Cadbury Schweppes plc today announced that it is in discussions with Kraft Foods to acquire its chewing gum and candy business in France. The discussions concern the acquisition of the Hollywood, Malabar and Tonigum chewing gum brands and Krema, Kiss Cool and La Vosgienne pocket and bagged candy brands, together with relevant manufacturing capability and distribution. This business has leading positions in important segments of the non-chocolate confectionery market in France.

The French confectionery market is the seventh largest in the world at 333,000 tonnes, growing at 3% p.a. between 1994 and 1998. The acquisition of Kraft Foods non-chocolate confectionery business would give Cadbury Schweppes an overall market share of approximately 16% and confirms its leading position in sugar confectionery.

Kraft Foods' French chewing gum and candy business would complement Cadbury Schweppes' current French chocolate and sugar confectionery business, giving greater access with a more comprehensive product portfolio in the impulse distribution channel.

Kraft Foods' French sugar confectionery business owns four of the top confectionery brands in France and operates in three sectors -- chewing gum, pocket pack and bagged candy. Hollywood, its chewing gum brand, is a leading confectionery brand in France with over a 50% share in its segment. Other gum brands include Malabar, Tonigum and Stimorol. Chewing gum is a highly attractive, brand led category in France.

In the pocket pack sector, key brands include Kiss Kool, a sugar free mouth freshener, La Vosgienne, a traditional boiled sweet in a tin, Vichy Mints and Cachou Lajaunie. Krema is the umbrella brand for the bag range and includes traditional brands such as Regal'ad (chews), Fruidules (boiled sweet) and Regliss' Mint chew.

The proposed acquisition also includes Kraft Foods French manufacturing capability at St Genest. The Kraft Foods French sugar confectionery business has a large, dedicated sales force of around 140 people covering the grocery and impulse channel and employs around 450 in total. In 1999 this business had sales of 1239mFF.

Cadbury Schweppes' Chief Executive Officer, John Sunderland, commented, "Kraft Foods' strong brands would help us build critical mass in the French sugar confectionery market and give us entry into the profitable chewing gum segment. It would also be complementary to our existing French confectionery business, which includes Poulain, Cadbury and La Pie Qui Chante products, and would significantly extend our brand portfolio and customer base."

An agreement on the proposed acquisition will not take place until the process of consultation with works councils, which is underway, is completed. The proposed acquisition would be subject to regulatory approval as applicable.