Cadbury spins off beverages
After a year of effort, Cadbury Schweppes recently got stockholder approval to spin off its North American beverage division, creating anew company to be called Dr Pepper-Snapple Group (DPSG). Cadbury will become a chocolate only company, in a good example of hwy mixing businesses often does to work. The company's brands also include Mott juices, Seven-Up, A&W, Canada Dry, Schweppes, Sunkist, Nantucket Nectars, Hawaiian Punch, and Sunny Delight
The move has been a year in the making and is generally considered a goodone. The two divisions functioned as separate companies, except that the US drinks group had too get an OK from the UK headquarters very time it made a move. The company got rid of its European drinks operation in 2006.
But the new beverage company faces serious obstacles, as outlined in a BusinessWeek article ("New Future for Cadbury Schweppes". 4/11/08):
In the fiercely competitive $106 billion U.S. beverages market, future expansion for DPSG is no sure bet. Market leaders Coca-Cola and Pepsi also have targeted fruit-based drinks-and enjoy larger distribution networks and deeper pockets. DPSG brands such as Nantucket Nectars and Hawaiian Punch already are feeling the squeeze, and analysts are skeptical that the business can hit its 3% to 5% annual sales growth targets.
And some experts say that the remaining Cadbury company, now the #1 candy company in the world, may be involved in more mergers. Talk is that Cadbury may buy IS rival Hershey, but on the other hand, some analysts see the new candy-oriented company as ripe for a buyout from rivals Kraft or Nestle.
