Blog: Dean BestBittersweet times for Cadbury and Hershey

Dean Best | 3 October 2007

It was perhaps inevitable that Cadbury Schweppes’ plans to streamline its operations worldwide would hit its domestic market.

In June, UK-based Cadbury, the world’s largest confectioner, said it would axe 15% of its workforce as part of a global cost-cutting drive. The company also indicated that it would close 15% of its manufacturing sites around the world over the next four years.

At the time, CEO Todd Stitzer faced a barrage of questions over whether the future of Cadbury’s home in Bournville was under threat. “The heart of Cadbury will continue to be in Bournville. The purple flag will continue to fly over those buildings,” was Stitzer’s response.

The measures announced by Cadbury today (1 October) will see some 700 jobs cut and a manufacturing site in the UK closed. Some production at the Bournville site will be switched to Poland in a bid to drive down costs but, aside from that Bournville, a place that has come to be seen as Cadbury’s spiritual home, will remain intact.

Nevertheless, the news that Cadbury’s cuts have reached the UK was not a complete surprise. The company is facing sustained competition in its home market, albeit where it remains the market leader. Cadbury’s share of the UK confectionery market was eroded during the first half of the year and the company has manufacturing sites across Europe to which it can switch production to reduce costs.

Cuts have already been announced in New Zealand, Australia and now the UK – where will be next?

Postscript: sticking with confectionery, Hershey didn’t hang around in naming a new CEO. David West will replace Rick Lenny, who will quit the company at the end of the year.

West’s appointment was announced just a day after Lenny’s departure. Speculation abounds that Lenny is heading for the exit door after growing frustrated at Hershey’s ownership structure. And fresh questions will be asked over whether West can revive a company that has struggled amid growing competition in its backyard from the likes of Mars. Some say a merger with a global rival would be the only way to revitalise Hershey. Step forward Cadbury?


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