Cadbury Nigeria Plc has suspended the production and sale of its recently introduced biscuit brand, Cadbury Bournvita Biscuit, in response to complaints about its high price.
The biscuit brand, launched in November 2022, is available
in two consumer pack units containing six and ten cookies, priced at N60 and
N100 respectively.
The suspension follows distributors’ calls for the company
to reduce the price of the product as sales plummet.
In addition to the price pressure from distributors, Cadbury
is also facing competition from other brands in the biscuit market.
Compared to similar products, Cadbury Bournvita Biscuit is
priced at a premium, which distributors believe hampers its sales.
Research conducted by Nairametrics reveals that a carton of
the biscuit, consisting of 48 units, is sold at a distribution price of
N2,650.
This is significantly higher than competing brands like
Coaster Biscuits (N1,600 per carton), Beloxxi (N2,100 per carton), and PaleG
(N2,100 per carton).
A reliable source at the organization confirmed the
development to Nairametrics explaining Cadbury Nigeria made the decision to
suspend biscuit production in order to review the pricing strategy based on
feedback.
The source noted that distributors and sellers have
complained about the high price, which has resulted in low demand.
The source also mentioned that Cadbury Nigeria is
considering reducing the pack sizes (from six units to four and from ten units
to eight) to lower the price.
“For example, the six-unit pack could be reduced to four
units, and the ten-unit pack could be reduced to eight units,” he said.
Nairametrics attempted to contact Cadbury’s management for
comment on the situation, but they had not responded at the time of
publication.
Further investigations conducted by Nairametrics across
different markets in Lagos State revealed that the product was unavailable in
most distributors’ and dealers’ stores.
Distributors of Cadbury Bournvita Biscuit expressed their
opinions as well.
Mercy Adeleke, the owner of Mercylink Global Ventures,
stated that the product is too expensive and should be priced at N2,000 per
carton to compete with other brands.
She also criticized Cadbury Nigeria for bypassing
distributors and using their own sales representatives for distribution.
“The price is on the high price, no matter how good a
product is, if the price is high, it will not enjoy high patronage.
The arrangement for making use of their sales
representatives is not helping us as distributors.
They should reduce the price and make it available to
distributors instead of using their sales representatives to get to the
market,” she said.
Chris Iloh, the owner of ChrisIyk Wholesale Store, mentioned
that the product initially gained popularity upon its launch but has since
disappeared from the market.
“Though the price was high, people rushed the products when
they were introduced to the market, but they suddenly became scarce, I think
there might be a shortage in production or something is wrong,” he said.
He believes this is due to the high price, resulting in
decreased demand.
Another distributor, Mrs. Bisola Ajaiye, echoed the
sentiment that the price of Cadbury Biscuit is too high and suggested reducing
it to achieve success in the market.
“The price of Cadbury Biscuit is too high,” said Mrs. Bisola
Ajaiye another distributor. “People are not willing to pay that much for
biscuits, especially when there are other brands that are just as good but much
cheaper.”
She said that the high price of the biscuit is making it
difficult for it to compete with other brands.
“We can’t sell Cadbury biscuits at the same price as other
brands, because we’ll lose money because the supply price is high. They need to
reduce the price to make the product a success,” she said
Cadbury’s decision on how to address these challenges
remains unknown. However, it is evident that the company is facing difficulties
in gaining market share in a competitive landscape with well-established
brands.
In Q1 2023, revenue from the recently launched Bournvita
biscuit segment reached N604 million, accounting for 3.65% of Cadbury Nigeria’s
total revenue of N16.56 billion.
The company reported a profit after tax of N3.435 billion
for the same period, representing a growth of 124% compared to the previous
year.
This increase was primarily driven by a 30% rise in topline
revenues, reaching N16.5 billion, fueled by improved sales in the refreshment
beverages segment, including Bournvita and 3-in-1 Hot Chocolate.
The confectionery division, encompassing brands such as Tom
Tom, Buttermint, Candy Caramel, Candy Coffee, and Clorets gum, also experienced
increased sales.
The company share price closed at N18.6 and is up 16.25% YtD.
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