Cadbury-Kraft focuses on consumer behaviour inside shops

Shelves full of Oreo biscuits at a local Mumbai store are described as a “blue wall” by visiting Cadbury-Kraft executives. The food giant has attempted to replicate the metaphoric "blue-wall" in many stores in Mumbai and other cities in a bid to drive sales in the last one year.

The results have been encouraging. Since its launch, Oreo has garnered an over six percent market share in the lucrative and intensely fought Rs 4,000-crore premuim biscuit market, where it competes with Britannia’s Treat-O and Bourbon, Parle Products’ Kreams and Hide & Seek, and ITC’s Sunfeast, among others.

What Cadbury-Kraft is doing with Oreo is part of a game that includes other brands and categories as well. In the last year, the firm has aggressively pushed a marketing & sales programme that has targeted shoppers in the top metros and cities of the country.

Branded visicoolers, a range of dispensers developed by local and international design experts, are part of the company’s efforts to make the overall shopping experience exciting for consumers. The firm has refurbished packaging of its brands such as chewing gum brand Bubbaloo and pushed promotions to drive sales.

Taking a leaf out of rival Hindustan Unilever's retail strategy in Perfect Stores, which focuses on in-store display and placement of products after studying shopper behaviour and preferences, Cadbury-Kraft will follow a similar path at the top 50,000 high-end groceries, food stores and chemists within its retail universe of over 700,000 stores in India.

Studying consumers
Sunil Taldar, director, sales and international business, Cadbury-Kraft Foods, said the focus on behaviour of consumers in shops is important because they make the final purchase decision there.

“How your product is positioned, its packaging, pricing etc goes a long way in determining whether they will buy the product,” said Taldar, who has worked with Cadbury for more than a decade in different markets, including China, and moved to India last year to head sales for the combined Cadbury-Kraft business.

Cadbury-Kraft Foods, an unlisted unit of US food major Kraft Foods, which in 2010 bought Cadbury, has been able to drive incremental sales growth of over 10 per cent in the last one year, helping it achieve a 40 per cent growth in sales during the first nine months of 2011, said Taldar. The company worked furiously last year to integrate Kraft brands such as Oreo and Tang into the strong Cadbury distribution system in India. For calendar year 2010, Cadbury reported net sales of Rs 2,652 crore - a growth of close to 30 per cent over the previous year.

The 50,000 outlets Cadbury-Kraft is focused on in India stock one or more of these products: chocolates which include Cadbury Dairy Milk, Celebrations, Bournville, 5 Star, Perk, and Gems; confectionary such as Bubbaloo, Eclairs, and Halls; biscuits such as Oreo and powdered beverages that include Tang and Bournvita.

Taldar said the company has put in place consumer promotions within stores in key categories such as chocolates and biscuits to help drive sales at these outlets.

While the combined Cadbury-Kraft business remains smaller than other strategic markets within Kraft Foods, which recently announced that it was splitting into two - a $32-billion snacking powerhouse and a $16-billion grocery business - India is still key. Irene Rosenfeld, chairperson & chief executive of Kraft Foods, who visited India in November 2011, said that she is keen to see the Indian business emerge as one of the top five food companies in the country.

Cadbury-Kraft’s main rivals include key food companies in India, such as Nestle, which own Maggi and Kit Kat; Britannia; HUL, makers of Knorr, owners of Kissan and Bru; Parle Products, ITC and GlaxoSmithKline with its Horlicks, Viva, and Maltova brands.

Like most of its rivals, the bulk of Cadbury-Kraft's sales come from traditional retail stores. Modern trade or organised retail constitutes only one per cent of its universe, but the company is keen to push this number up, given that packaged foods as a category show greater traction in such retail outlets.

Cadbury-Kraft is banking on technology, much like HUL, to help it replenish stock quickly at stores, both traditional and modern. “We have upgraded the frontline sales force with handhelds to capture store orders, which are linked to the distributor billing software,” said Taldar. “Distributors are linked to company portals to manage auto replenishment of inventory.”

The Mumbai-based company is looking to increase its retail footprint beyond the over 700,000 stores in 5,200 towns that it now reaches. This number will be ramped up this year, especially in rural areas, said Taldar.