As part of its cost saving strategy, confectionery and soft drinks manufacturer Cadbury Schweppes will axe 10% of its employees and a fifth of its factories. The savings will go into product development and aggressive marketing campaigns, which may be the right move in the highly mature confectionery market.

Cadbury Schweppes has announced its intention to shed 10% of its workforce, as well as shut down a fifth of its factories worldwide. The group currently employs 55,000 people and operates 133 factories. These decisions were taken as part of the company's plans to save £400m (US$676.4m) by 2007.

Todd Stitzer, the chief executive of Cadbury Schweppes, has already warned that 2003 would be a year of transition for the group. In March 2003, Cadbury Schweppes acquired the US confectionery group Adams for £2.7bn. The addition of Adams' Trident, Halls and Dentyne brands has made Cadbury Schweppes the largest confectionery manufacturer in the world.

At the same time, this takeover has left the group with a highly complicated organisational structure, leading to very high costs. For this reason, Cadbury Schweppes announced a first round of cuts in February 2003 to reduce the number of operating units by four, to leave only five. Two weeks ago the closure of two production facilities in the UK was announced, with the ensuing loss of 550 jobs. One of these manufactured Halls cough sweets in Manchester, the other Trebor mints in Chesterfield. Further job losses are expected in the UK, but Cadbury Schweppes declined to make any specific predictions.

The company was hit by a fall in European confectionery sales this summer, due to the unusually hot weather. Cadbury Schweppes said last month that it expects to perform to a similar level in H2 as in the first half of the year

Cadbury intends to reinvest the savings made thanks to this 'fuel for growth' strategy into aggressive and innovative marketing, as well as new product development. This could be a winning strategy in a very mature market where innovation and highly sophisticated consumer targeting are often the only way to gain market share from other large rivals, such as Swiss giant Nestlé.

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