Cadbury Schweppes will go head-to-head with its rival Wrigley in the UK chewing gum market after unveiling plans to launch its Trident brand in the UK next year.
The Trident brand has been used in the UK before but has not been a success. Nevertheless Cadbury believes it can take a significant bite out of its rival's market share.
Cadbury is the second-largest producer of chewing gum in the world, with a 26 per cent market share, but is not present in the UK. Wrigley, the owner of brands including Extra, Airwaves and Hubba Bubba, dominates the UK market with a 98 per cent market share. It calculates that around 28 million UK users regularly chew its gum.
Todd Stitzer, the Cadbury chief executive, dismissed the notion that the company is entering the market as a result of UK consumers turning their backs on unhealthy chocolate products. Cadbury is expecting strong sales of revamped chocolate products over Christmas to offset weak sales.
"There has been a furious banging of the drum about obesity but the global confectionery market is still growing," Mr Stitzer said. He said sales of its traditional chocolate products are still growing despite the popularity of organic and dark chocolate.
Mr Stitzer said the UK chewing gum sector declined last year but that the Trident launch should lead to growth of the overall market. He said that when the Italian confectioner Perfetti launched its chewing gum into France the overall market rose 16 per cent.
A Wrigley spokesman welcomed the competition but said Wrigley believes it has "clear competitive advantages" in the UK. Mr Stitzer admitted that Cadbury has not launched a product in a market where its rival is so dominant.
Mr Stitzer also said Cadbury would not look to undercut Wrigley on price. "We play the gum battle on innovation not on price cuts," he said. He declined to comment on the size of the marketing budget or the range of Trident flavours that Cadbury would launch into the UK market.
Cadbury has scrapped margin targets as a result of uncertainty over higher energy costs, but is committed to improving margins over time. The company doubled its annual dividend payment to better reflect its earnings growth and said that it would consider a share buyback programme in the future if it improves its credit rating and further reduces debt.
Mr Stitzer ruled out a break-up of the Cadbury Schweppes group, maintaining that the best structure for the company was to remain a global confectionery producer and a regional beverage business.Reuse content