Cadbury Schweppes' Americas beverage business posts +2% sales growth in 1st half 2003 and +5% increase in operating profits. Of +2% gain, +1% was organic and +1% was from Nantucket Nectars acquisition. Figures are dollars, not volume. Company says 7UP sales down -16%, as anticipated, as brand moves much of its volume from Pepsi to independent system. Customer dispute. Company also notes "contract issues with a major customer" are now resolved, but hurt Dr Pepper fountain volume. Cadbury does not identify customer. Customer was YUM Brands (formerly Tricon); suit settled about midway into 1st half (BD 3/28/03). Informed industry executives say resolution leads way for YUM franchisees to have more flexibility in dealing with Dr Pepper/Seven Up (DPSU) while keeping benefits of Pepsi relationship; and creates path for Dr Pepper to be sold again at YUM.
Stitzer. Reorganization. In talk with BD, Cadbury CEO Todd Stitzer says recent changes in DPSU sales/marketing created "significant savings and unified focus on all the brands." Also notes combining Snapple/Mott's brought "some of the Snapple marketing creativity and focus" to Mott's. Says company still looking at more potential "significant changes," including possibility of "unified national accounts team for all of the businesses." Coke/Pepsi bottlers. Asked if Dr Pepper getting enough focus from Coke/Pepsi bottlers, Stitzer says, "we're working at getting that." With cola systems' focus on Coke/Pepsi "innovation, that's taken some time and attention away from Dr Pepper." Adds, "it's our job to ... get our share of attention." Says relations with CCE/PBG are "fine," noting, "we have our positive and not-so-positive conversations from time to time. But we're focused on moving ahead with both CCE and PBG."
Category growth. Asked about growth prospects for CSDs, Stitzer says: "The innovation cycle is proving to be not as productive as it was." Adds for major U.S. CSD companies, "it will be back to basics on core brands (plus) focus on the diet opportunity ... You'll see better growth on CSDs." Re specifics, Stitzer cites: "Innovation in packaging and renewed focus on the quality of advertising related more to consumer insights ... Re-connecting." Notes: "Something is clearly going on with the consumer, and re-connecting with what the consumer wants and needs from CSDs is going to be important."
Views of Cadbury beverage portfolio given changing consumer dynamics? "Over the last three years, we've re-balanced our portfolio from 85% CSDs to 55% CSDs and 45% and non-carbs (by dollars)." Adds, "that portfolio contains a lot of very appealing premium beverages that are healthy for consumers and fill a lot of consumer needs ... They're premium, so they provide high profit, and that allows us to manage the mix of volume, pricing and profit in a way that is unique and healthy for Cadbury Schweppes."
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