The relaunch of the 1980s chocolate bar Wispa, combined with a powerful marketing campaign featuring a drumming gorilla, has ensured the recovery of Cadbury Schweppes' UK chocolate business this year.
The group, which is spinning off its US drinks division, yesterday raised its forecasts for confectionery and said it expected revenue growth for the full year to be at the top end of its 4-to-6 per cent target range.
Some 20 million Wispa bars have been sold since the product returned to the shelves in the summer after a four-year absence, and Cadbury has increased its market share of chocolate by 1 per cent over the last quarter.
Its Dairy Milk television advert, which features a gorilla enthusiastically drumming along to Phil Collins' "In the Air Tonight", has boosted sales after more than 10 million people viewed the video online.
The improvement comes after a poor summer last year, when Cadbury was hit by the recall of chocolate bars following a salmonella outbreak, for which the company was fined 1m in June. The group increased its marketing budget for confectionery by several million pounds this year in a bid to win back support for the brand.
The finance director, Ken Hanna, said yesterday that. along with its marketing campaign, Cadbury had also benefited from a vibrant chocolate industry, which has been innovating on products "and issuing lots of ads".
"The whole category is relatively buoyant," he said.
Mr Hanna added that although nobody was immune to a slowdown in consumer spending, "these are small- ticket indulgent treats" and should not be too badly affected. "There are concerns about obesity, but the UK public has shown itself to be disciplined over small bite-size treats," he added.
The chief executive, Todd Stitzer, added that he was confident that efficiency initiatives and the confectionery growth would give the group momentum next year despite the uncertain economic outlook and higher raw materials costs.
Cadbury has upped prices by a couple of pence across its product range due to the soaring costs of raw materials, particularly dairy products, but said the effect of this will not be seen until 2008.
Union leaders reacted angrily yesterday following the news that Cadbury was raising its guidance. Unite, which is campaigning against the company's plans to axe 500 jobs at its factory in Keynsham, said it showed that "moving production to Poland was completely unnecessary".
"This is a very successful company who are getting far too greedy," Unite's regional official, Lydia Hayes, said. "They are showing contempt for their workforce at a time when they are delivering so much for them." In June, Cadbury unveiled plans to cut 7,800 jobs and close 15 per cent of its factories worldwide.
Earlier this week the activist investor Nelson Peltz teamed up with the Qatar Investment Authority to increase his stake in the group from 3.4 per cent to just below 5 per cent, which analysts say will keep up pressure on Cadbury to improve its financial performance.
Cadbury said it was progressing on the demerger of its US beverages division, which has been renamed Dr Pepper Snapple, after plans for a sale were hampered by the collapse of the credit markets this summer.
Watch the advert here
Chocolate ad with no chocolate was a big hit
It has already achieved cult status, broken all download records and boosted the career of the musician Phil Collins. Cadbury's massively popular television advert featuring a gorilla playing the drums for Collins' track In the Air Tonight has also, more importantly for the company, boosted sales at the group.
The brainchild of Juan Cabral of the advertising agency Fallon, the ad is part of a 6.2m campaign from Cadbury and stars the US actor Garon Michael, who has something of a reputation as a primate having appeared in the films Congo, Instinct and Planet of the Apes.
Starting off as a 90-second television advert deliberately echoing the "glass and a half full" theme of Cadbury's Dairy Milk, it quickly attracted internet fans. There have been more than 600 postings of the ad and spoofs on YouTube and the videos have been viewed more than 10 million times online.
The ad, which doesn't even show any chocolate, is the first of a series from Fallon for Cadbury, with the aim of "making consumers smile". After its release, In the Air Tonight enjoyed a revival and is still at number 26 on the iTunes download chart.
Dairy Milk has been the leading chocolate brand since the 1920s. It has 10 per cent of market share with annual sales of more than 360m.Reuse content