Cadbury’s drink unit poised to grow

Cadbury’s drink unit poised to grow
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First Published: Wed, Jun 13 2007. 10 02 AM IST
Updated: Wed, Jun 13 2007. 10 02 AM IST
By Reuters
New York: Cadbury Schweppes Plc’s US beverage unit is preparing to separate from its candy-making parent by launching new brands and expanding the offerings of its existing brands, a senior executive told Reuters on 13 June.
Gil Cassagne, president and chief executive of Cadbury Schweppes Americas Beverages, said in an interview the company was developing a so-called enhanced water product, but said it was too soon to give any details about the flavors, bottles or distribution.
Bottled water drinks enhanced with vitamins and minerals are the latest must-have drink, since Coca-Cola Co. bought “vitamin water” maker Glaceau for $4.1 billion earlier this month.
British-based Cadbury, the world’s biggest confectionary company, is planning to split its sweets and beverage units. It may spin off the US beverage unit through an initial public offering, but sources familiar with the situation said a sale to private equity players is more likely.
The company plans to outline its plans on 19 June, sources said. But whatever the outcome, Cassagne expects to stay on to run the US business, which is Cadbury’s largest operating region.
“Just by definition, the separation says it’s going to be different,” Cassagne said. “But it’s not that important to us who owns us, honestly, as it is that we’re associated with either a company or a group of individuals who are willing to invest in our business ... and really want to take the business to the next level.”
Cassagne said the next level for the maker of Dr. Pepper, Sunkist, Canada Dry and 7 UP means continuing to increase its sales of carbonated soft drinks at a rate that beats the industry.
Bolstered by its strength in flavored soft drinks, Cadbury Schweppes saw its soft drink sales volume grow 1.3% in the United States, outperforming Coca-Cola, PepsiCo Inc. and the total industry, which fell 0.6%. In 2005, industry volume fell 0.2%.
The company is also boosting its offerings of faster- growing noncarbonated beverages by bringing its Penafiel mineral water, popular in Mexico, to the United States, and launching a sports drink called Accelerade.
It also recently introduced line extensions of its Snapple brand, including Snapple white teas flavored with nectarine and Asian pear and Snapple classic black teas such as Earl Grey and English Breakfast.
Cadbury’s independent bottling system currently distributes Glaceau’s vitaminwater, but the future of that distribution has been called into question by its acquisition by Coke.
“Right now, there are about twenty (brands of enhanced water) out there, because everybody knows that Glaceau is going somewhere,” Cassagne said, meaning that Coke will probably now handle distribution. “So now everyone and their uncle is coming out of the woodwork with enhanced waters to fill what they believe might be a perceived hole in somebody’s portfolio.”
So far, Atlanta-based Coke has not revealed its plans for distributing Glaceau’s brands.
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First Published: Wed, Jun 13 2007. 10 02 AM IST