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April 11, 2008

UK: Gum launches boost Cadbury

Confectionery giant Cadbury Schweppes has posted a 7% increase in revenue for the first quarter as a result of the company’s chewing gum launches.

Confectionery giant Cadbury Schweppes has posted a 7% increase in revenue for the first quarter as a result of the company’s chewing gum launches.

Gum products saw double-digit growth during the three months to March, benefiting from the launch of three new Trident gum flavours and higher pricing to offset an increase in commodity costs.

Cadbury said it was “pleased” with Easter despite a much shorter selling season, yet the decision to limit its participation in aggressive seasonal Easter discounting impacted on the company’s market share.

In the Americas, confectionary revenues were ahead by 10% with continued strong results in the US and Latin America. In the US, the gum market grew in high single-digits benefiting from price increases and continued high levels of innovation activity.

The company’s North American beverages unit reported 3% growth in revenue.

The confectionary giant said that while the economic outlook for 2008 is challenging, the company is encouraged by the performances of its confectionery and Americas Beverages businesses.

Despite Cadbury’s positive position, some market analysts have cut the company’s outlook, describing it as a “disappointing” performance.

“It looks a pretty robust performance but it was slightly lower than we expected. We were looking for an 8-9% increase,” Darren Shirley of Shore Capital told just-food this morning (11 April).

“Their performance in the American beverage business, coupled with a 4% price increase is a bit of a concern going into the demerger. The results haven’t led me to turn any more positive today.”

Cadbury said the demerger of its drinks and confectionery businesses was on track and is expected to be approved at its AGM today (12 April).

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