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Cadbury bets big on small packs

New Delhi, Nov. 15: Cadbury India is aiming to add consumers by selling in small packets. The company expects this strategy to expand the Rs 2,000-crore domestic market by 5 per cent a year.

India’s No. 1 chocolate company, with a market share of around 70 per cent, will price packs in the Rs 2-5 range to boost sales and improve brand visibility.

“Very few people in India consume chocolates on a daily basis, so the challenge is to grow the market. In smaller towns and stores, price plays a very important role,” V. Chandramouli, director (human resources and strategy) of Cadbury India, told The Telegraph.

He said many Indians would prefer to shell out Rs 5 rather than Rs 50. “It’s the frequency and velocity; a lot of people buying a little at a time, adds up to a lot.”

The company has small convenient-to-carry packages for its brands, including Perk, 5 Star, Dairy Milk, Eclairs and Gems. The small-pack strategy is already paying off. Dairy Milk Shots, which was introduced last year and costs Rs 2 per packet, has already contributed 15 per cent to Dairy Milk sales. A new variant of the Perk costs Rs 5 for two pieces and Rs 2 for a single piece.

To keep prices low, the company has reduced its dependence on imported cocoa by backing domestic producers. It encourages farmers to grow cocoa by providing them with saplings, technical expertise and advice on where they can get free government inputs such as fertilisers. It later buys cocoa beans from them.

Cadbury meets 50 per cent of its requirement through imports. A 30 per cent tariff on imports makes local cocoa cheaper.

Slackening growth at home makes India and the other emerging markets increasingly important for Cadbury.

Last year, emerging markets accounted for 35 per cent of sales and around 60 per cent of sales growth. At 54 grams, the per-person consumption in India is still very low compared with the UK and US where it stands at 10.5 kg and 10 kg, respectively.

The British candy maker, which has been in India for more than 60 years, is looking to create opportunities outside homes. “For the school and college-goers, who want to share a piece of chocolate with friends or grab a quick snack between lectures, affordable price and small packaging are convenient,” Chandramouli said.

Cadbury is also trying to shift the consumer perception of chocolate from being an indulgence to a healthy snack.

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