Cadbury Schweppes has announced a major reorganisation. It will close 15% of its 70 confectionery factories worldwide by 2011 and reduce its workforce by 7,500. There are also plans to sell its US soft drinks unit.
Cadbury admitted that the confectionery side of the business was too complex and needed to be streamlined. The company is currently the world market leader in sales of sweets with 10%. just ahead of Mars of the US with 9%, followed by Swiss based Nestle and Wrigley also of the US. But it substantially lags behind other major manufacturers in terms of profit margins.
Announcing the cut backs, Cadbury said it had made a strong start to this year with confectionery sales 9% higher and drinks up 5% in the first-quarter.
The sale of the US soft drinks division is expected to take place this year and bring in as much as twelve billion euros with money to be returned to shareholders. The company confirmed it has received several expressions of interest. It sold its European drink unit in 2005.
Cadbury said in March that it planned to separate its drinks and confectionery businesses. It had been under pressure from shareholders to do that.
It is also looking to expand through acquisitions and in the last two weeks has agreed deals to buy companies in Turkey, Romania and Japan.