Internal Analysis Cadbury Schweppes

Internal Analysis

On 1969 Cadbury Schweppes was formed by the merger of the beverage company started by Jacob Schweppes in 1763 in Geneva (Switzerland) and the chocolate business started by John Cadbury in1824 in Birmingham (UK).

Schweppes was the 3rd competitor after Coca-Cola and PepsiCo and Cadbury was 4th in global chocolate business.

Cadbury Schweppes is focused in beverage and confectionery brands.

As a reminder, in the beverage market, Cadbury Schweppes had a N° 3 position in the US market with 9.5% SOM and lost SOM to Coca Cola (27.1%) and Pepsi 26.4% and Nestlé.

⇒In confectionery the company had made some non-chocolate acquisitions: Trebor on 1989, Bassett on 1989, Hollywood on 2000 (the first chewing gum acquisition) and Dandy on 2002(Danish gum company).

Also the company acquired some beverage brands, Carbonated Soft Drink (CSD) brands: Canada Dry and Sunkist on 1986, Dr. Pepper and Seven-Up on 1995, Orangina 2001; and non CSD brands: Mott’s on1982, Hawaiian Punch on 1999 and Snapple on 2000.

Cadbury Schweppes as a beverage company is present in North America, Europe and Australia. After 1995 with the acquisition of Dr. Pepper and Seven-Up the business had increased steadily but they had lost market share over the previous two years, also the company remained third in US soft drink business with 9.5%; Coca-Cola was in first position with 27.1% and PepsiCo was in second position with 26.4% of the total volume.

Meanwhile competition launched new products; Cadbury Schweppes only launched one new product: Dr.Pepper Fusion during the previous seven years, and analysts expected volumes to fall even more.

As a CSD company they covered Europe, Asia and Africa; and also Australia, Canada and Argentina.

⇒In the US market Cadbury Schweppes had sold the rights to its confectionery brands to Hershey in 1998.Worldwide operating margin declined from 13% in 1998 to 12% in 2002. In US market operating margin were 16% in 1998, projected to fall to 8% in 2002. Some analysts argued that Cadbury Schweppes had been under investing in its brands and they failed to innovate. Historically, Cadbury Schweppes had been managed as a decentralized company. In 2002 they had 98 manufacturing and bottling plants: 62 plants made confectionery and 36 bottled beverages.

Porter analysis

Rivalry among competing sellers

The rivalry among competitors in the non alcoholic beverage industry is very strong even though there are only 16 companies. Many reasons can account of its competitiveness; first companies in this sector are always looking to expand their business and reach new customers. This can happen by tapping a new market by making new drinks , or simply by mergers and acquisitions .Cadbury Schweppes is certainly no stranger to mergers since they have acquired various beverage companies raging from Dr Pepper /7 up , to Motts , to Snapple, . It is only recently, though that Cadbury Schweppes has started into making new drinks to keep with its competitors.

Coca Cola and Pepsi Co are clearly the biggest names in the industry, and it has been these two companies that have set the standard for the rest of the competitors.

Obviously the rivalry between these companies is quite fierce with no one letting the other tap into a market all by themselves. With businesses that keep expanding with new drinks and bigger mergers,

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