presence in India is very little despite the fact it entered Indian market thrice To prevent cannibalization of Cadburys current brands Oreo biscuits (sandwich cookie) launched under the Cadburys brand name in India as Cadbury enjoys much greater brand equity as compared to Kraft. May follow this strategy in other emerging markets as well
Cont.
First product to be launched from Krafts portfolio in 2011 was Tang. Grow the existing market rather than introduce something new. Risk that the companys much-loved brands will not get the attention they deserve in a big food company that sells everything from instant coffee to hot dogs. ( for US markets ) Backing up well established brands like Halls was a no brainer. Instead of Trident gums of Kraft, investments were made in the bubblegum brand Bubbaloo
Cont.
Confident of Cadburys Indian operations with growth rate of 22-25 %
Different strategic priorities, growth profiles and operational focus Kraft reports 13.3% increase in revenue to $13.8bn (8.6bn) for the three months to 30 June