Nestle Rowntree
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I. Analysis of the industry
The chocolate industry can generally be divided into chocolate confectionery and sugar confectionery. While the latter includes boiled sweets, toffees, chewing gum and so on, this case study concentrates on the former, which, as the name indicates, focuses on products made with chocolate. According to the British product definitions there are three product categories within the chocolate confectionery industry that have to be distinguished: Blocks, Countlines and Boxed chocolates.
In 1987 six major producers (accounting for 50% of total world volume of chocolate confectionery) dominated the industry. They had all achieved healthy rates of profitability in the 1980s. Trading profit on sales averaged 9.3% over the five year period ending in 1987. During the same time a concentration process in the industry could be observed, where several larger companies acquired smaller ones. One of the major forces behind this was the reaping of economies of scale in this industry...