Cadbury's international expansion strategy and operational failures

Cadberry/Schweppes

Cadbury/Schweppes

Cadbury has a rich history that begun nearly two centuries ago. In 1831 John Cadbury began manufacturing cocoa products in the United Kingdom that were used in primarily chocolate drinks. The company later went through a series of evolutions to become the multinational confectionery company known today. Its original introduction into the confectionery market was a direct attempt to stem off the Swiss dominance that overtaken the industry. Today's market is somewhat similar to the market of the early twenty first century in the sense that there is still a large dominance by one of Cadbury's competitors.

Strengths

By the late twentieth century Cadbury virtually dominated its home markets which were mainly comprised the European market and that of former British Commonwealth nations such as Australia and New Zealand. In these markets, Cadbury gained notary and product loyalty through early expansion efforts. In this particular industry, it is difficult to introduce new products since brand loyalties have already been established with existing brands. To attract consumers to a new product in this market, it takes massive amounts of advertising to sway consumers away from their favorite brands. Only a small percentage of attempts at taking new products to this market succeed as a result and a large component of success relies on having sufficient patience and capital to fund new product expansions.

Cadbury has worked to build significant brand loyalty in what it would consider its home markets and has also had several products that dominated in certain narrow product niches in international markets such as the United States. In the U.S., some products like Coconut Mounds, York Peppermint Patties, and especially Cadbury's Creme Eggs operated with a high level of success. These successes serve as the parent company's strongest asset because they have acted to build brand awareness in international markets where brand loyalty is crucial.

Conclusion

Cadbury was acquired by Kraft foods in 2010 for more than thirteen billion pounds. It is reasonable to suspect that Kraft was interested in the brand's value in the home markets that it operates in and placed a high value on Cadbury's brands (Reynolds). However, it is also interesting to note that Cadbury wasn't willing to relinquish its control over its brand without a premium price paid (Carr). Thus Cadbury arguably was quite aware of the incredible intangible values placed upon its products brand awareness for Kraft. The advantage to Kraft is that it is now able to reach new markets as well as dedicate more resources to the launch of new products internationally since it has obtained greater quantities of scale.