Mumbai: Cadbury Schweppes Plc will consider acquisitions to expand its share of the Indian confectionery market in the face of increasing competition, a senior company official said on 4 July. Cadbury, which has a presence in chocolate confectionery, candy and milk drinks in India, competes with Nestle and Hershey, which recently bought a majority stake in an Indian confectionery firm.
Cadbury, maker of Dairy Milk chocolate and Halls cough lozenges, would look at acquiring a confectionery brand, possibly after the sale of its North American drinks business, said its India head.
“Once the drinks business goes, confectionery will be our whole focus globally, and we want to be the lead player here,” said Anand Kripalu, managing director of Cadbury India Ltd.
Cadbury is preparing to sell its drinks arm, which it has said will give it a warchest of up to $2 billion for acquisitions.
“If we can get our hands on a good confectionery brand here we would certainly be open to buying it,” Kripalu said after the launch of Cadbury’s first chewing gum brand in India, Bubbaloo.
The target firm would be of “a reasonable size” that can make a difference to its business, Kripalu said, but added that they were not “actively pursuing” anything yet.
Cadbury, which began operations in India in 1948 by importing chocolates and repacking them for sale, expects the Bubbaloo brand will contribute at least 5 % of its overall Indian revenue in the next two to three years, Kripalu said.
Chocolates make up half India’s confectionery market, with hard-boiled candies and toffees making up nearly 40%. Cadbury estimates chewing gum makes up 11% of the market and is worth about Rs1.8 billion.
The segment is dominated by Wm. Wrigley Jr. Co. and Perfetti van Melle, but Cadbury is aiming at a “high double-digit share” in the next 18-24 months, Kripalu said.
Cadbury India has five manufacturing plants and had estimated sales of Rs10.6 billion in 2006, up by a fifth from a year ago, with net profit of Rs825 million, up 38%.
In April, Hershey bought 51% in an Indian confectionery maker, a unit of Godrej Industries Ltd. , for about $55 million. The venture, Godrej Hershey Foods and Beverages Ltd., is setting up a plant to make hard-boiled candy.