Annual Report and Accounts 2006
Goal 2
Profitably and significantly increase global confectionery share
Invest, innovate and execute
In confectionery, we continue to hold the leading share of the global market, with a 10% share, and in 2005 widened our lead against our nearest competitor by a further 30 basis points to 90 basis points.
Global confectionery market shares
| 2003 | 2004 | 2005 | |
|---|---|---|---|
| Cadbury Schweppes | 9.3% | 9.7% | 9.9% |
| Mars | 9.5% | 9.1% | 9.0% |
| Nestlé | 7.8% | 7.9% | 7.8% |
| Wrigley | 4.4% | 4.9% | 5.8% |
| Hershey | 5.8% | 5.5% | 5.5% |
| Ferrero | 4.3% | 4.4% | 4.4% |
| Kraft | 4.9% | 5.0% | 4.3% |
Source: Euromonitor 2005
In confectionery, like-for-like revenue growth was 4% with the impact of the difficult trading in the UK reducing growth by 2%. We grew or maintained our share in 13 of our top 20 markets which account for over 90% of our total confectionery revenues. Innovation again played a key role in driving growth as did emerging markets, which grew by 10%.
Our performance in gum was excellent with good performances in all regions contributing to 10% revenue growth. We continued to see strong share gains in the US with a 300 basis point gain giving us a record share of 32%. This share gain was driven by a combination of innovation behind Trident and the launch of a new brand Stride in June which by December had captured 2.9% of the US$3.6 billion US gum market.
In EMEA, the further roll-out of centre-filled gum and the launch of bottle gum across Europe benefited performance.
Centre-filled gum is a strong example of our ability to exploit our broad product range, geographic reach, routes to market and manufacturing capabilities under our Smart Variety growth initiative. It is now available in 13 countries worldwide under local and regional brands: Trident, Hollywood, Stimorol and Dirol. In 2006, it was launched in Russia, Spain, Portugal, Norway and Denmark and we launched new flavour variations in France, Greece, Sweden and North America.
In early 2007, centre-filled gum was one of two products we launched into the UK market under the Trident brand, the other being a soft-chew gum with a long-lasting flavour, Trident Soft, which uses the flavour encapsulation technology developed for Stride in the US.
Chocolate had a more difficult year given the impact of the product recall in the UK with revenues up 1%. Outside the UK, growth remained healthy at 5% driven by innovation in premium, wellbeing (dark chocolate and lower sugar) and affordable products.
Innovation included premium Eden chocolate in Australia, and affordable offers in South Africa, where Cadbury Dairy Milk grew 8% and in India, where our chocolate share reached 72%.
In the UK, we increased the rate of innovation and our marketing spend in the second half of the year, launching Cadbury Dairy Milk Melts, a premium indulgence treat, Cadbury Flake Dark, a dark chocolate addition to the Flake brand, and Cadbury Highlights, a no added sugar chocolate bar. We also relaunched Cadbury Snaps with new packaging and supported by a new marketing campaign. Our activity will continue in 2007 with strong marketing support for Creme Egg, Cadbury Dairy Milk, and Cadbury Flake. Green & Black's, our premium organic chocolate brand, continued to grow strongly, with revenues increasing by 20%.
In candy, our focus on affordable, quality products resulted in strong growth (+10%) in emerging markets, for example in India with the introduction of Cadbury Dairy Milk Eclairs Crunch. Similarly, in South Africa, Halls grew by 31% with the launch of new affordable products, and performance also remained strong in Latin America. However, total candy performance was impacted by weaker results from Halls in the US, due to lower demand during the cough and cold season, and from a decline in non-core brands. As a result, overall candy revenues were flat.
Leverage Smart Variety
We made a number of confectionery acquisitions in 2006, in higher-growth emerging markets. We bought South Africa's leading gum business, Dan Products, giving us a strong market share position across all three confectionery categories of chocolate, gum and candy. We also purchased a further 30% of our Turkish confectionery business and moved to majority ownership of our Nigerian business.
We also announced our intention to sell two non-core brands and businesses, Allan Candy in Canada and Monkhill in the UK. These disposals will further increase our focus on our core brands.