Workout: Cadbury Beverages

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Subject: Workout: Cadbury Beverages, Inc.

Introduction

Cadbury Beverages Inc. is in the beverages manufacturing division of Cadbury Schweppes PLC by the merger of Schweppes PLC and Cadbury in 1969. They would go on to acquire a few of Procter and Gamble brands such as Crush, Hires, and Sun-drop in 1989 and before that Canada Dry in 1986. They would have to eventually re launch the brands into the market because of how far behind they all were, mainly with the focus on the Crush brand.

By 1989 Cadbury Schweppes PLC would be one of the largest multinational companies and the world's third largest marketer behind Coca-cola and Pepsi. They would have worldwide sales of 4.6 Billion in 110 countries. Beverages would account for 60 percent of company sales and 53 percent of operating income. Also, at the same time Cadbury Beverages, Inc. was the fourth biggest soft drink marketer in US behind Coca-cola, Pepsi, and Dr. Pepper. The would have 3.4% market share in the carbonated soft drink market, where they would also be the market leader in a few soft drink categories.

The company would run into a few main problems when in the process of re-launching Crush. The main 3 would be to develop a base positioning, to build a cooperative relationship with bottlers, and to budget and advertising and budget program. To come up with the best solution it is easier to breakdown the profile of the company. Such analysis includes the industry structure and economics, buyer behavior, competition, and positioning. After the creation of the following company profile it will be much easier to present a recommendation.

Industry Structure/Economics

There are 3 different actors in the distribution of carbonated soft drinks those being concrete producers, bottlers, and retailers. The roles and margins of the concrete producers and bottlers differ between regular and diet soft drinks. There are about 40 concrete manufacturers in the US, but only 3 of them (Coca-cola, Pepsi, Dr. Pepper) account for 82 percent of industry sales. When it comes to the bottlers there are around one thousand of them in the US that are either owned by a concrete producer, or franchised. When a bottler is franchised they are given exclusivity rights for a certain territory, but cannot sell a directly competitive brand.

Concrete manufacturers mainly just create basic flavors while typically arriving at a gross profit of 86% (regular) and 87% (diet). When taking off most expenses that occur the net profit is 16% (regular) and 30% (diet). Bottlers on the other hand convert basic flavor in the soft drinks and package them up in bottles and cans. They usually have a gross profit of 46%