Cadbury

Cadbury plc

Type	Public (LSE:  CBRY, NYSE:  CBY)
Industry	Confectionery and Soft drinks
Founded	Birmingham 1824
Headquarters	City of Westminster, London, England, United Kingdom
Key people	Roger Carr, Chairman Todd Stitzer, CEO
Products	List
Revenue	£5,384 million (2008)
Operating income	£648 million (2008)
Net income	£370 million (2008)
Employees	71,657 (2008)
Website	www.cadbury.com

Cadbury plc (LSE:  CBRY, NYSE:  CBY) is a British confectionery and beverage company with its headquarters in London, United Kingdom, and is the world's largest confectionery manufacturer. The firm was formerly known as "Cadbury Schweppes plc" before demerging in May 2008, separating its global confectionery business from its US beverage unit, which has been renamed Dr Pepper Snapple Group Inc. The company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It is headquartered in Mayfair, City of Westminster, Greater London.

History

Early history

In 1824, John Cadbury began vending tea, coffee, and (later) chocolate at Bull Street in Birmingham in the UK and sometimes in India. The company was later known as "Cadbury Brothers Limited".

After John Cadbury's retirement, his sons, Richard and George, opened a major new factory at Bournville, five miles south of the city. In 1893, George Cadbury bought 120 acres (0.5 km²) of land close to the works and planned, at his own expense, a model village which would 'alleviate the evils of modern more cramped living conditions'. By 1900 the estate included 313 cottages and houses set on 330 acres (1.3 km²) of land. As the Cadbury family were Quakers there were no Public houses in the estate; in fact, it was their Quaker beliefs that first led them to sell tea, coffee and cocoa as alternatives to alcohol.

After World War I, Cadbury Brothers Limited undertook a financial merger with J.S. Fry & Sons Limited, another chocolate manufacturer.

Merger

Cadbury merged with drinks company Schweppes to form Cadbury Schweppes in 1969.

Snapple, Mistic and Stewart's (formerly Cable Car Beverage) were sold by Triarc to Cadbury Schweppes in 2000 for $1.45 billion. In October of that same year, Cadbury Schweppes purchased Royal Crown from Triarc.

Demerger

In March 2007, it was revealed that Cadbury Schweppes was planning to split its business into two separate entities: one focusing on its main chocolate and confectionery market; the other on its US drinks business. The demerger took effect on 2 May 2008, with the drinks business becoming Dr. Pepper Snapple Group Inc. Cadbury is selling its Australian beverage unit to Asahi Breweries.

Recent developments

In October 2007, Cadbury announced the closure of the Keynsham chocolate factory, formerly part of Fry's. Between 500 and 700 jobs would be affected by this change. Production transferred to other plants in England and Poland.

In 2008 Monkhill Confectionery, the Own Label trading division of Cadbury Trebor Bassett (qv), was sold to Tangerine Confectionery for £58million cash. This sale included factories at Pontefract, Cleckheaton & York and a distribution centre near Chesterfield, and the transfer of around 800 employees.

In mid-2009 Cadbury replaced some of the cocoa butter in their chocolate products with palm oil. Despite claiming this was a response to consumer demand to improve taste and texture, there was no "new improved recipe" claim placed on the label. Consumer backlash was significant from environmentalists and chocolate lovers. By August, the company announced that it was reverting to the use of cocoa butter. In addition, they would source cocoa beans through Fair Trade channels. This turnaround was considered a significant victory for the power of the buying public and social media to influence big corporations.

On 7 September 2009 Kraft Foods made a £10.2 billion takeover bid for Cadbury. The offer was rejected, with Cadbury claiming that it undervalued the company.

Operations

United Kingdom

Cadbury plc also owns Trebor Bassett, Fry's, Maynards and Halls. The confectionery business in the UK is called Cadbury UK (formerly Cadbury Trebor Bassett) and, as of August 2004, had eight factories and 3,000 staff in the UK. Biscuits bearing the Cadbury brand, such as Cadbury Fingers, are produced under licence by Burton's Foods. Ice cream based on Cadbury products, like 99 Flake, is made under licence by Frederick's Dairies. Cadbury cakes and chocolate spread are manufactured under license by Premier Foods, but the cakes were originally part of Cadbury Foods Ltd with factories at Blackpole in Worcester and Moreton on the Wirral with distribution depots throughout the UK.

United States

Cadbury plc's presence in the United States consists of the confectionery unit Cadbury Adams, manufacturers of gum and mints but not chocolate. Cadbury merged with Peter Paul in 1978. Ten years later Hershey's acquired the chocolate business from Cadbury's. Accordingly, although the Cadbury group's chocolate products have been sold in the US since 1988 under the Cadbury name, the chocolate itself has been manufactured by Hershey's and can be found in Hershey's chocolate stores. Therefore, although some Cadbury products such as Whole Nut can be found in stores in the United States, the chocolate has a bitter taste compared to their counterparts sold in the United Kingdom. Prior to the May 2008 demerger, the North American business also contained beverage unit Cadbury Schweppes Americas Beverages. In 1982, Cadbury Schweppes purchased the Duffy-Mott Company.

Australia

Cadbury also operate a major factory in Tasmania, Australia. The factory only produces chocolate. It was once a popular tourist attraction and operated daily tours, however the factory ceased running tours mid-2008 citing health and safety reasons.

Executive compensation

In 2008 Todd Stitzer, Cadbury's CEO, was paid a £2,665,000 bonus. Combined with his annual salary of £985,000 and other payments of £448,000 this gives a total compensation of over £4 million.

Branding

Cadbury itself and its range of confectionery products were traditionally marketed with the Cadbury name being used in the possessive case, such as Cadbury's Creme Egg. In 2003, however, a corporate rebranding saw all lines bear the non-possessive Cadbury. The company's marketing materials now explicitly avoid references to the older possessive use of the trademark in relation to individual brands and the company itself.

Accounting

In May 2006, Cadbury Schweppes announced that it would be outsourcing its transactional accounting and order capture functions to Shared Business Services (SBS) centres run by a company called Genpact, (a businesses services provider) in India, China, and Romania. This was to affect all business units and be associated with U.S. and UK functions being transferred to India by the end of 2006, with all units transferred by mid-2008. Depending on the success of this move, other accounting Human Resources functions may follow. This development is likely to lead to the loss of several hundred jobs worldwide, but also to several hundred jobs being created, at lower salaries commensurate with wages paid in developing countries.

Products

Cadbury plc manufactures chocolates and sweets such as the popular Cadbury Dairy Milk, as well as a limited range of beverages in Australia.

Health and safety

2008

On 29 September 2008 Cadbury withdrew all of its 11 chocolate products made in its three Beijing factories, on suspicion of contamination with melamine. The recall affected the mainland China markets, Taiwan, Hong Kong and Australia. Products recalled included Dark Chocolate, a number of products in the 'Dairy Milk' range and Chocolate Éclairs.

2007 Recalls

On 10 February 2007, Cadbury announced they would be recalling a range of products due to a labelling error. The products were produced in a factory handling nuts, potential allergens, but this was not made clear on the packaging. As a precaution, all items were recalled.

On 14 September 2007, Cadbury Schweppes investigated a manufacturing error over allergy warning, recalling for the second time in 2 years thousands of chocolate bars. A Printing mistake at Somerdale factory resulted in the omission of nut allergy labels from 250g Dairy Milk Double Chocolate bars.

2006 Salmonella scare

On 19 January 2006, Cadbury Schweppes detected a rare strain of the Salmonella bacteria, affecting seven of its products, said to have been caused by a leaking pipe. The leak occurred at its Marlbrook plant, in Herefordshire, which produces chocolate crumb mixture; the mixture is then transported to factories at Bournville and Somerdale to be turned into milk chocolate.

Cadbury Schweppes did not officially notify the Food Standards Agency until Monday, 19 June, 2006, shortly after which it recalled more than a million chocolate bars.

In December 2006, the company announced that the cost of dealing with the contamination would reach £30 million.

In April 2007, Birmingham City Council announced that it would be prosecuting Cadbury Schweppes in relation to three alleged offences of breaching health and safety legislation. An investigation being carried out at that time by Herefordshire Council led to a further six charges being brought. The company pleaded guilty to all nine charges, and was fined £1 million at Birmingham Crown Court - the sentencing of both cases was brought together. Analysts have said the fine is not material to the group, with mitigating factors limiting the fine being that the company quickly admitted its guilt and said it had been mistaken that the infection did not pose a threat to health.

Theme parks and shops

There used to be Cadbury shops at theme parks in the UK. These included the Cadbury Castle at Chessington World of Adventures the Cadbury Sweet Shop at Thorpe Park and the Cadbury House at Alton Towers. All three of them were taken over by Nestlé. Cadbury shops can be located at local shopping centres such as, Lowry outlet mall or Manchester's trafford centre etc.

Cadbury Heroes sponsor Air at Alton Towers.