Apr 20, 2000|
Higher cocoa prices snip Cadbury’s first quarter margins
Cadbury India has maintained an impressive 20% growth in the topline for the first quarter. However, the operating margins have dipped by 1% primarily because the company had contracted for cocoa, its main raw material at the higher prices of approximately £1200/ton last year.
The cocoa prices currently rule at around £ 600/ton and the management has indicated that the stocks contracted at the older rates would be over within the next three weeks. Thus raw material costs can be expected to drop substantially for the company from the second quarter of the year.
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The most encouraging part of the topline growth in the first quarter was the fact that the company could recover lost ground in the metro cities. These contribute almost 30% of the company’s turnover and the growth of the company’s brands in the metros was not satisfactory last year. In the first quarter the company’s sales in the two metro cities Mumbai and Calcutta rose 15% in volume terms.
Over the last year, the company regained its share in the food drinks market by re–launching ‘Bournvita’. More important the last year witnessed the highest growth for Cadbury’s biggest brand ‘Cadbury Dairy Milk’ which grew 41% in volume terms. ‘Eclairs’ too grew by 14% in volume terms. The notable failures for the company were its sugar confectionery brand ‘Googly’ and its chocolate brand ‘Picnic’.
Overall, the management was confident of the company being able to maintain an overall volume growth of 12% and a value growth of 20% in the current year too.
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