Apr 10, 2000|
Nestle’s loss is Cadbury’s gain
Cadbury India has plans to launch four new chocolate brands (as opposed to brand variants) in the current year.
Cadbury controls a 70% market share in the chocolate market and this strategy is likely to help maintain its lead at a time when its main competitor Nestle is diversifying into mineral water which would require relatively large investment in distribution, apart from a higher advertisement and publicity expenses.
There have been unconfirmed reports that Nestle has not been much headway with its latest chocolate offering ‘Munch’, which has been priced at half the rate of Cadbury’s ‘Perk’. Ironically Nestle had used the production line on which its immensely successful ‘Kit Kat’ brand was being manufactured for the production of ‘Munch’. ‘Kit Kat sells at Rs 15/- (for a 36 grams pack) as against ‘Munch’ which has been priced at Rs 5 (for a 19 gram pack). Thus the company would actually end up losing market share in volume terms the chocolate market over a period of time.
Cadbury, meanwhile would tighten its hold even if two of its forthcoming four brands are successful. Last year Cadbury launched brands such as ‘Frutus’ and ‘Gollum’ in the 180,000 tonne confectionery segment which enabled it to cover up the volume loss it had from ‘Googly’. However, chocolates remain a far more lucrative proposition for Cadbury vis-à-vis confectionery. The company has already declared a 1:2 bonus last year and is likely to achieve a net profit in the range of Rs 550 m on a turnover of over Rs 6 bn in the current year.
More Views on News
Jun 20, 2017
While GSK consumer reported muted revenue growth, volumes are seen to be recovering.
Aug 21, 2017
Should you subscribe to the IPO of Apex Frozen Foods Ltd?
Jul 18, 2016
Will investing in Bajaj Corp yield high returns on account of a rural revival in sight?
May 4, 2016
Should you subscribe to Parag Milk Foods' initial public offering?
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407