Business Briefing 23/01

India Sweetened the Cadbury Deal; US and Patently Them

Two major global deals in as many months that have India as the focus is ample proof of how much global businesses value India’s high-spending, burgeoning middle-class consumers. First, Volkswagen decided to overcome its late entry and nascent Indian operations by acquiring a 20 per cent stake in Suzuki, which owns half of India’s car market. Now, Illinois-based food and dairy behemoth Kraft has replicated VW’s strategy by snapping up outright British chocolate maker Cadbury for nearly $20 billion. Unlike in any other country, Cadbury is an almost heritage brand in India with sales upwards of Rs 2,000 crore and growing at an envious 15 per cent. It’s cachet with Indian consumers is stronger than even Maruti Suzuki’s and controls almost three-fourths of the chocolate market here, the kind of dominance not enjoyed by Cadbury anywhere else in the world. Kraft’s experience of doing business in India has been anything but sweet. The maker of Oreo cookies, Tang and Toblerone chocolates came unstuck in India largely due to its lack of distribution muscle, an important part of consumer goods marketing in India. With Cadbury in the bag, Kraft has at its disposal one of the slickest marketing and distribution channels, which could come in more than handy in expanding its staple dairy products business. Kraft can’t stop saying cheese.

With China becoming the factory of the world, and India the equivalent for call centres and infotech services, Americans drew comfort from the belief that they’d retain the spiffy status of being hi-tech innovators forever. Now, it turns out, the US is shakier on that ground too. For the second straight year, overseas companies, mostly of Japanese, Korean and Taiwanese provenance, collectively filed more patents than US-based firms. By the end of 2009, only seven US companies figured in the list of top 20 patent filers. However IBM remains the most ‘innovative’ company in the world by laying claim to 4,914 new ideas and inventions last year.  Patent filings may not always represent the true health of firms, for less than 20 per cent of these new ideas make it to the market in the form of products and services.  “It’s important to consider quality as well as quantity. The silver lining maybe the high priority foreign firms place on US patents. It’s a confirmation of the importance of the US market,” says Darlene Slaughter, GM, IFI patents, a US firm that compiles IPR databases.  It’s a point well made.

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arindam