Cadbury profit climbs behind innovation, marketplace execution

by Eric Schroeder
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LONDON — Increased investment in growth and focus on innovation and marketplace execution helped boost first half profit at Cadbury Schweppes P.L.C. to £244 million ($423.6 million), up 6.1% from £230 million in the first half of 2004.

Cadbury, producer of Dr Pepper, Mott’s Apple Juice, Dairy Milk chocolate and Trident gum, posted revenues of £3,127,000,000 ($5,427,000,000) in the first half of 2005 ended June 19, up from £2,954,000,000.

"Although the external environment is likely to remain challenging, we will continue to increase investment behind long-term growth and expect to deliver within our goal ranges for the full year," said Todd Stitzer, chief executive officer.

The company recently has revamped its flagship Dairy Milk brand by integrating it with other brands such as Caramel, leading to a 9% increase in brand sales. Other top sellers over the half year were Trident gum, up 15%, and Halls cough drops, up 17% on strong sales during the U.S. winter.

Cadbury’s Americas Beverages region posted a 5% increase in like-for-like sales in the first half, reflecting improved performance from both its carbonates and non-carbonates businesses in the U.S. and Mexico.

"Innovation, which focused on Dr Pepper and diet variants of our core brands, was the primary driver of performance," the company said. "Our diet brands grew volumes by 11%. Around 1% of the region’s sales growth is estimated to have been due to the early delivery of new products ahead of launch programs. Positive price and mix in U.S. carbonated and Mexican beverages was largely offset by the impact of significantly higher promotional spend in U.S. non-carbonates."

Also during the first half, Cadbury said it invested heavily behind a combination of innovation, higher promotional spend and marketing activity. New product launches included a new range of Snapple diets and Mott’s Plus and Mott’s Plus for Kids.

Like-for-like sales in the Americas Confectionery region outpaced the first half of 2004 by 14%, as performance was strong in core gum and sugar categories. U.S. sales were ahead by 12%.

"In gum, sales benefited from innovation around the Trident brand and the reorganization of the selling effort to convenience and key grocery customers," the company said. "Our gum share rose by 10 basis points to 27.7%. In sugar, strong seasonal sales, growth in sugar-free and the launch of Halls Max, led to a 27% increase in the sales of Halls."

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