Cadbury to boost adspend levels in India

27 November 2009

NEW DELHI: Cadbury, the confectionary giant, plans to greatly increase its advertising expenditure levels in India, as it seeks to drive growth in the country.

The UK-based firm posted sales of 1,587 crore rupees in the Asian nation last year, and is aiming to improve its revenue levels there by 20% on an annual basis going forward.

Currently, the typical consumer in the rapidly-developing economy eats just 54 grams of Cadbury products a year, compared with a per capita average of 5kg in the US, and 10.5kg in the UK.

Moreover, this figure falls below that recorded in several other areas in the Asia Pacific region, including Pakistan, Sri Lanka, Malaysia, Singapore and China.

Anand Kripalu, managing director of Cadbury India, said "our strategy for growth is to put more grams into more mouths" in India, with a particular focus on ensuring it meets the cost needs of shoppers.

"Consumers in this country, I have come to the belief, buy SKUs first and brands second … Therefore, getting price points right is fundamental," Kripalu continued.

"If a consumer has two rupees in his pocket, and the product price is three rupees, the company is out of the market for that consumer."

As a result of this trend, it is crucial that brand owners ensure their goods appeal on both a personal level, but also on a financial one.

"I don't think you can ever say that brand loyalty is not there. A brand may be relevant to me. But if it is outside my price matrix, then it is not as relevant to me,” said Cadbury India's managing director.

"In India, the pyramid is such that a 1% drop in price multiplies the percentage of the population you appeal to."

Cadbury thus launched a small bar of Dairy Milk around15 months ago, priced at two rupees and targeted at around 8% of Indians, and which now delivers some 15% of volume sales.

"Only when aspirational brands have offers which are accessible, the market explosion truly happens. I think there is enormous opportunity at that end of the market," Kripalu said.

However, the chocolate maker is also trying to attract people from higher income demographics, an approach that is tailored to the wide diversity of options available in India.

"India is the kind of market where there is a massive opportunity at the top, the middle and the bottom, and you can't choose and say I will play only in one," said Kripalu.

As such, Cadbury is promoting goods like its Bournville bar in the premium tier, with the dark chocolate brand said to appeal to changing tastes.

More broadly, the company competes not only with rivals in its own industry, but also with whole other segments, as many consumers only have limited discretionary funds at their disposal.

"The moment you stop innovating, you don't have exciting advertising, you don't have exciting packaging or display at the point of buying in the store; it's not impossible for somebody to go for a completely different category, not just brand, and buy something else that excites them," Kripalu said.

The confectioner has boosted its marketing outlay by around 30% during 2009 to date, with a specific emphasis on its best-performing lines, or what are known internally as its "power brands."

"If you look at our top five brands, we have increased the advertising support exponentially. Our adspend growth has far exceeded our sales growth. In fact, we see it as fundamental to category development," Kripalu concluded.

Data sourced from Hindu Business Line; additional content by Warc staff