Confectionery and soft drinks company Cadbury Schweppes has announced a series of investments in chewing gum and sugar confectionery and predicted strong revenue growth for 2005.
Cadbury is starting to negotiate with Tahincioglu Holdings to buy its 30% stake in Kent, the Turkish business in which Cadbury acquired a 65% holding in 2002. Kent is the number two confectionery business in Turkey with the number one share in sugar and a number three share in gum. The increase in ownership to 95% will enable us to strengthen our position in the region and make further strategic capacity investments, the company said. The Kent factory will become a key low-cost supply hub for the EMEA region both in sugar confectionery and centre-filled gum. The purchase price is expected to be around GBP55m (US$97.5m). The deal is expected to close in early 2006.
In 2006, Cadbury plans to begin building a new green-field gum factory in Poland. The factory will cost GBP70m, will support our gum innovation and growth agenda in the European market and will generate significant cost benefits, it said. Following commissioning of the factory in 2008, Cadbury will significantly reduce its gum supply requirements from Gumlink A/S. Its existing supply agreement with Gumlink expires in 2010.
It is also investing GBP30m in its gum factory in Mexico to expand production of sugar-free gum to meet demand, which is growing strongly across the region, and accommodate the transfer of gum production from Canada.
In early September, Cadbury announced that it intended to sell its Europe Beverage
business to focus on its higher growth confectionery and other beverage businesses. On 21 November, it announced that it had received a binding offer of GBP1.27bn for the business. The sale is expected to complete early in 2006 following employee consultations and EU regulatory approval.
The company said that year to date trading was in line with expectations, with revenue growth expected to be around the top end of the goal range
‘We have continued to see strong sales momentum across our confectionery and beverage businesses, driven by sustained investment in growth and successful innovation,” said Todd Stitzer, Cadbury Schweppes’ CEO. “The rapid sale of Europe Beverages allows us to focus on our higher growth businesses, and today we are announcing significant investments to strengthen our presence in key developing markets and provide low-cost sourcing.”