Cadbury hopeful Christmas will boost poor sales of chocolate

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The Independent Online

Cadbury Schweppes sought to allay concerns it is losing market share yesterday as the confectionery giant cut its growth forecasts for a second time this year.

Fears Cadbury could, like its Swiss rival Nestlé, see its market share slump were fuelled by the recent salmonella scare that forced the company to recall about 1 million chocolate bars.

However, the company yesterday blamed a weak third-quarter performance on hot weather in the UK during the period, and forecast strong sales of organic and new chocolate products over the key Christmas period would bolster it again.

Fears that the salmonella problem could trigger a market share collapse akin to Nestlé's decline over the past three years were exacerbated by a 5 per cent fall in Cadbury's revenue between July and September. Data from AC Nielsen also showed that in October Cadbury's share of the UK chocolate market slipped behind its main rival Mars for the first time in three years.

Ken Hanna, Cadbury's chief financial officer, said: "Our market share is more than double that of Nestlé. It is inappropriate to tag us in the same way." Mr Hanna said the sales decline was a result of the hot weather and a general slowdown on the UK high street affecting chocolate sales. "We are not in a declining trend and in the year to date we are comfortably ahead of Mars," he said. Cadbury remains by far the largest player in the overall UK confectionery market.

Nestlé has been a major concern in the UK chocolate market since it bought Rowntree in 1989 but has lost its way after a series of botched product launches. AC Nielsen, the market research firm, calculates that the Swiss giant's share of the UK chocolate market stands at 15.6 per cent compared with 19.9 per cent three years ago.

Since 2003, a string of Nestlé executives has tried to reinvigorate sales of products including the KitKat bar, Smarties and Yorkie bars. However, the launch of a new premium chocolate bar, Double Cream, failed. Its attempt to leverage its KitKat brand by launching a range of new flavours, such as lemon yoghurt, spectacularly backfired when sales of the traditional versions of the chocolate bar suffered.

Cadbury traditionally derives between 35 and 40 per cent of its sales from the Christmas period. Mr Hanna said sales would benefit from the launch of a dark-chocolate flake bar, a new range of premium chocolates called Cadbury Melts and continued strong growth at the company's organic chocolate division Green & Blacks.

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