A Study on the Confectionery Industry: Nestle, Cadbury, and Hershey's

This report presents an in-depth analysis of the confectionery industry, fulfilling the requirements of an MBA internship under the University of Kerala. The study, conducted online due to pandemic restrictions, focuses on three major companies: Nestle, Cadbury, and Hershey's. The report's objectives include examining the BCG Matrix, SWOT analysis, Porter's Five Forces, and sales/production within the organizations. The scope encompasses developing conceptual and interpersonal skills while exploring market structures, products, and company locations. The research relies on secondary data, addressing limitations such as the inability to conduct direct communication and data availability constraints. The report traces the evolution and history of confectionery, from ancient times to modern developments, highlighting the influence of consumer habits, technological advancements, and market trends. It also provides insights into the current scenario of the global confectionery market, including revenue forecasts, key drivers (like rising incomes and urbanization), challenges (such as health concerns), and market segmentation. The report concludes with a comprehensive overview of the confectionery industry's past, present, and future, providing valuable insights into its dynamics and competitive landscape.

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1.1 INTRODUCTION OF THE STUDY
An internship is a professional learning experience that offers meaningful, practical work related
to a student's field of study or career interest. An internship gives a student the opportunity for
career exploration and development, and to learn new skills. They are typically undertaken by
students and graduates looking to gain relevant skills and experience in a particular field. An
internship consists of an exchange of services for experience between the intern and the
organization.
Generally the internship is done for acquiring knowledge about an organization or industry. The
internship program is designed to provide students engaged in a field experience with an
opportunity to share their insights, to explore the links between students' academic preparation
and their field work, and to assist participants in developing and carrying out the major research
project which will serve to culminate their internship experience.
It is mandatory to undergo one month internship for the partial fulfilment of Master of Business
Administration under University of Kerala. Due to the pandemic the university has suggested to
complete the internship online by selecting three companies under an industry.
The study is based on confectionery industry, The confectionery industry is a group of large
companies around the world that produce various types of chocolate, chewing gum, and candy as
well as other products made from cocoa. Chocolate, non-chocolate, and chewing gum are the
industry's three main categories. Almost 60% of all confectionery is chocolate.
Confectionery Industry is a branch of the food industry producing confectionery in specialized
factories and in sections of large bread bakeries, canneries, and food combines. The term
confectionary includes cakes, sweet pastries, doughnuts, scones, and cookies etc.
This is a report on the study conducted on:
• Nestle
• Cadbury
• Hershey’s

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1.2OBJECTIVES OF THE STUDY
• To analyse the BCG Matrix,
• To study about the SWOT Analysis
• Porters Five Force Analysis of the industry
• To analyse the sales and production in the organization.
1.3 SCOPE OF THE STUDY
The internship help in developing conceptual skill, inter personnel skill, and encourages the
entrepreneurial capabilities. The companies Cadbury, Nestle and Hershey’s are explained detailed
in this study about their market structure, products and company location.
1.4 DATA SOURCES
The source of data used in this study is secondary data only. Secondary data is the data that have
been already collected by and readily available from other sources.
1.5 LIMITATIONS OF THE STUDY
• The data used were secondary data.
• Direct communication with various departments of the company was not possible due to
current pandemic situation.
• Data collection from individuals on their views and concepts were not identified.
• The data available may be old or out of date.
• Official details were not disclosed due to security issues.
• People’s views and concepts were not identified
2.1 EVOLUTION
Confections refer to food items that are rich in sugar and carbohydrates. It includes a wide range
of products such as chocolates, cookies, bars, gummies, mints, and others. Consumer habits,

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tastes, and preferences are constantly evolving. This has led to innovation in the field of
confectionery that drives the market growth.
Confectionery industry is a branch of food industry producing confectionary in specialized factory
and in sections of large bread bakeries, canneries, and food combines Confectionary is the art of
making confections, which are food items that are rich in sugar and carbohydrates In general,
though; confectionery is divided into two broad and somewhat overlapping categories, baker‗s
confection and sugar confection. Chocolate confections are under separate category as they are
sugar-free versions of sugar confections. The confectionery industry also includes specialized
training schools and extensive historical records. Traditional confectionery goes back to ancient
times and continued to be eaten through the middle ages of modern era.
2.2 HISTORY
It is generally believed that cavemen first established the concept of enjoying a sweet treat.
Perhaps this is where the history of confectionery starts. Much can be learnt from their drawings
which depict men taking honey from beehives and dropping it into their mouths. So given that the
history of sweets and the history of cakes and bakery items are somewhat entangled, it would be
fair enough to suggest that it all started with honey!
Confectionery is the art of making sweets, which are rich in sugar and carbohydrates. Generally,
the confectionery is alienated into two broad categories, i.e., baker’s and sugar confections. Flour
sweets which are also known as baker confections principally include cakes, pastries, sweets,
pancakes, and similar baked goods. On the other side, sugar confectionery includes candies which
are normally called sweets in American and British English and these include candies, chocolates,
gums, sweet tortillas, and other goods made mainly with sugar. Whereas chocolates are sometimes
considered as separate category because they have sugar free versions to suit people with diabetes
and other diseases. The words sweets‘(UK and Ireland), candy (US and Canada), and lollies
(Australia and New Zealand) are the most common varieties of sugar confectionery. The
traditional confectionery of items goes back to early times and is continued to be consumed in the
middle era and as well as in the modern ages.
When refined sugar was not freely available in the market in ancient times, people used honey as
a medium of sweets while making confectionery items. Ancient Egypt, China, India, Greece and

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Rome used honey to coat fruits and flowers to preserve them or creating sweetmeats. Between the
4th and 6th centuries and BC, the Persians, made contact with the Indian subcontinent and its “reeds
that produce honey without bees”. They adopted then sugarcane agriculture which is indigenous
to tropical Indian subcontinent and Southeast Asia.
If we talk about early history of sugar usage in Europe, it was initially the apothecary who had
the most important role in the production of sugar-based preparations. The Medieval European
physicians erudite the medicinal uses of the material from the Byzantine Greeks. One Middle
Eastern remedy for Chills, Rheum’s and Fevers were little, twisted sticks of pulled sugar called
in Arabic al fänäd and these became known in England as aphonics, or more commonly as pennet,
penids, penidia, or pan sugar. They were the precursor of modern cough drops. In 1390, the Earl
of Derby paid “two shillings for two pounds of penydes”. Then Jordan almonds, sugar-coated
nuts or spices for non-medicinal purposes marked the beginning of confectionery in late medieval
England.
2.3 DEVELOPMENT
The world’s first chocolates were crude. Most often chocolate was consumed as a ceremonial
spiced beverage. Modern chocolate is smooth and melty, a testament to modern machinery and
automation. Over 500 years ago, when cacao—the raw material for chocolate— was first
exported to Europe, it was minimally and inconsistently processed.
Market monopolies and vertical integration by large businesses have brought about the modern
chocolates found in convenience stores around the world. Colonization played a huge role in the
development of modern chocolate into this saccharine, global form.
Up until the 1800’s, all chocolate was consumed in beverage form. When cacao beans were
brought to Spain, and later to other parts of Europe, they were brought alongside spices. The
cacao drink continued to be prepared with those spices until the introduction of sugar, which until
then had been mostly used in tea. Adding sugar transformed the flavor of cacao beverages into
something resembling that of modern chocolate.
Unlike the Spanish, the British didn’t do not tend to add spices to their drinks, nor did the French.
The sweetness mellowed out cacao’s harsher flavours and made it more appealing to all
consumers.

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The first chocolate bars were a rudimentary creation, a pressing of cocoa powder, cocoa butter,
and sugar. Eating chocolate as a food brought the flavour of cacao out from under the thumb of
the rich and into the hands of the masses. There weren‗t yet machines which could run for days,
refining the chocolate until smooth. Perhaps there also wasn't much knowledge about how each
of the chocolate processing steps affects flavour.
Some of the most important innovations for developing modern chocolate have been: the
longitudinal conche, powdered milk, cocoa butter press, and standardized post-harvest protocols.
The conche is integral in the chocolate making process, as the machine responsible for taking out
much of the harsh acidity and bitterness which characterizes cacao beans. The cocoa butter press
made it easier to remove the fat from cacao beans, leaving chocolate manufacturers with cacao
butter to sell to the cosmetics industry and cocoa powder to sell to the public. This cocoa powder
was diluted with sugar and milk powder and sold as hot cocoa mix, bringing the diluted flavour
of chocolate to the masses. Chocolate bars continued to get cheaper as cacao cultivation spread
to Africa and Asia, and chocolate companies continued to stretch their cacao with fillers. As
cacao was grown in more parts of the world, the complex processing necessary to fully develop
its flavours didn’t travel with it. Only when large chocolate companies began seeking the highest
quality cocoa at the lowest price did they begin spreading cacao processing protocols. Such
standardized practices are still not commonplace around the world. But even if they don’t do
them, cacao farmers in most countries know about picking only ripe pods, and both fermenting
and drying their cacao. Modern chocolate has one other big helper to thank: sugar. The modern
chocolate industry wouldn’t be possible without contemporaneous innovations in the sugar
industry. The ability to sweeten cacao is one of the most important factors in its palatability and
near-obsession from consumers. When cacao drinks were first sweetened with sugar, it came in
sugar loaves and had to be snipped off and dissolved in a liquid. With the ability to remove more
moisture from sugar, companies could add it to cacao mass without fear of the mass seizing and
thickening. As sugar has been vilified by the media, other sweeteners have stepped in and added
variety to the chocolate industry. Vegan, sugar free, and dairy-free chocolates have opened
chocolate up to most every world market. But recently, market demand has started going back to
its roots. Those first chocolates made in Europe were developed in a very different context. At
the time, the world was still being discovered and many foods were labelled by origin, including
cacaos. The first chocolates in Europe were actually single origin chocolates.

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While traceability in small-batch chocolate making is nothing new, its ethical sourcing definitely
sets it apart from its ancient counterpart. Now a days the chocolate industry is widening with vast
and wide areas it is because the demand for the chocolate products are hugely increasing.
2.4 MOST MODERN SCENARIO
The global confectionery industry revenue is estimated to reach 176 billion US Dollar by 2018
with a CAGR of 3.0% over the next five years. Rising disposable income, increasing awareness
of health and wellness, higher population, and consumer spending are the major industry drivers.
The study provides an overview of the global confectionery market, tracking three market
segments of that industry in four geographic regions. Thus, a total of 12 segments of the global
confectionery industry are tracked. The report studies the manufacturers of chocolate
confectionery, sugar confectionery, and gum, cereal bars and other confectionery. It provides a
five-year annual trend and forecast analysis that highlights market size, profit, and cost structure
as well as opportunities for the regions of North America, Europe, APAC, and Rest of the World.
As per the study, introduction of confectionery categories and new product variants of different
tastes are ensuring higher acceptability of these products. Increasing urbanization, hectic
lifestyles, and more women in the workforce globally are increasing the demand for
confectionery food. The biggest challenges for the industry include health issues, as well as
inflation, employment rate, increasing government regulation, and changing consumer
preferences, among others.
The chocolate segment is forecast to witness the highest growth during 2013-2020. Special
occasions and celebrations are expected to increase confectionery sales. This comprehensive
guide from Lucintel provides readers with valuable information and the tools needed to
successfully drive critical business decisions with a thorough understanding of the market’s
potential. This report will save Lucintel clients hundreds of hours in personal research time on a
global market and it offers significant benefits in expanding business opportunities throughout
the global Confectionery industry analysis.

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In a fast-paced ever-changing world, business leaders need every advantage available to them in
a timely manner to drive change in the market and to stay ahead of their competition. This report
provides business leaders with a keen advantage in this regard by making them aware of emerging
trends and demand requirements on an annual basis.

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COMPAY PROFILE

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3.1 NESTLE
Nestlé S.A. Is a Swiss multinational food and drink processing conglomerate corporation
headquartered in Vevey, Vaud, Switzerland. Nestle was formed in 1905 by the merger of the
Anglo-Swiss Milk Company, established in 1866 by brothers George and Charles Page, and
FarineLactee Henri Nestle, founded in 1866 by Henri Nestle. The company grew significantly
during the First World War and again following the Second World War, expanding its offerings
beyond its early condensed milk and infant formula products. The company has made a number
of corporate acquisitions, including Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971,
Rowntree Mackintosh in 1988, Klim in 1998, and Gerber in 2007.
Nestle is the largest food company in the world, measured by revenues and other metrics, since
2014. It ranked No. 64 on the Fortune Global 500 in 2017and No. 33 on the 2016 edition of the
Forbes Global 2000 list of largest public companies. Nestlé's products include baby food, medical
food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream,
frozen food, pet foods, and snacks. Twenty-nine of Nestlé's brands have annual sales of over
CHF1 billion including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer's, Vittel, and

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Maggi. Nestlé has 447 factories, operates in 189 countries, and employs around 339,000 people.
It is one of the main shareholders of L'Oreal, the world's largest cosmetics company.
 Founding and early years
The company's name was meant to flatter the British, to whom Page hoped to sell a great deal of
his condensed milk. Anglo-Swiss first expanded its operations beyond Switzerland's borders in
1872, when it opened a factory in Chippenham, England. Condensed milk rapidly became a staple
product in European cupboards—the business downturn in 1872 and the depression of 1875 did
not affect the firm's sales. Charles Page died in 1873, leaving the company in the hands of his
brother George and Anglo-Swiss's other investors. The next year, Anglo-Swiss undertook further
expansion in England by purchasing the Condensed Milk Company in London. By 1876 sales were
almost four times their 1872 level. Meanwhile, in Vevey, Switzerland, in 1867 Henri Nestlé began
selling his newly developed cow's-milk food for infants who could not be breastfed. Demand for
his FarineLactée Nestlé soared. Between 1871 and 1873, daily production more than doubled, from
fewer than 1,000 tins a day to 2,000. Nestlé's goal was to bring his baby food within everyone's
reach, and he spared no effort in trying to convince doctors and mothers of its benefits. But while
his energy and good intentions were nearly endless, his financial resources were not. By 1873,
demand for Nestlé's product exceeded his production capabilities, resulting in missed delivery
dates. At 61, Nestlé was running out of energy, and his thoughts turned to retirement. Jules
Monnerat, a former member of parliament who lived in Vevey, had long eyed the business, and in
1874 Nestlé accepted Monnerat's offer of CHF 1 million. Thus, in 1875, the company became
FarineLactée Henri Nestlé with Monnerat as chairman. In 1877 Nestlé faced a new competitor
when the Anglo-Swiss Condensed Milk Company—already the leading manufacturer of
condensed milk in Europe—decided to broaden its product line and manufacture cheese and milk
food for babies. Nestlé quickly responded by launching a condensed milk product of its own.
George Page tried to buy the competing company outright, but he was firmly told that Nestlé was
not for sale. Turning his attention elsewhere, he purchased the Anglo-Swiss Company's first
factory in the United States in 1881.. Two years later, in 1900, Nestlé opened a factory in the
United State , and quickly followed this by entering Germany and Spain. Early in the 1900s, Nestlé
also became involved in chocolate, a logical step for a company based in Vevey, the center of the

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Swiss chocolate industry. Nestlé became a partner in the Swiss General Chocolate Company, the
maker of the Peter and Kohler brands. Under their agreement, the chocolate company produced
the first Nestlé brand milk chocolate, while Nestlé concentrated on selling the Peter, Kohler, and
Nestlé brands around the world.
 Merger of Nestlé and Anglo-Swiss in 1905
In 1905 Nestlé and the Anglo-Swiss Condensed Milk Company finally quelled their fierce
competition by merging to create the Nestlé and Anglo-Swiss Milk Company. The new firm would
be run by two registered offices, one in Vevey and one in Cham. With Emile-Louis Roussy as
chairman, the company now included seven factories in Switzerland, six in Great Britain, three in
Norway, and one each in the United States, Germany, and Spain.
Most of its factories were located in Europe, however, and when World War I broke out in 1914,
Nestlé's operations, particularly in such warring countries as Britain and Germany, were seriously
affected. Although production continued in full force during the early months of the war, business
soon grew more difficult. By 1916 fresh milk shortages, especially in Switzerland, meant that
Nestlé's factories often sold almost all of their milk supplies to meet the needs of local towns.
Shipping obstacles, increased manufacturing and operating costs, and restrictions on the use of
production facilities added to Nestlé's wartime difficulties, as did a further decrease in fresh milk
supplies due to shortages of cattle.
To deal with these problems and meet the increased demand for its products from governments
supplying their troops, Nestlé decided to expand in countries less affected by the war and began
purchasing existing factories, particularly in the United States, where it established links with
several existing firms. By 1917 Nestlé had 40 factories, and in 1918, its world production was
more than double what it was in 1914. Nestlé pursued the same strategy in Australia; by 1920 it
had acquired a controlling interest in three companies there. That same year, Nestlé began
production in Latin America when it established a factory in Araras, Brazil, the first in a series of
Latin American factories. By 1921, the firm had 80 factories and 12 subsidiaries and affiliates. It
also introduced a new product that year—powdered milk called Lactogenic did not take long for
the effects of such rapid expansion to catch up with the company, however. Nestlé and AngloSwiss

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reported its first loss in 1921, to which the stock market reacted with panic, making matters worse.
The company explained that the CHF 100 million loss was due to the rising prices of raw materials
such as sugar and coal, and a trade depression that had caused a steady fall in consumer purchasing
power, coupled with falling exchange rates after the war, which forced the company to raise prices.
Overall, the late 1920s were profitable, progressive times. In addition to adding some new products
of its own—including malted milk, a powdered beverage called Milo, and Eledon, a powdered
buttermilk for babies with digestive disorders—the company bought interests in several
manufacturing firms. Among them were butter and cheese companies, as well as Sarotti A.G., a
Berlin-based chocolate business that began manufacturing Nestlé, Peter, Cailler, and Kohler
chocolate. In 1928, under the direction of Chairman Louis Dapples, Nestlé finally merged with
Peter, Cailler, Kohler, ChocolatsSuisses S.A.—the resulting company of a 1911 merger between
the Swiss General Chocolate Company and Cailler, another leading firm—adding 13 chocolate
plants in Europe, South America, and Australia to the growing firm.
 Expansion During the great depression
Nestlé was becoming so strong that it seemed even the Great Depression would have little effect
on its progress. In fact, its U.S. subsidiary, Nestlé's Food Company Inc. of New York, barely felt
the stock market crash of 1929. In 1930 Nestlé created new subsidiaries in Argentina and Cuba.
Despite the Depression, Nestlé added more production centers around the world, including a
chocolate manufacturer in Copenhagen and a small factory in Moravia, Czechoslovakia, to
manufacture milk food, Nescao, and evaporated milk. Factories were also opened in Chile and
Mexico in the mid-1930s.
While profits were down 13 percent in 1930 over the year before, Nestlé faced no major financial
problems during the Depression, as its factories generally maintained their output and sales were
steady. Although Nestlé'sNew York-based subsidiary, renamed Nestlé's Milk Products Company,
was more affected than those in other countries, U.S. sales of milk products were steady until 1931
and 1932, when a growing public frugality began to cause trouble for more expensive but
established brands such as Nestlé's. Profit margins narrowed, prices dropped, and cutthroat
competition continued until 1933, when new legislation set minimum prices and conditions of
sales.