Cadbury India hopes to sustain 20% growth

Cadbury India hopes to sustain 20% growth

Mumbai: The acquisition of its parent Cadbury Plc by Kraft Foods Inc. two years back has left a sweet taste in the mouth of Cadbury India Ltd which recorded its highest growth at 30% in 2010 and grew 40% in the first nine months of 2011.

The company clocked a turnover of 2,503 crore in fiscal 2010, and Anand Kripalu, Cadbury India president, India and South-East Asia, hopes to sustain the 20% growth.

Arvind Singhal, chairman of Technopak, said Cadbury India has not been affected despite being in a discretionary-spending category which is typically hit by high inflation. “Among its peers in the chocolate category, it’s the only one that has achieved growth," he said, attributing much of the success to the local management team and quality of leadership.

India head Kripalu, a Unilever veteran of 22 years, used the experience he gained there to good effect. Within six months of joining Cadbury, in April 2006, he spoke of doubling the company’s growth rate from the historical 10% to 20% per annum.

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Cadbury India also got on board consulting firm AT Kearney to prepare and implement a three-year road map for internal transformation. The firm also introduced small changes such as stopping the practice of giving away 20% free chocolates every quarter and big ones such as implementing the power brands strategy, which Kripalu adopted from his previous employer.

“The power brands strategy (implemented at HUL in the late 1990s as the company looked for higher growth in India) meant being ruthless and hard-nosed to push a few brands for growth as they get the company growth," said Aniruddha Lahiri, president, The Chatterjee Group (TCG), and a former Unilever employee who spent three decades at the consumer products company.

In keeping with this strategy Kripalu, for instance, discontinued weak brands such as powdered beverage Delight, a lollipop Mr. Pops and Cadbury Dairy Milk 2-in-1. The strategy yielded results and saw brands such as Cadbury Dairy Milk, a driver of the chocolate category in India, grow at a compounded growth rate of 30% per annum.

Kripalu and his team simultaneously widened the brand portfolio to cater to consumers in rural areas with products such as Cadbury Dairy Milk Shots that can even survive an ambient temperature of 35 degree Celsius (chocolates typically melt at 32 degree Celsius).

Kripalu also attributes Cadbury India’s success to Kraft “empowering" managers in the Indian company, giving them the power to make independent decisions.

Today, the firm has added new categories and changed its management structure which now spans five categories—chocolates, gum, candies, biscuits and powdered beverage—with the person who heads each also being responsible for the profit and loss account of his unit.

A Booz and Co. report FMCG road map 2020 says India’s 1.3 trillion fast moving consumer goods business by sales will grow either at 12% or 17% over the next decade depending on policy and economic climate. “Companies that disaggregate the operating model, win talent wars, bring sustainability into the strategic agenda and reinvent marketing among other things are better placed to win," the report adds.