Cadbury to spin off US drinks business as market share falls

Cadbury Schweppes's North American soft drinks business lost market share in the first quarter of this year, the company said yesterday as it gained shareholder approval to spin off the business.

The US beverage unit, which makes Dr Pepper, increased sales by an underlying 1 per cent but suffered a "modest" drop in market share. The drop was caused by a 4 per cent price rise in the first quarter, double the increase imposed by Coca-Cola and PepsiCo. Prices rose because of soaring costs for raw materials such as oil, aluminium for cans and corn syrup.

"The timing of this statement relative to the listing of the business cannot be considered helpful," Martin Deboo, an analyst at Investec Securities, said. Cadbury's intends to spin off the soft-drinks business as Dr Pepper Snapple next month to focus on confectionery.

The move was demanded last year by Nelson Peltz, the activist investor. New Cadbury shares are expected to start trading in London on 2 May, while shares in Dr Pepper Snapple will begin trading on 7 May.

John Sutherland, Cadbury's chairman, told shareholders at Cadbury's annual meeting in London that separating the businesses would cost Cadbury £265m.

The meeting was targeted by protesters opposing Cadbury's plan to close a plant in Keynsham, near Bristol, and move production to Poland with the loss of 500 jobs.

The company's shares fell 2.6 per cent to 563.5p, down 9.3 per cent this year, after it warned of a "challenging" economic outlook for the rest of the year. The food industry is facing an economic slowdown combined with soaring commodity prices. The price of cocoa, chocolate's key ingredient, has risen about 28 per cent in the past year.

The confectionery business reported a 7 per cent sales increase for the first quarter, the biggest jump for a decade. In the UK, sales rose 3 per cent but Cadbury lost Easter egg market share as it opted out of a price war.

Cadbury aims to increase confectionery sales by 4 to 6 per cent a year. It beat the target last year, helped by a television advertisement for Dairy Milk showing a gorilla drumming to "In the Air Tonight" by Phil Collins.

The ad helped revive sales after Dairy Milk and other bars were recalled because of salmonella poisoning in 2006.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us