Cadbury plans to streamline operations in Poland

By Hilary Davies

As a consequence of active acquisition and disposal over the last few years, crowned by the buy-up of chewing-gum producer Adams in March 2003, its organizational structure is now too complex and their cost base disproportionate for a company of its size, says Cadbury-Schweppes. The company is currently the world's number one in sugar and functional confectionery, number two in chewing gum and the world's third largest soft drinks company - hence the inauguration of a restructuring and cost-reduction program dubbed 'Fuel for Growth.'

The program, announced at the end of last week, plans to close around 29 percent of the company's 133 factories worldwide and lay off ten percent of its 55,000 employees. Half of the L900 million (zł.6.15 billion) to be invested in the program will go on restructuring; the remainder is for capital spending on top of ongoing capital spend requirements, which constitute about three percent of sales.

According to the PR head at Cadbury-Schweppes headquarters in Britain, Dora McCabe, says they can't rule out the possibility of factory closures and job-losses in Poland, where profits of zł.23.5 million last year were down on 2001's figures by more than zł.10 million. Cadbury which has been in Poland since 1993, currently has two factories, in Bielany Wrocławskie and Warsaw.

Up to one third of the savings expected to follow the 'Fuel for Growth' program will be reinvested in a parallel program 'Smart Variety', which aims to leverage the combination of the company's broad category participation, as well as accelerating sales growth through increased spending on marketing and innovation. Dora McCabe says that, "In Poland we'll be launching the 'Wedel Flake', which is basically a Polish version of the 'Cadbury Flake', a brand well-known in Britain."

Peter Knauer, president of Cadbury-Wedel, whose spending on advertising grew from seven percent to 19 percent of sales income between 1999 and 2002, told the press that the company, already the market leader, has plans to further strengthen its position.

Some analysts have suggested that the 'Smart Variety' program is a rerun of global consumer goods company Unilever's "Path to Growth' program initiated in 1999. But McCabe denies any similarities: "We are very different from Unilever because we have a lot of very powerful local brands," says McCabe, "Wedel being a very good example. And this is exactly what we want to build on."

It's a statement that clearly echoes CEO Todd Sitzer's comments to investors at a seminar on October 27. "Nobody else has our combination of portfolio reach, range and route to market."