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Cadbury's acquisition of Adams this year saw the company become the global leader in the confectionery market. Despite this, Cadbury has put its plans to conquer the American market on the back-burner and announced a cost-cutting programme aimed at consolidating its regional strengths, says Branwell Johnson
For chocolate lovers, Cadbury's Dairy Milk falls into the sheer indulgence category. However, while the product is recognised as the quintessential silky milk chocolate brand in the UK, owner Cadbury Schweppes is finding the path to becoming a global player far from smooth.
The company is struggling to establish itself as a global enterprise bursting with "power brands" to compete with heavyweight giants such as Nestle and Masterfoods.
In March this year, Cadbury bought the Adams confectionery business, owner of Halls lozenges and Trident sugar-free gum, from Pfizer for pound 2.6bn (MW December 19, 2002). This allowed it to leapfrog confectionery market leaders Nestle Rowntree and Mars to take pole position in the global market. As a result of the acquisition, it is now number two in the chewing gum market behind Wrigley.
However, unlike many global players, the Birmingham-based company, which last year enjoyed 20 per cent of the UK sugar confectionery market by value with retail sales of pound 336m (Mintel), is planning to increase its focus on regional and local brands.
The move forms part of its Fuel for Growth plan, unveiled last week by chief executive Todd Stitzer (MW last week). The ambitious Fuel for Growth cost-reduction programme is designed to provide funds to increase investment in marketing and innovation.
Stitzer, an American and the first non-Briton to run the business, is also planning to cull 5,500 jobs globally and shut down a fifth of the factories in an effort to save pound 400m a year.
The bubble bursts
Other shake-ups at the company include the relaunching of the Cadbury's range. The company recently axed its Wispa chocolate brand, changing the product's name to Cadbury's Dairy Milk Bubbles. Similar moves are expected to bring Caramel and Turkish Delight under the Cadbury's Dairy Milk umbrella.
Changes continued last week with the appointment of Starcom Motive to handle media planning and buying, replacing Carat, the agency that negotiated Cadbury's successful pound 10m sponsorship of Coronation Street.
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