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Cadbury’s brand name fading?
In 2010 Kraft took over British company, Cadbury for $19.5bn (£11.5bn). Kraft’s CEO, Irene Rosenfeld said that the company would be spending heavily in countries such as India and China with the aim that such countries will generate annual revenues of around $1bn. Emerging markets have seen double digit growth, particularly in India and China within the chocolate confectionery market where further growth is anticipated in the future.
Cadbury Dairy Milk is considered the ‘gold standard’ for chocolate in India. After the takeover the Cadbury team also looked at innovations within their advertising campaigns. Cadbury’s most recent campaign, ‘Kuch meetha Ho Jaye!’ (Let’s have something sweet) was a major success with Indian consumers, who associated Cadbury Dairy Milk with celebratory occasions.
In addition to this, according to Lorna Davis president and chairman of Kraft’s China operation, the number of cities in China in which Cadbury products are sold would rise to about 40% due to the US foods groups distribution network. Trefis (a website that looks at stocks and shares of leading companies), notes that Cadbury has strong presence in emerging markets, generating one-third of its total revenue from these regions, it is no wonder that Kraft is seeking to invest heavily in these markets.
The acquisition has resulted in over 40 confectionery brands under Kraft and has positioned the company as number one in the chocolate and sugar confectionery market globally. Kraft have demonstrated their competitive edge as the acquisition of Cadbury has placed Kraft in a strong position with an increase in market concentration and enabled the company to become a leading player against competitors Mars and Nestlé’s confectionery division.
However, it may be argued that since the acquisition, Kraft has taken their eye off the ball. In 2010 Cadbury lost its title of ‘New Zealand’s most trusted brand’. According to an annual Readers Digest New Zealand survey, Cadbury was ranked at 36th place.
Furthermore, in August 2011 Kraft announced a major change to their company; Kraft said it will be dividing the company in two publicly-traded companies: Mondelez International, a global snacking business and Kraft Foods Group, a North American grocery business. Fears grow about breakup of the company as Cadbury brands could suffer in a bid to drive Kraft’s snacks division. The level of detail and attention that went into these brands when Cadbury was solely focusing on confectionery may not be replicated following the takeover and this may cause for Cadbury’s brand name to fade with consumers.
Read more in our case study on Cadbury in our online store