Cadbury announces major management changes. Gil Cassagne takes on new role as president of American beverages unit (BD 2/7/03). He will be based in Dallas. Cassagne has been running Cadbury's Australian business and previously ran Mott's and Dr Pepper fountain. Reporting to him will be: 1) Mike McGrath, president of Dr Pepper/Seven Up (DPSU). Doug Tough, who has been DPSU's CEO, departs company. 2) Jack Belsito, president Snapple. 3) Brad Irwin, president Mott's. 4) Mike Weinstein, president innovation/new business development. Stitzer. Cadbury CEO-designate Todd Stitzer tells BD: "You'll see an excited and energized North American beverages team." View. Major independent system bottler: "Todd is the best thing that's happened to us in a long time." Plus. European beverages will continue to be run by Matthew Litobarski; Mexico -- now run by Litobarksi -- will transfer to the Americas unit run by Cassagne in 2004.
North American consolidation. Company says it will "amalgamate" DPSU, Mott's and Snapple "fully leveraging our strong brands, innovation capabilities, broad and diverse routes to market and scale with customers." Mott's and Snapple will consolidate into one location in the northeast, as their office leases expire in 2004/2005; Mott's now in Stamford, CT; Snapple in White Plains, NY. Results. Cadbury says North American volume for 2002 was up +6% but flat if acquisitions were excluded. Brands. Dr Pepper volume -- including Red Fusion -- was flat for year. 7UP was down -7%. "Core brand Snapple" up +3.5%.
Interview with Cadbury CEO-designate. BD asks: Impact of Cadbury's North American consolidation? Stitzer: "From an overall perspective (and) to the extent we can, we're going to sell a total refreshment beverages portfolio in as many channels as we can. We haven't designed the way we're going to do it yet. The concept is that we would have a total beverage portfolio call in national accounts, to our bottlers, to our company-owned distributors (and) to our brokers. Certain of our products aren't in those channels for franchise reasons, for historical reasons, so we need to work that out with our various partners ... Gil and his team are going to work together to pursue selling a total beverage portfolio (in) as many places as it is legally and commercially possible."
View of 7UP's prospects as much of its volume moves from Pepsi to independent system? "In 2003, 7UP will initially lose 12% to 15% of its volume, as (did) our other brands when they transferred (in the 1990s) from the cola systems to the (independent system). Roughly 70% of the 7UP volume in the Pepsi system is transferring initially, and it's conceivable that another 20% would transition in the next couple years. Our perspective -- just as with the transfers of Sunkist, A&W and Welch's (in the 1990s) -- is that over a two to three year period, 7UP volume will return to its prior level due to focus from the independent bottlers. The only exception to that is that 7UP has in many respects been de-listed from fountain accounts. (Our) flavor brands were not in the fountain world. We'll work hard to get those (7UP) fountain cases back. It's conceivable that 7UP bottle and can will get back to the level it once was, but that total 7UP will miss as it relates to the fountain foodservice element of that."
Thoughts on 7UP advertising/marketing/brand health? "This year's campaign, in particular, is a clever play on the 'Make 7UP Yours' campaign which significantly increased advertising awareness through 2000 and most of 2001. Awareness did slip a bit in 2002, as certain spots were pulled due to 9/11 concerns. But we're confident that the new spots will reverse this. I do think it's very difficult to read marketing metrics in the context of a distribution system that is not in love with the brand -- as (was the case with) the Pepsi system last year -- and intent on getting it out." Is 7UP's core equity in good shape? "I believe it is. As with all brands, you can always do more."
Thoughts on Dr Pepper in light of Coke/Pepsi systems' new products? "If you look at the ACNielsen numbers for 2002, you will find that regular Dr Pepper's declines were significantly less than every other major regular brand. It's remarkable. I think Dr Pepper regular declined about -1.5 percentage points, and every other brand declined three (points) or more. (I refer to) Mt. Dew regular, Pepsi regular, Coke regular and Sprite regular. It's never a great thing to say we declined less than everybody else, but total (trademark) Pepper was flat to slightly positive based on volume contributions from Red Fusion, diet and caffeine free, this despite a challenging run of introductions by the cola companies which takes focus away from Pepper. There is nothing wrong with the Pepper equity or the prospects for it. In fact, brand and advertising awareness are higher than ever. The key is getting the bottlers to focus on it and for us to keep doing what we're doing."
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