Project Report on CEO Executive Compensation -Cadbury India-Hot Drinks
Dissertation on CEO Executive Compensation
Case Study on Cadbury India Limited Company in Hot Drinks Industry in India
Company Background
·
Cadbury India is a subsidiary
of Cadbury Schweppes, with Cadbury Schweppes holding a stake in excess of 90%
in its local subsidiary.
·
The company operates in the hot
drinks and packaged foods industries.
·
It has national coverage with
manufacturing and distribution facilities in all four regions.
·
Cadbury India is a public
company and not known to be actively seeking funds to realise its growth strategies.
·
The company launched Cadbury
Bournville Fine Dark Chocolate from its parent company’s international brand
portfolio in India in October 2008.
Production
·
The company supplies the local
market through its local production units. Cadbury India has five factories,
located in Thane, Pune, Induri and Malanpur in West India, and Baddi in North
India. Cocoa is one of the major raw materials used by the company and is
procured mainly from plantations in South India, in the states of Kerala, Tamil
Nadu, Karnataka and Andhra Pradesh.
·
The company exports its
products to Sri Lanka, Dubai, the US and the Maldives.
·
Cadbury India is not known to
be involved in third party manufacturing.
Competitive Positioning
·
Cadbury India is the fifth
largest player in the hot drinks market, with a share of 4% of value sales in
2008. The company derives this position through its malt-based drinks and
chocolate-based flavoured powder drinks brands. The company’s flagship brand is
Bournvita, which has been present in the Indian market for more than half a
century. Targeted at mothers and children, Bournvita is positioned as a
wholesome and nutritious drink helping children to grow stronger, both
physically and mentally.
·
The company’s share of other
hot drinks witnessed a slight decline in 2008 as Cadbury’s Drinking Chocolate suffered a slight loss of
share due to the presence of a large number of cheaper competing brands
available in supermarkets. Bournvita continued to perform well in North and
West India, with small sachets helping to drive volumes in semi-urban and rural
areas. The extension of Bournvita to Bournvita 5-Star further helped the
company to keep pace with its competitors in hot drinks during the year.
·
Cadbury India is positioned in
other hot drinks, a category which is expected to witness an off-trade volume
CAGR of 4% in the forecast period. While this category is fairly mature in
India, as Indians are the largest consumers of malt-based drinks in the world in
volume terms, it is also very dynamic. The category has recently seen the entry
of new domestic and international brands and is very competitive in terms of
advertising and new product launches. Malt-based drinks have also recently
witnessed a lot of product innovation in terms of flavours and consumer
segmentation.
·
The company has a narrow
product and brand portfolio with only flavoured powder drinks products. While
Bournvita is its major brand hot drinks, its other brands include Cadbury’s
Delite, Cadbury’s Cocoa and Cadbury’s Drinking Chocolate.
·
The company is positioned only
in the high end of the hot drinks market with only premium products such as
Bournvita and Cadbury’s Drinking Chocolate in its portfolio
·
Cadbury India is considered an
innovator as it is responsible for creative marketing initiatives such as the
TV series “Bournvita Confidence Academy”. It is also known for product
innovations such as the popular Bournvita 5 Star flavour variant.
Source-Euromonitor International-Local Company Profile
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