Cadbury Schweppes Merger Case Study

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Mergers, Acquisitions and Takeovers Case Study


Case Title:

Cadbury Schweppes� Acquisition Strategy

Publication Year : 2010

Authors: M Verma

Industry: Food, Diary and Agriculture Products

Region:US

Case Code: MAA0175IRC

Teaching Note: Not Available

Structured Assignment:  Not Available


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The $11.8 billion Cadbury Schweppes is a global manufacturer and marketer of branded confectionery and beverage products. Its popular brands include Cadbury, Trident, Dr Pepper, Halls and 7UP. Cadbury Schweppes has a presence straddling chocolate, sugar and gum categories. Its products are primarily 'impulse purchase' products and are sold to customers through several different outlets ranging from grocery stores, petrol station kiosks to fountain equipment at leisure, food and entertainment venues. The company has fuelled its growth through acquisitions. Concentrating on its core brands, it has strengthened its portfolio through acquisitions. Analysts feel that Cadburys is too dependent on chocolates, a stagnant category and its beverage portfolio is eschewed. To correct the anomaly, it concentrates on non-cola acquisitions, developing core brands and pricing strategy to drive growth in the US non-carbonate category. To reduce its dependence on chocolates it acquires international and regional gum brands and sugar free candies with the aim of increasing its exposure to faster growth categories. The company also concentrates on generating faster organic growth. It also goes for a master branding strategy and cross product development to enhance growth. It focuses on becoming the number one player in all the markets it is operating in.

Cadbury, Confectionery, Beverage, Adam, Master branding strategy, Acquisition strategy, Core branding strategy, Diversification strategy, Marketing strategy, Organic growth, Brand portfolio management, Retail strategy, Competition, Dr Pepper, Trident


Introduction
About Cadbury Schweppes
The Adams acquisition
Other Acquisitions
Category-wise Revenue Contribution
Cadbury Schweppes� brands
Cadbury�s SWOT Analysis
Shareowner Performance
US non carbonated beverage

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Page 2: The Cadbury Schweppes Group

The origins of the Group go back over 200 years. Jacob Schweppe perfected his process for manufacturing mineral water in Geneva in 1783. In Birmingham, John Cadbury first started selling tea and coffee in 1824, then cocoa and chocolate, which was soon to become the main business. The two companies - Cadbury and Schweppes - merged in 1969. Since then there has been a continuous programme of expansion worldwide.

The Group has undergone major changes during its development and since 1984 its structure has been based on its two business streams of Beverages and Confectionery. 

The range of companies and countries through and in which the Group operates is vast; for instance, it owns Stani, a leading confectionery company in Argentina, and it has an interest in Camelot (the company which runs the UK National Lottery).

Cadbury Schweppes describes itself as a 'British-based but internationally-focussed food and drinks business operating primarily in the 'impulse purchase' or 'informal consumption' segment. Following on from this, the company has a stated commitment to:

  • Continue to focus operations in the market sub-sector of confectionery and soft drinks, and specifically consolidate its soft drinks position worldwide as the largest and most successful non-cola brand owner
  • Aim for a 'top three' position in the global confectionery market
  • Aim for profitable growth via a flexible but carefully selected use of organic development, acquisitions and alliances
  • Monitor positively and regularly growth opportunities in adjacent market sectors where acquisition or alliance could bring real gain through synergy.

In summary, the company is ambitious. It will achieve its aims via growth, acquisition and alliances whilst maintaining its profitability. If acquisition or alliances are deemed to be necessary, the company will look for synergy, i.e. consider the strengths of Cadbury Schweppes and the acquired/partner company to assess the benefits produced by the two merging together, the result of which must be greater than that which either of the two could achieve if they remained separate. (This is often referred to as 2 + 2 = 5).

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