Cadbury pays pounds 46m to become Poland's chocolate leader

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CADBURY SCHWEPPES, the confectionery and soft drinks group, took a further bite out of Poland's fast-growing chocolate market yesterday when it paid Pepsico pounds 46m for Wedel, the country's leading brand of confectionery.

The deal makes Cadbury market leader in Poland's chocolate market with a share of 28 per cent. Chocolate sales in Poland have been growing at an annual rate of 17 per cent over the last seven years, making it one of Europe's fastest growing markets for chocolate bars.

Based in Warsaw, Wedel recorded sales of $80m in 1997. It employs 1,100 staff and last year relaunched its product range under the Wedded name. Cadbury claims that Wedel is "an icon" in Poland with a similar standing to Cadbury in the UK.

PepsiCo, which has invested almost $500 million in Poland since 1991, withdrew Wedel from the Warsaw Stock Exchange in April after increasing its stake to 99 per cent from 74 per cent.

The US company wanted to divest the chocolate and biscuits portions of Wedel to focus globally on its beverage and salty snack businesses.

This deal consolidates Cadbury's position in Poland where it started manufacturing chocolate in 1993, spending pounds 20m developing a greenfield site. The Wedel business will be run in conjunction with Cadbury Poland.

Cadbury has been investing heavily in new markets both in Europe and the Far East. It opened its Russian manufacturing site in July 1997 and has so far invested pounds 75m in the market, including a factory.

Sales have been affected by the recent economic turmoil in Russia, but Cadbury has said it is committed to the Russian market in the long term.

Cadbury has also invested pounds 20m in China, having entered the market in 1993.

Cadbury Schweppes director Ian Johnston said: "The combination of Cadbury and Wedel puts us in a strong position to generate added value for the group in this large developing market. The Wedel trade mark is a powerful asset in Poland, representing high quality, good value chocolate and is a good fit with our existing operation."

At the time of Cadbury's half-year results last month, Cadbury Schweppes' chief executive, John Sunderland, said the company was looking to take advantage of falling asset prices around the world. The Far East is seen as a possible target as prices fall as a result of the economic turmoil in the region.

Cadbury Schweppes shares closed 34.5p higher at 853.5p after the day's high of 856p.