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Cadbury takes stock of bitter chocolate reality 

Namrata Singh  
Mumbai, April 21: Cadbury India managing director Rajeev Bakshi is a worriedman. No, he is not worried about the company's topline and bottomlinegrowth, which has improved over last year as per expectations, and indifficult market conditions. What is of more concern to him today -- for whichthe Cadbury India think-tank is racking its brains to thrash out asolution -- is the chocolate confectionery's decreasing share of the brandedimpulse market.

The impulse category consists of branded products like soft drinks, chewinggums, non-glucose biscuits, chocolate confectionery and wafers. While softdrinks majors are fighting out their own marketing battles by spendingextraordinary sums on celebrity endorsements and are creating chaoticdecible levels in the market place, it is the chocolate confectioneryproduct which is suffering from a low share-of-the-voice syndrome.

At an analysts' meet in Mumbai on Thursday to announce Cadbury's firstquarter results, a concerned Bakshi told analysts: ``Share of impulse is amajor concern. Our analysis shows that we (chocolate confectionery) arelosing market share in the impulse category. That is a cause for worry.''Cadbury India may be a leader with a 70 per cent market share in chocolateconfectionery, but the receding share of impulse of chocolate confectioneryis not something which can be flaunted.

As he signalled trouble for the chocolate confectionery's share of impulse,silence reigned supreme amidst the crowd of analysts who lapped up everyword that was spelt out by the 43-year old head of the country's largestchocolate confectionery company.

Cadbury India has carried out a detailed analysis on the impulse category bytaking into consideration major impulse products. It found that the share ofchocolate confectionery is just about 6 per cent. ``What is important forsuccess in addition to growth in our own category, is saliency in marketshare of the impulse category,'' opined Bakshi.

The branded impulse market has seen a great deal of innovation and activity,from both locally manufactured and imported products. New entrants in themarket and an increasingly high spend on share of voice by players has setthe impulse category growing at a fast pace offering huge opportunity forgrowth.

``Once you start losing market share of the impulse category, it signalstrouble as other impulse products are enhancing their share of voice spendsdramatically. We are losing market share in this category and it is criticalto increase it. That's the strategy we are working on -- to improve theoverall impulse share of the category. Internally, we are in seriousdiscussions as to how we can achieve this. Our propensity to sustain ourshare of voice in impulse is critical,'' Bakshi stated.

He said the growing imports -- which is threatening -- is one reason why thechocolate confectionery share of impulse is not what it should be. ``Theseare occupying us and we know we have to combat this,'' he said, whilepointing out that this situation exists even as the company's targeted 20-12model (20 per cent topline growth and 12 per cent volume growth per annumfor three years) is right on track.

``We need to attack the problem (share of impulse), not just by increasingspends, but by accompanying the spend strategy with a fast growthstrategy,'' Bakshi elaborated.

``As far as the future is concerned, value-added concept of brands is whatwe are seriously looking at. To create a service impulse, five managers inthe company have been put on the task on how best to service the consumer,''he said.

On Cadbury India's other brands, Bakshi said Frutus is a big brand for thecompany and that it should contribute 4-5 per cent of the sales. The companycontinues with its strategy to launch one major product every year.

On sugar confectionery, he said that the company is de-focussing on thiscategory due to untenable pricing because of unfavourable market dynamics.He also said that Picnic had failed as a brand and the company isrevaluating options on the same.

Bakshi said that the company has also lined up B2B and B2C initiatives.Finally, Bakshi let out a secret: Cadbury India was in the race foracquiring Jagatjit Industries' brands -- Maltova and Viva, which are now incompetitor SmithKline Beecham's stable. ``Talks were on till the lastminute, but the deal did not make sense to us as we felt that the valuationwas not appropriate,'' Bakshi said, hinting that the company is open toacquisitions for growth.

He, however, maintained that the company will continue to increase itsmarket share in the food drinks category, what with a revived Bournvitaalready exhibiting signs of growth.

Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.

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