Description of Business

⁽¹⁾ For an explanation of underlying profit from operations and a reconciliation to profit from operations see Information used by management to make decisions. Excludes Central. In 2005, 60% of our revenue came from confectionery and 40% from beverages. On the same basis, the Americas regions accounted for 46% of revenue, EMEA 36% and Asia Pacific 18%. Developing markets accounted for 23% of revenue, with developed markets accounting for the remainder.

Americas Beverages

The Americas Beverages region comprises operations in the US, Canada and Mexico. The principal products of the business are carbonated and still soft drinks.

In carbonated soft drinks (CSDs), Americas Beverages participates mainly in the flavours (non-cola) segment, where we own the number one or number two brands in most categories in which we compete. Americas Beverages has a 17% share of the US CSD market, the world's largest. Its main CSD brands are Dr Pepper - the seventh largest US CSD brand, with a 7% share - and 7 UP. We own 7 UP in the United States and Puerto Rico only. Other important brands include Canada Dry, A&W and Sunkist, which is a licensed product. Diet drinks account for approximately 25% of CSD volume. In still drinks, Americas Beverages competes in ready to drink teas, juice and juice drinks. Our still beverage brands include Snapple, Hawaiian Punch, Mott's, Clamato and Yoo-Hoo.

In Mexico - the world's second largest CSD market - we are the third largest beverages company with 6% of the Mexican CSD market, and an 18% share of the non-cola market. Our main brands in Mexico are Peñafiel, Squirt, Crush and Canada Dry. Peñafiel is the leading brand in the mineral water sector, with a 36% market share. Squirt is the number two grapefruit CSD.

Our beverage products are distributed through a number of different routes to market. In North America, the CSD brands are primarily manufactured and distributed through third party bottling and canning operations. These source beverage concentrate from Americas Beverages, which operates as a licensor. Around half of our North American CSD volumes are distributed by companies in which our competitors have a significant stake. The remainder is distributed through independent bottlers including Dr Pepper/Seven Up Bottling Group (DPSUBG), in which we have a 45% equity interest. DPSUBG is the largest independent bottler in the United States, and distributes around 24% of our carbonated soft drink volumes. DPSUBG operates primarily in Texas, California, and other Western and Midwestern states of the United States. The processes and operations of the independently-owned bottlers and canners are monitored to ensure high product standards. We also provide marketing, technical and manufacturing support. The still beverage brands are manufactured and distributed by both Group-owned and independent companies.

In Mexico, we manufacture and sell our products either through third party bottlers, as with US carbonated soft drinks, or through company-owned bottling operations. Around 20% of our volume in Mexico is manufactured and distributed by third party bottlers. The balance, and the majority of our brands, are manufactured by group-owned bottling operations.

Americas Confectionery

Our business in this region was significantly expanded following the acquisition of Adams in March 2003. Over 75% of the Adams business was based in the Americas. Americas Confectionery operates businesses in all the region's major countries including the US, Canada, Mexico, Brazil, Argentina and Colombia. Almost 60% of sales are in the US and Canada, with the remainder in Mexico and Latin America.

In the US, the world's largest confectionery market, we have the second largest market share in gum at 24%, mainly through the Trident and Dentyne brands, and the leading share at 54% in cough/cold confectionery through Halls. We are also the largest confectionery company in Canada, the world's 12th largest confectionery market, with an overall 21% market share and leading market positions in gum, sugar and cough confectionery, and a top three position in chocolate. Five brands, Trident, Dentyne, Cadbury Dairy Milk, Caramilk and Mr. Big, account for nearly 60% of sales.

In Latin America, we have the leading overall confectionery market share at 17%, (Source: Euromonitor 2004) more than double that of our nearest competitor. We have a 64% share of the Latin American gum market, and leading market shares in gum in Mexico, Brazil, Venezuela, Argentina and Colombia. We also have the leading share of the fragmented sugar confectionery market at 8%, and a number one or number two position in individual markets (Source: Euromonitor 2004). We have a broad-reaching distribution infrastructure in Latin America which enables us to supply a highly fragmented customer base of small shops and kiosks. In Mexico, we have a share of over 65% of the gum market and 8% of the sugar market. Other brands sold in the Americas include Clorets, Swedish Fish, Sour Patch Kids, Beldent, Bazooka and Mantecol.

We have manufacturing facilities in Canada, the US, Mexico, Argentina, Brazil and Colombia.

Europe, Middle East and Africa (EMEA)

The EMEA region includes all of our confectionery interests in the European (including Russian), African and Middle Eastern confectionery markets.

Cadbury Trebor Bassett (CTB) in the UK is our largest confectionery business in EMEA. We have a leading 30% share in the UK, the world's second largest confectionery market. CTB's products are chocolate and sugar confectionery, under brand names including Cadbury, Trebor, Bassett, Maynards, and Halls. In 2005 we acquired the fast-growing Green & Black's brand of luxury organic chocolate.

In Continental Europe, where our main markets are France, Iberia and Poland, we primarily sell gum and sugar confectionery. France is our largest operating unit and we have the leading position in the French confectionery market - the world's fifth largest - with a 17% share. We have a 55% share of the French gum market, principally under the Hollywood brand. We also have 19% of the sugar confectionery market (main brands: La Pie Qui Chante and Carambar), and sell chocolate, mainly under the Poulain brand. We also sell gum under the Trident brand in Spain, Portugal and Greece and Stimorol and V6 in Denmark, Belgium and Sweden. Our sugar confectionery brands include Halls in Spain, Greece and Italy. We sell chocolate under the Wedel and Cadbury brands in Poland, where we have a 18% market share, and also operate in the Netherlands and Switzerland.

Outside Continental Europe, our main markets in the EMEA region are Russia, Turkey, and markets in Africa and the Middle East. In Russia, we have a 28% share of the gum market through the Dirol brand, and we also sell medicated sugar confectionery under the Halls brand and chocolate under the Cadbury brand. We have the leading share of Turkey's sugar confectionery market at 62%, with brands including Kent, Missbon, Olips and Jelibon, and a top three position in gum under the brands Relax, Toybox and Nazar (14% share). We also sell chocolate under the Grand Chocolates and Bonibon brands.

We are the leading confectionery company in Africa and the Middle East. Our main confectionery operations are in Egypt, South Africa, and Nigeria where we have number one market shares. On 20 February 2006, we announced that we had increased our shareholding in Cadbury Nigeria to 50.02%.

For the purposes of these accounts Cadbury Nigeria is reported as an associate. Our Nigerian business sells sugar confectionery, gum and food beverages with market shares of 46%, 14% and 33% respectively. Its lead brands include Tom Tom, the biggest selling candy in Africa, Bournvita, and Bubba bubble gum. We also operate in Morocco, Lebanon, United Arab Emirates, Ghana and Kenya. In Egypt, we sell products under the Cadbury, Bim Bim and Chiclets brand names and have a 44% market share. In South Africa we sell confectionery products under the Cadbury and Halls brand names with a 44% and 19% market share respectively.

On 8 February 2006, we announced that we had agreed to buy Dan Products, which sells chewing gum business in South Africa, for £33 million.

Asia Pacific

This region comprises our confectionery operations principally in Australia, New Zealand, India, Japan, Malaysia, Indonesia, Thailand and China, and Schweppes Cottee's, an Australian beverages and foods business.

Australia and New Zealand are our largest markets in the region. Australia is the 11th largest confectionery market in the world. We are the leading company in the Australian confectionery market, with the number one position in chocolate with a 55% market share, and a strong presence in sugar confectionery. Our main chocolate brand in Australia is Cadbury. Our Australian beverages business's products are sold under the Schweppes, Cottee's, Solo, Spring Valley, Sunkist and Wave brand names. Schweppes Cottee's also has a license to manufacture, sell and distribute Pepsi, Red Bull, 7 UP, Mountain Dew and Gatorade. In Australia, we both manufacture, distribute and market our own products and manufacture concentrate and bottle product for other manufacturers. In New Zealand, our brands include Cadbury and Moro, and we have a number one position in the confectionery market with a 43% share.

Our other significant markets in this region include India, Japan and Thailand. Our Indian business has a leading presence in chocolate with a 71% market share, and also sells sugar confectionery. Our Japanese business sells mainly gum under the Recaldent and Clorets brands, and has a number two market position with a 17% market share. We also have leading market shares in Thailand in gum and sugar confectionery at 59% and 32% respectively, and top three positions in chocolate, sugar confectionery and gum in China.

The Malaysian business is a prime example of Smart Variety, with the successful introduction of chocolate products from Australia and New Zealand helping to take us to a leadership position in chocolate, with a market share of 24%. In gum, we have introduced Dentyne from Thailand, adding 9% to our share of the gum market during 2005.