Annual Report and Accounts 2006

Introduction

Our principal businesses are confectionery and non-alcoholic beverages. We have the largest share of the global confectionery market with broad participation across its three categories of chocolate, gum and candy and by geography. In beverages, we have strong regional presences in North America and Australia.

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Origins and portfolio development

Our origins date back to the founding of Schweppes, a mineral water business, by Jacob Schweppes in 1783, and the opening of a shop which sold cocoa products by John Cadbury in 1824. The two businesses were merged in 1969 to create Cadbury Schweppes plc. Many of our key brands are long established, having been launched in the late 19th and early 20th centuries, most notably Cadbury Dairy Milk, Dr Pepper and Halls.

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Confectionery brands

Brand	Product	Date launched
Cadbury	Cocoa powder	1824
Bassett's	Candy	1842
Maynards	Candy	1880
Halls Cough Tablets	Cough drop	1893
Dentyne	Gum	1899
Cadbury Dairy Milk	Milk chocolate bar	1905
Chiclets	Sugar-coated gum	1914
Clorets	Breath freshener	1951
Stimorol	Gum	1956
Trident	Sugar-free gum	1962
Bubblicious	Bubble gum	1977
Sour Patch Kids	Candy	1985

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Beverages brands

Brand	Product	Date Launched
Schweppes	Carbonated water	1783
Mott's	Apple juice	1842
Schweppes Tonic Water	Quinine-based carbonated drink	1870
Dr Pepper	Carbonated soft drink	1885
7 UP	Carbonated soft drink	1929
Hawaiian Punch	Non-carbonated soft drink	1937
Clamato	Tomato-based drink	1969
Snapple	Non-carbonated soft drink	1972

Over the last 25 years we have significantly changed our geographic and product participation within the confectionery and beverages markets, mainly through a programme of acquisitions and disposals.

We have extended and strengthened our position in certain markets and categories where we believed we could generate faster growth at higher margins, and exited other markets and categories where we felt we had no sustainable competitive advantage and where a sale created value for our shareowners.

The most significant strategic moves over this period have been:

• 1986 and 1987 - sale of the food and beverage and health & household divisions
• 1995 - purchase of Dr Pepper/Seven Up, a carbonated soft drinks business mainly in the US
• 1997 - sale of Coca-Cola & Schweppes Beverages, a soft drink bottling operation, in the UK
• 1999 - sale of beverage brands in approximately 160 markets around the world
• 2000 - purchase of Snapple, a non-carbonated premium beverages business mainly in the US
• 2003 - purchase of the Adams confectionery business, a gum and medicated candy business with strong positions in North, Central and South America
• 2006 - sale of Europe Beverages
• 2006 - purchase of remaining 55% stake in Dr Pepper/Seven Up Bottling Group

Following the sale of Europe Beverages which completed on 2 February 2006, we now have four regional operating units: Americas Beverages; Americas Confectionery; Europe Middle East and Africa (EMEA), which sells confectionery; and Asia Pacific, selling both beverages and confectionery.

In 2006, we purchased a number of US bottling businesses to strengthen our route-to-market for our US beverages business. Our confectionery acquisitions in 2006 are discussed overleaf.

In October 2005, we announced that we intended to dispose of a number of small non-core businesses and brands with estimated proceeds of between £250 million and £300 million. We sold Holland House Cooking Wines in 2005, and Grandma's Molasses in early 2006. The combined proceeds were £37 million. In April 2006, we sold Slush Puppie for £13 million, and in August 2006, we completed the sale of Bromor Foods, our South African beverages business for ZAR 1,160 billion (£109 million). We have also announced that we intend to sell the Monkhill and Allan Candy confectionery businesses, which are based in the UK and Canada respectively, and the Cottee's Foods jams, marmalades and toppings business in Australia.

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