Cadbury | Mondelez International

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Cadbury is the UK's best-known and most loved chocolate brand. After several years of rolling change, during which the former Cadbury Schweppes plc cut loose its drinks business in order to establish itself as the world's biggest confectioner, the business finally fell victim to consolidation within the global industry. It was toppled from the top spot as #1 confectioner by the acquisition of Wrigley by Mars, and soon afterwards was itself the target of a hostile takeover by US food giant Kraft. Following completion of that deal in 2010, the company's extensive chocolate, candy, gum and mints portfolio was consolidated into Kraft's existing divisions. Two years later, Kraft's snacks and confectionery divisions were themselves spun out into a new global giant under the name Mondelez International. As a result, the Cadbury's masterbrand now rubs shoulders with Milka, Toblerone and other brands, making the merged business joint leader in global confectionery alongside Mars/Wrigley.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 29th Jun 2017: Publicis Groupe may have captured the conversation at Cannes with the launch of Marcel and its year-long sabbatical from awards events, but it hasn't yet halted the steady drop of account defections. Following a review of global creative for its Cadbury's masterbrand, Mondelez has transferred that account out of Fallon and Saatchi & Saatchi into a new split between VCCP and the Ogilvy network. VCCP will take over the brand in its biggest market, the UK & Ireland, with Ogilvy replacing Saatchi in Australia. Ogilvy already held the account in India, the rest of Asia, the Middle East, Africa and Canada.

Adbrands Weekly Update 18th Aug 2016: Mondelez has reacquired rights to make biscuits under the Cadbury's brand from long-standing licensee Burton's Biscuit Company. As a result, it will now be able to market Cadbury's Fingers and other spin-offs alongside the main Cadbury's bar chocolate brand. However, it will continue to contract out manufacturing to Burton's.

Adbrands Weekly Update 3rd Dec 2015: Mondelez is seeking a buyer for several non-core confectionery assets in Europe, including the Christmas favourites Terry's Chocolate Orange and boxed selection Terry's All Gold. Nestle could be a potential buyer, or possibly Ferrero.

Adbrands Weekly Update 26th Nov 2015: Ads of the Week: "WE: The Australian Crowd-Coloured Short Film". Sometimes it's not just what you do but how you do it. For a new campaign for Cadbury's Dairy Milk in Australia, SapientNitro invited 1,500 ordinary web users to each colour in one frame of this short film using an online palette. (If you were one of them you also get a credit at the end). The drawn story is nice, but what really lifts the film into a class of its own is the amazing crowd-sourced colour design, and those occasional glimpses of graffiti from contributors colouring outside the frames. Fantastic (but watch out for the strobe lighting effects.)


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Background

Free for all users | see full profile for current activities: Although the two separate companies of Cadbury and Schweppes did not merge until 1969, the seeds of both businesses were planted in the early 19th century. Jacob Schweppe invented the technique for making artificially carbonated water in 1783 in Geneva, and moved to London nine years later [see Dr Pepper Snapple Group for more]. John Cadbury's business began slightly later and did not become an international force until the 20th century. Cadbury was originally a tea and coffee merchant, who opened his first shop in Birmingham in 1824. But the cocoa and drinking chocolate he served proved more popular than tea or coffee, and the family business was soon booming. During the 1860s, the firm began to sell eating chocolate as well, but sales were comparatively limited, especially after the introduction of fine imported milk chocolate from Switzerland in the 1880s.

Cadbury's attempted to develop its own milk chocolate in the 1890s using powdered milk, but the results were unsatisfactory. Later, in around 1901, George Cadbury travelled to Switzerland to see for himself how Swiss manufacturers were able to blend chocolate with milk without it souring, and after several years of experimentation, the company introduced its Dairy Milk bar chocolate in 1905. This contained far more milk than the Swiss chocolate, equivalent to around a glass and a half of milk in each bar, giving rise to the long-running slogan (first used commercially in 1928). Cadbury's expanded rapidly during the early 20th century, absorbing another confectioner, JS Fry, makers of Fry's Turkish Delight, in 1919 to form the British Cocoa and Chocolate Company. The Milk Tray chocolate box was introduced in 1915, followed by Flake in 1920, Fruit and Nut in 1928, Crunchie in 1929, and Whole Nut in 1933. The company also extended its global presence, establishing factories in British colonies such as Canada, Australia and South Africa by the 1940s.

By the 1950s, Cadbury and Schweppes were each enjoying considerable international success, and a series of acquisitions consolidated their positions further, before they took the decision to merge in 1969, forming Cadbury Schweppes. Further expansion followed, with the acquisition of UK hygiene business Jeyes in 1972, and one of America's leading confectioners, Peter Paul, six years later. Then Duffy-Mott, Holland House, Spain's Rioblanco and Australia's Cottee’s, manufacturers of coffee, fruit juice cordials and jams, as well as Sodastream in 1985.

However, by the mid-1980s the group had become increasingly unwieldy, with a comparatively wide portfolio of different, often dissimilar, businesses. The confectionery business had slumped, and the decision was taken to focus exclusively on soft drinks and confectionery. The group's large portfolio of food and hot beverage brands was sold off to form Premier Foods, as were Jeyes and other hygiene businesses. At the same time further brands were acquired to bolster the main product lines. Over the following years, the group's portfolio was swelled by brands including Canada Dry (1986), Sunkist (1986), French chocolatier Chocolat Poulain (1987), British confectioners Bassett Foods and Trebor Group (1989), Tri Naranjus soft drinks of Spain (1989) and Crush International (1989).

America had always proved a hard market for the company to crack, particularly since Mars and Hershey between them controlled some 70% of the market. In 1986 the failure of the US launch of the Cadbury's Wispa bar had been one of the factors which led to major restructuring, and in 1988 the chocolate group pulled out of the US altogether, selling the license for its brands to Hershey for $300m. Instead the group concentrated on developing its beverages business in the US, acquiring Dr Pepper/Seven Up in 1995. At the same time it grew steadily less enchanted with the performance of the drinks business outside North America.

Up to this point the group had been equally focused on two global markets, beverages and confectionery. Of the two, beverages was slightly more profitable, generating 55% of trading profits in 1997, although its share of total sales was smaller at 47%. However 1998 was a bad year for the company. Over-expansion in Russia dented performance, costing almost £100m in trading losses and depreciation in assets. In December that year, Cadbury initiated an enormous shake-up to the group with the announcement that it would sell all of its drinks brands outside the US to Coca-Cola. That deal was almost immediately redrafted when competition authorities in several countries objected on grounds that it would further increase Coke's already substantial market share. A large chunk of the business was transferred to Coke in July 1999, while Cadbury and Coke lawyers negotiated with regulators in the remainder of Europe and Australia. Eventually plans to sell those units were abandoned in 2000. That same year, company chairman Sir Dominic Cadbury retired, marking the first time in the company's history that a Cadbury had not been on the group's board.

The group immediately set about using cash from the Coke deal to bolster its core strategic businesses. In addition to beverage and bottling purchases, Cadbury ventured into China, buying up local chewing gum company Wuxi-Leaf Confectionery. But the most significant deal was the acquisition in 2002 from Pfizer of US gum and mints giant Adams for $4.2bn. Analysts accused Cadbury of over-paying, highlighting Adams' virtually flat sales in recent years. However the group defended its decision, portraying Adams as a neglected business. Other purchases included leading Turkish confectioner Kent Gida, Butterkist popcorn in the UK, and the substantial Stimorol chewing gum portfolio in eastern and northern Europe.

The Bagger-Soerensen family of Denmark had been making American-style chewing gum under the name Dandy since the 1940s, but originally conceived Stimorol as a cough sweet. Just before its launch in 1956 they decided to make the product chewable as well and launched these strongly flavoured eucalyptus and liquorice "chewing tablets" with the slogan "Stimorol clears your throat". Having experienced some success in the domestic market, Dandy Confectionery launched Stimorol into the Netherlands three years later, initially in a partnership with a Dutch tobacco importer who felt it would complement his cigarette products. Gradually, a range of more traditional peppermint and spearmint flavours was added and distribution was extended across Europe. The brand was one of the first gums to move wholeheartedly to a sugar-free formulation from 1978, and Dandy formed marketing partnerships in the UK with Warner-Lambert, then owners of Trident, Dentyne and other brands; and in France with General Food, who controlled Hollywood gum.

The company also tested its products in selected markets in the US, but with only very limited success. In the early 1990s Dandy made the big push into the rapidly Westernizing Eastern European market. Wrigley already had a head start in Russia, having launched there in 1989 just after the government lifted its official ban on chewing gum, hitherto regarded as a symbol of the hated West. In order to dent Wrigley's now established hold on the market, Dandy launched a daring and unconventional marketing campaign in 1992, running extensive nationwide television advertising for its products before they were even available in the country. This successfully created huge anticipation, and sales rocketed when the product was finally unleashed to Russian consumers a year later.

By 1997, Dandy had won from Wrigley just under half of the Russian chewing gum market. The two brands continue to compete fiercely in that market, making Russia one of the few countries in which chewing gum ranked among the top ten most advertised consumer products. Yet for the most part, Dandy's brands were big only in small markets, the market leader in Scandinavian countries, Belgium and the Netherlands, while sacrificing all but a minimal share of the major markets of the US, UK and Germany. Following Cadbury Schweppes' strategic decision to move into the gum sector, the Bagger-Sorensen family took the opportunity to sell their stake in Dandy in 2002 for around £201m.

Also in 2002, Cadbury mounted an unsuccessful attempt, in partnership with Nestle, to acquire US confectionery giant Hershey.

In 2006, Cadbury was forced to order a recall of around 1m Dairy Milk confectionery products after a leaking pipe at a UK production facility gave rise to concerns of salmonella contamination. (It was later fined £1m for safety breaches). The local launch of Trident gum in January 2007 was also marred when its advertising campaign, devised by JWT, was greeted with numerous complaints from members of the public who considered its main character, an exaggerated Caribbean rapper, to be a racist stereotype. After deliberation, the Advertising Standards Authority agreed and ordered Cadbury to pull the ad. see full profile for current activities


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