Storm in a Milk-Cup: Oreo in India[dagger]

By Sarkar, Dev Narayan | IUP Journal of Business Strategy, March 2013 | Go to article overview

Storm in a Milk-Cup: Oreo in India[dagger]


Sarkar, Dev Narayan, IUP Journal of Business Strategy


The launch of Oreo cookies by Kraft-Cadbury India, a subsidiary of the US-based Kraft Foods Inc., created a storm in a milk-cup. It launched its world famous brand Oreo at a time when the premium biscuit category was getting increasingly competitive in India. In order to achieve success, Kraft Foods executed a well-thought out marketing strategy. A well-designed 360-degree promotion strategy was complemented by an equally effective distribution strategy, ensuring a deeper market penetration and coverage. Kraft-Cadbury won accolades for executing one of the most successful FMCG product launches in recent times. Can Kraft sustain and be effective in the long run remains to be seen especially in conditions where other MNCs are entering India and local brands like Parle and ITC are rearming themselves to take on the challenges.

Introduction

"Between January-September 2011, Cadbury India's sales grew 40%, thanks to the successful launch of world's largest selling cookie Oreo in March as well as double digit growth of most existing Cadbury brands", says Cadbury India Managing Director Anand Kripalu (Malviya and Vyas, 2012).

Any company entering an alien market in a multinational environment is bound to face challenges. Kraft-Cadbury is no exception. The Indian biscuits market is dominated by Parle, Britannia and ITC. There are also many prominent regional players like Bisk Farm, Priyagold, Cremica and Anmol. To add to the competition, there is a large unorganized market for biscuits in India.

Oreo is a well-established brand globally but new to India. The distribution channel of Cadbury, which was established over many decades in India, was used to ensure product placement at the retail level. The all-round promotion campaign was led by a TV advertisement showing the bonding between a father and his daughter. The pricing was such that although the unit price was kept at a premium small package sizes allowed consumers from all economic strata to consume an Oreo.

Cadbury will have to be wary of more MNCs entering India with products in the biscuits category. Many are going to compete with Kraft, Britannia and Sunfeast directly and making the market more competitive than ever. In the last two years, Britain's United Biscuits and GlaxoSmithKline Consumer Healthcare have launched several products aimed at the Indian market.

Kraft Foods

Kraft Foods Group Inc. is a North American grocery manufacturing and processing conglomerate, which is headquartered in Northfield, Illinois, a Chicago suburb (Wikipedia, 2013c). Kraft Foods Inc. (Kraft Foods) manufactures and markets packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products. Its product categories span breakfast, lunch and dinner meal occasions, both at home and in foodservice locations. The company sells its products to consumers in approximately 170 countries (Forbes, 2013). Kraft Foods operates in three segments: Kraft Foods North America, Kraft Foods Europe and Kraft Foods Developing Markets. As on December 31, 2010, Kraft Foods had operations in more than 75 countries and made its products at 223 manufacturing and processing facilities worldwide (Forbes, 2013). In February 2010, the company announced that it has acquired the control of Cadbury pic. The company operates in five segments: US Beverages, which manufactures packaged juice drinks, powdered beverages and coffee; US Cheese, which manufactures processed, natural and cream cheeses; US Convenient Meals, which manufactures processed meats and lunch combinations; US Grocery, which manufactures spoonable and pourable dressings, condiments, desserts, packaged dinners and snack nuts, and Canada and NA Foodservice, which sells products that span all of its segments and includes the Canadian and Puerto Rico grocery business, the North American Foodservice operations and the North American Grocery Export Business (Reuters, 2013). …

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