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Oliwia Mekala 641468

Cadbury is a British multinational confectionery company wholly owned by Mondelez International (Kraft Foods) since 2010. It is the second largest confectionery brand in the world after Mars. The headquarter is in Uxbridge, West London, and it operates in more than 50 countries worldwide. It is known for its Dairy Milk chocolate, Roses selection box, Crème Egg and many others. Cadbury was founded in 1824 in Birmingham, Warwickshire, England by John Cadbury. History It all started in 1824 when John Cadbury opened a grocer’s shop in Birmingham. Among other things he sold drinking chocolate which he prepared himself and cocoa. In 1831 John Cadbury decided to start producing on a commercial scale and bought a warehouse. By 1842 he was selling no less than 16 varieties of drinking chocolate and 11 cocoas. 1897 was the year when Cadbury launched its Milk chocolate, and finally in 1905 Cadbury Diary Milk which is still with us today was launched. After that Cadbury started to launching a lot of different types of chocolate like Milk Tray in 1915 and flake in 1920. For a fact, Cadbury became purple in 1920. The first TV advert was in 1955 shown on ITV’s. Finally after launching a lot of products and producing amazing adverts, Cadbury is now one of the most recognizable and successful confectionery company in the world. cadbury. 2021. Story. [ONLINE] Available at: https://www.cadbury.co.uk/our-story. [Accessed 15 February 2021].

Political factors Politics is a set of activities associated with making decisions in groups, or other forms of power relations between individuals. The decisions might have a huge impact on the businesses in the country. Political factors relate to how the government intervenes in the economy or a certain industry. All the influences that a government has on business, can be classified as political factors. Local government is responsible for a range of services for people and businesses in specific area.

Oliwia Mekala 641468 National governments are responsible for maintaining internal and external stability. That means they are responsible for establishing national laws and enforcing them. International governments are responsible for Trade laws and human rights. The first political factor that I am going to write about is the sugar tax in the UK. Sugar tax is a levy put on drink companies to crack down on high sugar levels in soft drinks. Companies are taxed according to the sugar content of their products. The idea of putting a sugar tax was to reduce the consumption of drinks with sugar, as well as reduce the number of negative sugar effects like diabetes, obesity or higher blood pressure. The sugar tax came into force on April 6, 2018. For example, A 1,75 ml bottle of coke has increased from £1.25 to £1.49. Other countries have introduced similar measures and have seen some success in reducing the drinking of fizzy drinks. Ministers were planning to impose a sugar tax not only on drinks, but also on food. Campaigners have called for a 20% sales tax on confectionery as well as complete ban on price promotions. Kawther Hashem who is a nutritionist said, “Companies and supermarkets are constantly finding ways to push more sugary products, which are contributing to the high rates of obesity”. “These types of promotions and low prices encourage young people to eat far too much sugar”. However, chocolate cannot legally be called chocolate unless it consists of cocoa solids and sugar. It is the addition of sugar which makes it delicious. When the sugar tax was levied on soft drinks in 2018, the chocolate manufactures started to worry, so they started to launch “less sugar” bars by adding either sugar substitutes or simply air. In August 2019, the new Cadbury’s healthier Dairy Milk landed in shops across the UK. The new product was an attempt to make key products healthier following the government pressure on the industry as it aims to halve obesity by 2030. Data from YouGov suggests that healthier confectionery could land well with Cadbury’s existing customers base, as well as the general public. Profiles data shows that 60% of those whose favorite snack is Cadbury’s products admit that they consume too much sugar. The interesting thing that I have found is the opinion of Cadbury’s chief. Mary Barnard who heads the UK division of the parent company of Dairy Milk maker Cadbury said that Denmark had abandoned proposals for a sugar tax after consumers circumvented a similar tax on fatty foods by buying butter and ice cream aboard. “Denmark withdrew the sugar tax as it didn’t drive consumer change. I think the consumer has demonstrated the ability to make change [without a tax]. Can we do more on health? Yes, and we should do more, but there is also a role for treats in everyday life. I would hate to see food losing the joy that Cadbury has been about for decades,” said Barnard, president of the northern European arm of US group Mondelez International. As we can see, there is a lot of different opinions about the sugar tax. However, the government always have the final say.

Oliwia Mekala 641468 On one hand, I think that the sugar tax for chocolate is something good, as it might be a kind of motivation for people who eat a lot of sweets. It might decrease diabetics, obesity, heart diseases, and other negative impacts of sugar. It also raises the revenue for the government. The taxes from sugar products goes to the government, and if there will be tax on all sugar products, the government will get more money, which can lead to decreasing other taxes. The other advantage is the fact that Cadbury could focus on the healthy snacks and launch new healthy products which would have a positive impact on people’s health. This could also improve their brand image, if they would do a good marketing around it (for example, a campaign “Eat healthy” where they launch snacks with less sugar etc.) On the other hand, sugar tax might be seen as something unnecessary. People could blame government that they put it only to get more and more money from taxes, and also blame of discrimination of lower income people. One of the Cadbury’s employees said “If people want to buy a chocolate or a coke, they will buy it, and not care about sugar tax, it is not taxes that government should put on us to try to make people healthy” – which suggests that if someone would want to give up on eating unhealthy things, he or she would just not buy it and the sugar tax gives nothing. Let’s talk about chocolate and Cadbury. Chocolate has a positive effect as well, for example, helps to improve the memory or it might put you in better mood. When putting a tax on it, some people might be less likely to buy it, so they will not experience the positive effects. The sugar tax put on chocolate might have a big negative impact on Cadbury. This is because, they will have to choose if they want to keep the amount of sugar in the chocolate, and make people pay more for their products in the countries with sugar tax or find a way to avoid it (for example, decrease the amount of sugar, or decrease the size of chocolate). The chocolate sugar tax would make them have to make some decisions which might be difficult. As I said, when the price of chocolate goes up, people are less likely to buy it, so their sales could drop. Considering the both views, I can say that sugar tax put on chocolate has a negative impact on Cadbury, but a positive on the UK society’s health. The higher price of chocolate would make people buy it once a week or once a month, which is good for them. Of course – chocolate has a lot of positive impact, but it is especially the dark chocolate with no sugar in it. YouGov. 2019. Sugar tax is bitter for chocoholics but Cadbury’s has a sweetener. [ONLINE] Available at: https://yougov.co.uk/topics/consumer/articlesreports/2019/08/02/sugar-tax-bitter-chocoholics-cadburys-has-sweetene. [Accessed 1 February 2021].

lifehack. 2021. 20 Health Benefits Of Chocolate. [ONLINE] Available at: https://www.lifehack.org/articles/lifestyle/20-health-benefits-chocolate.html. [Accessed 1 February 2021]. Theguardian. 2015. Sugar tax will not change diets, says Cadbury chief. [ONLINE] Available at: https://www.theguardian.com/business/2015/oct/22/sugar-tax-notchange-diets-cadbury-mondelez-childhood-obesity-public-health-england. [Accessed 1 February 2021].

Oliwia Mekala 641468 Thesun. 2018. Sugar Tax. [ONLINE] Available at: https://www.thesun.co.uk/news/1619208/sugar-tax-uk-fizzy-drinks-coke-sugarcost/. [Accessed 1 February 2021].

The next Political factor that I am going to talk about is VAT tax. VAT stands for Value Added Tax, and it is a tax added to a product or service. Businesses pay this tax to HMRC when they sell or hire their goods or services. It applies to the business and consumer. It is paid by the customer rather than the company that sells the product or service. The current rate of VAT is 20%. But how is VAT tax affecting Cadbury? Cadbury have to charge the amount of money for their products. Let’s say that Cadbury company wants to sell their chocolate for 1 pound. They have to pay 20% VAT tax which is 0,20. This means, that the customers will have to buy the chocolate for £1,20. If Cadbury wants their customers to pay £1 for the chocolate, they will have to sell it for around £0,83 (20% from 0,83 is 16,4 so it would add up to around £1).

On one hand, I think that VAT tax is good for Cadbury. As Cadbury is registered for VAT, they “tell” the world that their company is turning over more than £85,000 a year, so they have the image of big, established company. The company can also reclaim VAT on most products on services purchased from other companies. On the other hand, some of the Cadbury clients may not be VAT registered so they cannot reclaim the VAT on items, which means that the products might be too expensive or overpriced for these customers. Considering both views, I think that VAT tax is something inevitable. No one likes the taxes, but we will pay them, as they are needed for the government to pay all the free services that we use like NHS. VAT is the third largest source of revenue for the government. gov.uk. 2021. VAT RATES. [ONLINE] Available at: https://www.gov.uk/vat-rates. [Accessed 5 February 2021]. yourcompanyformations.co.uk. 2021. Pros and Cons of Being VAT Registered. [ONLINE] Available at: https://www.yourcompanyformations.co.uk/blog/pros-and-cons-of-being-vat-registered/. [Accessed 5 February 2021].

11 years ago (in 2010) the confectionery companies (so also Cadbury) quetly started shrinking the size of their products and nudging up prices in a bid to preserve their profit margins as a result of rising costs and the looming VAT rise. This is because they wanted to keep prices the same. theguardian. 2010. Confectionery companies downsizing to beat VAT rise. [ONLINE] Available at: https://www.theguardian.com/business/2010/dec/17/confectionerycompanies-downsizing-vat. [Accessed 5 February 2021].

Oliwia Mekala 641468 Corporation tax is a tax paid on profits from doing businesses as a limited company, any foreign company with a UK office, a club and co-operative. The corporation tax rate in the UK is 19% at the moment I have done some research about Cadbury’s corporation tax, and I found interesting article named “Cadbury owner pays £0 in tax despite multi-million pound profits in the UK”. In 2017 Cadbury owner Mondelez International paid no corporation tax to the UK taxman despite making profits of around £185m. But how did they did this? They were able to do this by channelling money to offshore accounts in Switzerland where tax rates are significantly lower. Instead of £35m, they have paid just £5.9m, which is a big difference. On one hand, I think that it really upset people who are going to work every day, paying their taxes normally, while Cadbury is avoiding it. It also anger the government – “John McDonnell, shadow chancellor, told The Daily Mirror: “This is outrageous. Time and time again we’ve warned the Government this type of behaviour is unacceptable. We have told them they urgently need to tighten the rules on tax avoidance.”. On the other hand, I see that it is good for the company. They might act selfish, but business is business. They are trying to outsmart the government to get in better financial position. Considering both views, I think that as long as customers will not really mind, and it will not destroy their brand image, it is good for them. inews. 2018. Cadbury owner pays £0 in tax despite multi-million pound profits in the UK. [ONLINE] Available at: https://inews.co.uk/inews-lifestyle/money/cadburymondelez-pays-no-tax-uk-multi-million-profits-207693. [Accessed 6 February 2021].

National minimum wage is the minimum pay per hour almost all workers are entitled to. The national minimum wage in the UK is £8.72 per hour. It does not matter how small an employer is, they have to pay the correct minimum wage. How National minimum wage affects Cadbury? That’s simple. Cadbury needs to pay their workers a wage for the job they do. If the minimum wage goes higher, the company will have to pay more to its employees, which means they will either have less profit or they will have to cut some costs – for example, decrease the size of the chocolate or the number of ingredients used (They have decreased the number of eggs used in the Crème Egg). On one hand, I think that National Minimum Wage is good for the society. It increases income of low-paid and improves the labour productivity so workers are more motivated. On the other hand, as I said, it can lead to higher prices and decreasing sizes or ingredients. It can also cause encourage use of black markets. Comparison

Oliwia Mekala 641468 As we can see, they are going higher and higher each year.

Economic factors Exchange rate is the value of one currency for the purpose of conversion to another. For example, the exchange rate of the American dollar against the British pound. As Cadbury operates in around 50 countries worldwide, then a change in the exchange rates will have an impact on the business. To talk about the impact of exchange rates on Cadbury, I am going to use the article from 2017 “Cadbury owner Mondelez warns UK consumers they could see more shrinkflation and price rises”.

There was a fall in the value of pound since the UK voted to leave the EU in June, which made some of the prices go higher. The way to leave prices remain the same was the reduction in pack sizes known as shrinkflation (prices remain the same, proportion sizes get smaller). Mondelez International warned, that the sweet-toothed shoppers may have to brace for more shrinkflation and prices rises. - “First thing to say is we never compromise on taste and quality. We also make sure that we are consistently looking at how to make things more efficiently so that that we can drive out our costs instead of passing them on to consumers,” Mr Caton said. “But, inevitably if there are strong changes in exchange rates and input costs, you have to say 'how do we offset those as a business', and occasionally that we do have to do that through pricing and re-sizing," he added. On one hand, I think that shrinkflation is something very good, as people pay the same amount of money for the product. It is smaller, but it is not much smaller, so sometimes we do not even spot the difference. This is also good for Cadbury, as they do not have to charge

Oliwia Mekala 641468 more money for the same product. Not everyone understands the economic factors, and some people might think that they increased their price, because they want to earn more profit. On the other hand, people might be upset by shrinkflation if they do not know the reason of it. Again – they might think that Cadbury has decreased the size of chocolate to use less ingredients and have more profit for themselves. Considering both views, I think that shrinkflation was the best way that they could face the fall in value of pound. There will always be people who thinks it is bad, but assuming all, it is better for the company to remain the price the same. Independent.co.uk. 2017. Cadbury owner Mondelez warns UK consumers they could see more shrinkflation and price rises. [ONLINE] Available at: https://www.independent.co.uk/news/business/news/cadbury-modelezshrinkflation-uk-consumers-warn-price-rises-chocolate-snacks-retail-a7671981.html. [Accessed 8 February 2021].

Economic Growth is an increase in the production of economic goods and services compared from one period of time to another. Economic Growth has a positive impact on businesses (so also Cadbury), as it creates more profit for businesses, so the stock prices rise. This gives the companies capital to invest and hire more employees and expand business. To explain the economic growth’s impact on Cadbury I am going to use the article from theguardian. In 2009 Cadbury has bucked the economic gloom with a 30% rise in annual profits. It was all thanks to growth in its main brands. In recorded year sales of Diary Milk chocolate grew by 11%. "Chocolate and chewing gum are performing well as consumers seek to comfort themselves with brands they are familiar with," said Todd Stitzer, the chief executive. He said when times are tough people buy affordable treats.

theguardian. 2009. This article is more than 11 years old Dairy Milk sales help Cadbury defy the recession. [ONLINE] Available at: https://www.theguardian.com/business/2009/feb/25/cadbury-chocolate-dairy-milktreats. [Accessed 9 February 2021].

Monetary policy is the changes made by a central bank to interest rates and quantity of money, to achieve changes in aggregate demand which keep inflation within its target range. How does it affect businesses? Higher interest rates lower asset prices. This reduces the value of the assets that firms that are constrained financially borrow against which means these firms are even less able to access credit.

Oliwia Mekala 641468

Social factors Consumer tastes and preferences are likes, dislikes, expectations and motivations that drive customer purchasing decisions. Let’s say you need a shoes. You would prefer a particular style, brand and colour. It is the same with chocolate. When we want to buy chocolate, we pick the one that we want to at the moment. For example, one day we are really in the mood to eat the Oreo chocolate, we go to the shop, we see 2 Oreo chocolates from a 2 different brands. We decide which brand we want to pick etc. It is good for the Cadbury to have a lot of different tastes and types of products, because it is more likely for the customers to buy it. Cadbury has around 115 products according to their website. Having this big amount of products, and being a very popular brand the company has a big advantage over their competitors. cadbury.co.uk. 2021. Products. [ONLINE] Available at: https://www.cadbury.co.uk/products. [Accessed 9 February 2021].

Attitudes to spending might vary. Some people might earn more, and have attitude to spend more. Sometimes people have attitude to spend in specific times like at Christmas or Easter time, so they would definitely buy more chocolate that time. The other days that people are likely to buy the chocolate are their pay days, the Chocolate day or special occasions like someone’s birthday. Lifestyle – Chocolate is not something that match every lifestyle. If we are trying to be fit, we avoid sugar. If we are vegans we avoid the use of animal products (not only meat but also milk, eggs etc.). I think that Cadbury can easily match every lifestyle by launching special products. They already have a diary milk 30% less sugar chocolate, but I also found an article, that they are working on launching the vegan chocolate. “We are very aware of the rise in consumer interest towards vegan products and we have a brilliant R&D team in Bournville who are focused entirely on new products and innovation. Whilst there are no immediate plans for a vegan Cadbury bar, we have lots of exciting developments in the pipeline!” Mondelez spokesperson added that they always listen to their customers and their ideas. livekindly. 2020. Cadbury Is L...