Cadbury CEO Says Company Has Scale to Compete.
Global Sales Up +4% in 2004. Beverages +2%.
Says Turner Successor Must Have
'Strong Bottling Operations Skills.'
Predicts Diet CSD Parity.

Cadbury Schweppes' global sales last year grew +4%, with beverages up +2%. Company says its U.S. CSD business "out-performed the market, with sales growth of +5%." [note: foregoing numbers are sales, not volume.] Re volume, company says trademark Dr Pepper (regular, diet, line extensions, etc) was up +3%. Notes 7UP Plus -- introduced late summer -- helped 7UP trademark performance in second half of year. 7UP trademark volume was down -9% in first half of 2004; then down just -4% in second half. Details. CEO Todd Stitzer says new head of Dr Pepper/Seven Up Bottling Group, who will succeed Jim Turner (BD 12/10/04), must have strong bottling and commercial skills (see below). Also says Cadbury -- though smaller than PepsiCo, Coke, NestlE9, etc -- has sufficient scale. Diet parity. And predicts diet CSDs in U.S. will reach "parity" with regulars.

Interview. BD talks to Stitzer. Does Cadbury have scale to compete globally in its industries? Stitzer: "I believe that we do ... I think, as it relates to our confectionery business, we have a uniquely advantaged model with 23 number-one or number-two positions in the world's 50 largest confectionery markets ... In soft drinks, in the markets where we participate, we're either a strong number-two or strong number-three with a unique portfolio of brands. I think we have an advantaged business model and the scale we need to create value for shareholders."

Will you pare down portfolio of U.S. beverage brands? "We think we have a strong portfolio. We examine the composition of the portfolio from time to time and make decisions on the basis of what we see at that particular time. At the moment, we're comfortable with what we have. There are certain brands that are performing less well or don't have as much critical mass, and over time we'll have to look at those and see whether they continue to fit."

Status of search for Jim Turner successor? What's needed? "The search is going well. We have a very generous list of highly competent individuals. First and foremost, we need a person who has strong soft drink bottling operations skills, who also has an appreciation of the dynamics of consumer product marketing and selling and the consolidating retail environment. (We) need someone who is a very commercially astute bottling operator." When expect search to be completed? "I would say by the end of the first quarter."

Future growth of U.S. CSD industry? "The outlook is 1%-2% volume and 1%-2% price. That volume growth will be driven increasingly by growth in diets. At the moment, Coke and Pepsi have 30+% of their portfolios in diets, and we have almost 25+%. Each company's portfolio composition will shift increasingly toward diets, to a point where there could be relative parity over a 10 or 15 year period."

Company's position? Cadbury "has grown extremely healthily in confectionery and very well in beverages given the fact that we had a tough summer in Europe (due to weather). We've integrated Adams (confectionery business), executed a number of complex cost reduction projects and implemented (new) systems ... We have accomplished a great deal on the commercial side, while also accomplishing a lot on the integration (and) cost reduction sides. That's generally regarded as the hallmark of a well-run business, which is what I think people should know about Cadbury Schweppes."