Cadbury price strategy hits market share

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The Independent Online

Dairy Milk maker Cadbury Schweppes today said its share of the chocolate market suffered over Easter after it held back on price cuts.

The confectionery giant, which owns favourites such as Creme Egg and Green & Black's organic chocolate, is under pressure from rising raw material costs.

"Our decision to limit our participation in aggressive seasonal Easter discounting has impacted our share," the company said.

The company said it was "pleased" with its Easter performance despite an earlier holiday restricting the selling season, as UK revenues rose 3% in the three months to March.

A continued strong performance from gum brands such as Trident helped the overall group's confectionery revenues grow 7%, and the firm maintained its revenue guidance for 2008.

Cadbury has launched a new UK advert - featuring racing airport trucks - in an attempt to follow last year's gorilla drumming to Phil Collins, which became a cult hit.

But the flooding of its Sheffield factory in last summer's downpours - where Bassett's Liquorice Allsorts and Trebor mints are made - continues to affect its share of the UK market.

The company saw its biggest growth in confectionery sales in the Americas, led by an 8% rise in Halls cough sweets in the US during the cold winter months.

Although chief executive Todd Stitzer said the economic outlook for 2008 remained "challenging", he also praised the group's strong performance in emerging markets such as India and Russia.

The group's American beverages business, Dr Pepper Snapple, saw a modest decline in fizzy drinks sales over the period, with rising commodity costs again responsible for the decline.

The company is demerging the drinks business, which also makes 7Up, through a listing on the New York Stock Exchange in May. It attempted to sell the operation last year but changed its mind after the credit crunch hit the ability of potential buyers to raise finance.

The move will leave the remaining Cadbury operation as the world's largest confectionery business, with number one or number two positions in 20 of the world's 50 largest confectionery markets.

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