“Working together to create brands people love.”
A Project submitted in partial fulfillment of the degree Mba course Managerial Economics.
Submitted by:- Shivangi Jariwala
Roll No:- 54
Sec:- ‘A’
Submitted to:- Prof. Kishore Bhanushali
Faculty of Manegerial Economics.
Enthused with the overwhelming performance of Dairy Milk in such a competitive market, this project is specifically made to have a deep and thorough understanding of various aspects of Microeconomics such as demand and supple analysis of my domain product Cadbury Dairy Milk.
Since last 50 yrs Dairy Milk is in the maturity level of it life cycle. And here are some of the facts that display the market condition and working of Dairy Milk. The various graphs and data used are partly hypothetical but true when the whole chocolate industry is taken into consideration.
Special attempts have been taken to use figures and facts as close to the actual one. The graphs drawn have been created keeping in mind the overall market scenario at a large.
Shivangi Jariwala

The mammoth project of this nature calls for intellectual nourishment, professional help, and encouragement from many quarters. I would like to express my Gratitude to :
My school “IBS” who has given me this opportunity to have an insight on such a crucial subject.
My Microeconomics faculty “Mr. kishore Bhanushali” who trusted me to do justice with this project. And also his class discussions on this topic.
My Friends who encouraged me to fulfill this project report whenever I was down.
A number of academics and practioners whose project work I have taken into consideration to create my work.
In particular I wish to profusely thank Sri Bala Bhaskar sir who is the undertaker of this prime institute.

I eagerly look forward to suggestions for improvement in this project report.
I n d e x.
Why I selected Cadbury Dairy Milk:
airy Milk, just the word brings pleasure to most people! Whether it be rich, chocolate truffles, chewy caramels, or pecan turtles just waiting to be tasted… people, no matter where you travel, are lined up in chocolate shops all over the world to indulge their passion.
Ask a kid “what’s the occasion to eat chocolates” and pat will come the reply, nothing but still I want to eat it. CHOCOLATES as a segment thrive on excitement and innovation and this segment has a huge scope in India because of the following reasons:

* Indian’s love sweets right from a 1 month year old kid to a 100 year old man.
* Young generation of India is more comfortable with the idea of sharing and eating chocolates.
* Affluence and spending power of Indian consumers is increasing day by day.
* India has the second largest population in the world and hence has a huge market potential.
* For India chocolate is a new and happening concept, as against almost saturated chocolate market in the west.
* Out of 10 people, 9 of them are aficionados for chocolates.
* The chocolate market in India is 1500 cr growing at 18-20% p.a.
* The per capita consumption of chocolate in India is 300gms compares with 1.9kg in U. k.
* Chocolates are rich in proteins, fats, carbohydrates, vitamins and minerals.

Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate, gum and candy brands. We employ around 50,000 people and have direct operations in over 60 countries, selling our products in almost every country around the world.

In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai.

Our core purpose “creating brands people love” captures the spirit of what we are trying to achieve as a business. We collaborate and work as teams to convert products into brands. Simply put, we spread happiness!

Currently Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands are Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations. Cadbury enjoys a value market share of over 70% – the highest Cadbury brand share in the world! Our flagship brand Cadbury Dairy Milk is considered the “gold standard” for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, we have worked with the Kerala
CHOCOLATE, just the word brings pleasure to most people! Whether it be rich, chocolate truffles, chewy caramels, or pecan turtles just waiting to be tasted… people, no matter where you travel, are lined up in chocolate shops all over the world to indulge their passion.

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K., but the journey with chocolate lovers in India began in 1948. The pure taste of Cadbury Dairy Milk is the taste most Indians crave for when they think of Cadbury Dairy Milk. The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of Cadbury Dairy Milk with a variety of ingredients and are very popular amongst teens & adults.
Cadbury Dairy Milk has exciting products on offer – Cadbury Dairy Milk Wowie, chocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a delightful combination of milk chocolate and white chocolate. Giving consumers an exciting reason to keep coming back into the fun filled world of Cadbury.
Cadbury Dairy Milk has been the market leader in the chocolate category for years. Today Cadbury Dairy Milk alone holds 30% of the market share in whole Indian chocolate market.
Cadbury India Ltd.
Cadbury House
19, B Desai Road
Mumbai 400 026
Tel: +91 22 4007 3100
Fax: +91 22 2352 1845
1. Chocolate market is estimated to be around 1500 crores (AC Nielson) growing at 18-20% per annum.
2. Cadbury is the market leader with 72% market share.
3. The per capita consumption of chocolate in India is 300 gram compared with 1.9 kg in developed markets such as United Kingdom.
4. Over 70 per cent of the consumption takes place in the urban markets.
5. Margins in the chocolate industry range between 10 and 20 per cent, depending on the price point at which the product is placed.
6. Chocolate sales have risen by 15% in 2008 to reach 36000 tonnes according to one estimate. Another estimate puts the figure at 25000 tonnes.
7. The chocolate wafer market is around 35 % of the total chocolate market and has been growing at around 13% annually.
8. As per Euro monitor study, Indian candy market is currently valued at around USD 664 million, with about 70%, or USD 461 million, in sugar confectionery and the remaining 30%, or USD 203 million, in chocolate confectionery.
9. Entire Celebrations range has a market share is 6.5%
10. The global chocolate market is worth $75 billion annually.

1. Price, as price goes up, the demand of Dairy Milk will go down to some extent.
2. Prices of its competitors like: Nestle, Amul, Herseys, Lindt, other sweets consumed in houses.
3. Income. As real income increases or decreases, consumers spending habits change.
4. The state of the economy as a whole – for example, whether the economy is booming, or in recession. This affects average incomes so the impact on a business is not really distinct from the second point.

Demand for chocolates:-
The table below shows the amount of chocolate consumers will purchase per month at various possible prices.
Price of
Dairy Millk
(Pc) Quantity demanded of
Dairy Milk
10 100 20 90 30 80 40 70 50 60 60 50 70 40 80 30 90 20 100 10
The amount people are willing and able to buy at any given price appears in the quantity demanded column, Qc and the price at which they are willing to buy is denoted by Pc. The below figure shows the demand curve for Dairy Milk (Dc), with price shown on vertical axis and quantity demanded on horizontal axis.
The Demand Curve slopes downward to the right, consistent with the law of demand which states that consumers will increase their purchase of chocolate when its price fall and decrease the purchase when price rises.
The demand of Dairy Milk is not influenced by its price but also by other demand determinants. The determinants of Demand are variables other than a good’s own price that are in the demand function. Such variables often include the price of Dairy milk, the price of other related goods, consumer’s income, season of the year and amount spent on advertising. A change in one of them will shift the demand curve for Dairy Milk. We could represent this relationship in functional notation as:
Qx = f (Px, Py, H, I, A)
Qx = Quantity demanded per year of Dairy Milk
Px = the price of Dairy Milk.
Py = Price of our competitor (Nestle, herseys, Amul, Lindt)
H = the number of two income household
I = the average annual per capita disposable Inc, and
A = the amount spent on advertising.

The figure shows an increase in the demand of DairyMilk with the increase in buyers’ income.
Price Elasticity of Demand:
* Elasticity – the responsiveness of a variable to a change in another variable
* Price Elasticity of Demand – buyers’ responsiveness to the price changes
* Price elasticity of supply – sellers’ responsiveness to the price changes
* Ep = % change in Quantity : % change in Price


The income elasticity of demand is defined, as the rate of change in the quantity demanded of a good due to change in the income of the consumer. In functional form it can be represented as follows:
Q = f(Y)
Where Q is the amount of quantity demanded and Y the income of the consumer. The curve which captures the changes in the quantity demanded due to change in the quantity demanded due to change in the income of the consumer is known as the “Engel Curve”
Ey = ?Q/Q / ?Y/Y = ?Q/?Y x Y/Q

Classification of price Elasticity:
* |E| < 1 – inelastic demand/supply
* |E| = 1 – unit elastic demand/supply
* |E| > – elastic
* E = 0 – perfectly inelastic
* E = 8 – perfectly elastic.
The Supply of a good – quantities of the good that sellers are willing to sell at different price levels. The Law of Supply – as the price of the good rises, sellers are willing to sell greater quantities of the good, ceteris paribus.

Factors affecting supply of Dairy Milk:
* Producers’ expectations
* Cost of production
* Technology
* Competitiveness of the market structure
* Market size
* Institutions.
Shift in Supply curve:
When more units of goods are supplied at higher price , it is called the extension of supply, and when less units of the good are supplied at a lower price is called contraction of supply. A movement upwards on a supply curve shows extension in supply and a movement downwards on a supply curve shows contraction in supply. When the supply of DairyMilk goes up(down)in response to price rise(fall), it is a movement along the supply curve.

S1 = Perfectly elastic supply and is equal to infinity.
S2 = Perfectly inelastic and is equal to zero.
S3 = Unitary elastic supply and is equal to 1.
S4 = Relatively Elastic supply and is >1 but <8.
S5 = Relatively inelastic supply and is <1 but >0.

Fixed Cost: Fixed costs are those cost which in total do not vary with the changes in output.
Fixed cost for Dairy Milk are borrowed capital, rental payments, salaries of top management, depreciation etc.
Variable Cost: Variable costs are those costs which increase with the level of output.
They include payment of raw materials, charges on fuel and electricity, sales commission etc.
Total cost: The total of Fixed cost and Variable cost is Total cost.
Cadbury Dairy Milk is available at the following prices in the market:
* 8gms Rs 5.
* 20gms Rs 20.
* 80gms Rs80.

How To Make Chocolate:

roast the cocoa beans. The process is similar to roasting coffee beans, except with gentler requirements: 5-35 minutes at temperatures between 120-160 degrees C (250-325 F). You must generally expose the beans to an initial high temperature, lower the temperature gradually, and stop roasting when the beans start to crack (but not burn). The first image shows the cocoa beans before roasting, and the second image shows the after-result. You can accomplish this in your oven or by using a store-bought roaster.
o If roasting in your oven, you will need to do a bit of experimenting because roasting times depend on the type of bean you’re using. Lay the beans in a single layer across a cookie sheet. Start off with an 18 minute roast in a preheated oven at 450 degrees C (1200 degrees F). They’ll be ready when they start to crack and when they actually taste like chocolate (let them cool before tasting!).
For roasting larger quantities of cocoa beans, you may want to invest in a drum, which is rotated over a gas grill.
o See the Tips and Warnings below about roasting.
2. Crack and winnow the beans. After roasting, the beans must be cracked into nibs and winnowed, whereby the husks (chaff) are removed.
o You can crack the beans with a hammer and remove the husks (which should be loose after proper roasting) by hand if you are working with a small batch.
For larger batches, you can use a very coarse, Corona type mill or purchase a specialized mill (shown here) to crack the beans into nibs. (In case you were wondering, a meat grinder doesn’t work.)
To winnow the nibs, stir them gently with hands or a spoon as you blow on them with a hair dryer or small shop vac until the husks are blown away.
3. Grind the nibs into a cocoa liqueur. You will need equipment strong enough to liquefy the nibs and separate the remaining husks. General food processors, Vita-Mix, coffee grinders (burr and blade), meat grinders (manual and electric) mortar and pestles, and most juicers will not work. You may need to experiment to find equipment that gets the job done. Many home chocolatiers find success with a “Champion Juicer” (see Citations below). Feed the nibs into the juicer one handful at a time, being sure to push them in gently (not forcefully) or else the motor may overheat. Cocoa liqueur will come through the screen and a mixture of husks and liqueur will find its way through the spout. Feed this mixture through the juicer again until only the husk comes through the spout.

Conch and refine the chocolate. By definition, conching affects the characteristic taste, smell and texture of the chocolate, while refining reduces the size of the cocoa solids and sugar crystals. Both processes can be applied at the same time with a powerful wet grinder (success has been reported with a 2 L Santha Wet grinder, also called the Stone Chocolate Melanger; see Citations below). How you conch and refine the chocolate will depend on what equipment you use, but here are guidelines for the Santha wet grinder:
o Melt the chocolate and the cocoa butter in the oven to about 120 F.
o Combine with non-fat dry milk powder, sugar, lecithin and a vanilla pod (split and soaked in the cocoa butter 1 hour; this is an optional flavoring).
o Pour the chocolate mixture in the grinder, periodically pointing a hair dryer at it for 2-3 minutes to keep the chocolate melted during the first hour (until the friction created by grinding keeps the chocolate liquid without additional heat being needed).
o Continue refining for at least 10 hours and no more than 36 hours, until the chocolate tastes smooth and balanced, but be sure not to over-refine (or it will get gummy).
o To take a break from refining (e.g. at night while you’re sleeping, see Warnings), turn off the grinder, put the covered bowl into an oven that’s preheated to 150 F but turned off, and leave it there overnight. It shouldn’t solidify but if it does, take the cover off and turn the oven on about 150-175 until the chocolate melts (be careful not to let the bowl itself melt, though).
5. Temper the chocolate. This is likely the most difficult part of the process, but it ensures that the chocolate will be shiny and have a “snap” to it, rather than being matte and soft enough to melt in your hands. However, the great thing about tempering is you can do it as many times as you like and the chocolate won’t be ruined. Or, you can purchase a tempering machine on the Internet for $300-400 (US). The most important thing is that you do not let any moisture in the chocolate, or it will be ruined.
Melt your chocolate carefully. You can accomplish this in the oven if you are using larger quantities of chocolate, or you can use a double broiler on the stove. It’s your choice, just make sure that the chocolate does not burn (keep stirring) and you melt more than 1.5 pounds of chocolate. Any less and tempering could prove difficult. When the chocolate is melted to a temperature of around 110 or 120 degrees F, transfer it to a dry, cool bowl and stir until the chocolate temperature drops to about 100 degrees F. Use a candy thermometer to gauge the temperature. The chocolate in the bowl should remain at the same temperature while you work with chocolate outside of the bowl.
Pour about one third of the contents of the bowl onto a hard, non-porous counter top or other surface (granite or marble works best). Spread the chocolate out with the spatula, and then bring it all back together.
Continue doing this (about 10-15 minutes) until the chocolate is about 85 degrees F. By the time the chocolate cools down to that point, the chocolate should be a thick, gooey mass.
Add some of the 100 degree F chocolate from the bowl to get the chocolate workable again. Gently work the chocolate around.
Return the chocolate back into the bowl with the 100 degree chocolate. Stir it gently, and try not to create bubbles.
o Check the chocolate’s temperature. You want it around 90 degrees F, but never over 92 degrees. Anything higher than this and you may need to temper the chocolate again.

Mold the chocolate while it is still at about 90 degrees. Pour the chocolate into the molds, careful not to spill. Some people find it effective to use a large syringe to place chocolate in the mold, but it is all about personal preference. When all of the chocolate has been added to the molds, you may either freeze, refrigerate, or let them harden at room temperature. Again, it’s all about personal preference, and there is no right way to do it.

Remove the chocolate from the molds when the chocolate is hardened. The molded chocolate should have a glossy appearance and should snap cleanly in two under pressure. If you are unsatisfied with your outcome, you may re-temper the chocolate as long as the chocolate remains dry and you haven’t burned it.
8. Eat and Enjoy!

Major Competitors Of Dairy Milk:
There various competitors seeking attention of consumers. Some are national players while others are international.
* Amul chocolate
* Nestle classic
* Lindt
* Herseys
* All sweets use at domestic level. Etc.

The extensive project work thus clears the fact that there is demand and supply curve for every product under sun. Also there are certain rules governing the demand and supply of a product. This rules does not apply to giffen goods or highly dear goods. Dairy Milk will always be in the maturity level of its life cycle due to its strong brand positioning.

* www.cadburyindia.com
* www.yahoo.com
* www.google.com
* www.wikipedia.com
* Managerial Economics by Truett and Truett.
* Notes taken during Economics classes.

Cadbury Dairy Milk.