😯 Cadbury Got a Blank Cheque?
The secret behind Cadbury's best performance in 40 years!
Shark Tank India is no less than Bollywood.
Be it the dramatic reactions of the Sharks or the masaledaar Shark fights, the show has replaced major TV soaps in India.
It recently had yet another Bollywood moment:
Lenskart co-founder and Shark Peyush Bansal offered a blank cheque to one of the pitchers!
But what if we told you it's not that uncommon?
In fact, one of India’s favourite brands, Cadbury, was offered a blank cheque!
That blank cheque is the very reason for associating “meetha” with that shiny purple wrapper.
That blank cheque is the very reason why Dairy Milk is a mandatory meetha in festivals.
Why did Cadbury get a blank cheque? ReadOn!
🤓 Kuch Meetha ho Jaye?
It all goes back to 2010.
Kraft Foods acquired the Cadbury brand. .
In 2009, Cadbury’s revenue was $400 mn.
Kraft Foods set a near-impossible target for Cadbury: grow the business to $500 mn in just ONE year!
But, it also provided the most important resource: money.
How much? An unlimited amount!
Yes, it offered a BLANK cheque.
Maybe the Dairy Milk sweetness had hit Kraft Foods :P
Well, the sky was the limit now.
With no constraints on resources, Cadbury delivered. Here’s how:
The team realised that Cadbury Dairy Milk was pretty popular, gave good margins, and was the most important brand of Cadbury’s India business. So they focused most of their attention on growing this brand.
They realised that the shops that had visi-coolers (those tiny fridges that tempt us to buy chocolates) gave higher sales than those that did not. So, the team doubled the distribution of visi-coolers from 20,000 to 40,000.
They also increased the number of distributors and display ads from 5,000 to 10,000.
Then came the masterstroke of brand positioning. Their ad expenditure was increased by 45%: this made Cadbury the “meetha” it is now.
💵 Numbers Hit With the Blank Cheque
Cadbury hit the target of $500 mn before the deadline. Its numbers went through the roof.
Revenue growth: 28%
It did not even spend as much as it had budgeted!
This growth did not stop in 2010. Cadbury posted a 40% growth in the first nine months of 2011.
Cadbury has proved that a blank cheque can do wonders.
But, wasn’t this a HUGE risk for Kraft Foods (now Mondelez)?
Yes, but it takes these decisions very carefully. Here’s how:
Step One: Carefully identify a business area that has a track record of success, with a lot of room for growth.
Step Two: Handpick a team with a natural sense of accountability and an extraordinary potential for greatness.
Step Three: Establish clear and measurable targets, with a brief but concise proposal not exceeding two pages in length.
Step Four: Authorise the team to proceed with the issuance of a blank cheque, leaving no doubt in their minds about the magnitude of their authorization.
Step Five: Stress on the importance of monitoring the results with clearly defined metrics.
Kraft had already used this strategy to make Oreos and Tang a hit!
So basically, if your coffers are full, you'll always be a success story?
Um, nope.
This strategy failed in Latin America.
📜 Learning from Failures
Kraft Foods wanted to develop a nutritious and affordable product range for low-income Latin American consumers.
The team created a range of affordable, tasty, and healthy lines of gelatin and pudding desserts.
Yet, the product failed. Why?
You see, it could not be correctly positioned in the mind of the consumers. The products were healthy but they were positioned as a treat: something that is usually seen as an indulgence.
Adding to it, the products had high costs and low margins.
Even after the failure, Kraft Foods promoted the leader of the failing team to head the snacks business in Brazil!
Woah, why?
Well, he learned from his mistakes and did not shy away from taking risks.
What can we learn from the blank-cheque strategy outcomes? Here’s our take:
When the practicality of situations holds us back, innovations and fresh ideas often suffer. Don’t kill an idea before it even takes birth. Let it freely flow. Maybe you will find a way to turn your idea into reality.
It’s important to make growth sustainable. If you have a free flow of cash, you could just spend it about anywhere. Imagine Cadbury giving the amount in freebies and discounts. Instead, it identified areas where a one-time expense got the ball of momentum rolling. Now, the company was creating extra revenues which it could reinvest in its own growth.
Simplify. Sometimes the answer to your problem can be as simple as Meetha equivalent to chocolate. All you have to do is cut the clutter.
Do you know any other brands that have taken similar steps? Let us know in the comments!
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See you tomorrow, smarty! 🤓
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Waaaw that’s sheer brilliance 👍