Vocabulary:

coalesce - объединяться, образовывать единое целое

visionary – мечтатель

serendipity - особая способность делать случайные изобретения

42. Cadbury Shakes up Its us Drinks

An overhaul of its American beverages business has helped Cadbury Schweppes take market share from its bigger rivals

For Jim Johnston, executive vice-presi­dent of sales for Cad­bury Schweppes Americas Beverages, there is an easy way to measure the company's transformation over the past two years: visit the local Wal-Mart.

Touring the soft drink sec­tion of the retailer's Plano, Texas, branch, near the headquarters of CSAB, Mr Johnston proudly shows off an entire aisle dedicated to the company's brands.

The company, part of UK-listed Cadbury, Schweppes, provides a case study for how a disparate collection of under-performing brands can be restructured into a powerful competitive force.

Today, CSAB is among the best-performing companies in the US beverage indus­try, gradually stealing mar­ket share from its big­ger rivals Coca-Cola and PepsiCo.

CSAB's success represents a sharp turnround from two years ago, when revenues and earnings were both in decline.

Reviving the company was crucial for Cadbury because it is the group's biggest source of profits - providing more than 40 per cent of the total last year - and second biggest source of sales, after European confectionery.

''Before recovery could be attempted, the group first had to identify the cause of CSAB's malaise. It con­cluded that there was little wrong with the company's products but their potential was being wasted by an inef­ficient business structure and poor execution.

The restructuring, com­pleted this year, has given the company greater bar­gaining power with retailers and given its brands access to a bigger, more powerful salesforce. Individually, most Cadbury brands are min­nows compared with those of Coke and Pepsi; together, they create a formidable portfolio.

Restructuring has brought increased efficiency, with cost savings projected to reach $120m a year. Headcount has been reduced by at least 250 and several surplus factories and offices have closed. Advertising spending has been cut by $35m by replacing multiple agencies with a single contract.

Perhaps the biggest bene­fit of restructuring, however, was the opportunity it pro­vided to change the culture of the company and shake up an underperforming man­agement. The overhaul was led by Gil Cassagne, pro­moted from head of the group's Asia-Pacific business to president of CSAB. "Of the company's top 160 managers, 60 are new to their positions," he says. "Restructuring has allowed us to set new standards in terms of performance and expectations."

In Mr Cassagne's first full year at the helm, sales increased by 2 per cent and operating profits by 5 per cent - and the positive trends have accelerated this year.

Despite its progress over the past two years, CSAB still faces tough challenges. Although Snapple has returned to growth following three years of stagnation, the brand continues to lose share of the iced tea market. And sales of 7-Up are still declining although the pace has slowed. The company is attempting to inject fresh life into both brands through increased advertis­ing and new, health-oriented products, including 7-Up Plus, a reduced-sugar drink with added fruit juice and vitamins.

Cadbury's strengthening of CSAB contrasts with its withdrawal from beverages elsewhere in the world. Last month, it sold the remainder of its European soft drinks business for €1.85bn ($2.2bn) to a private equity consor­tium led by Blackstone Group and Lion Capital. Cadbury had already sold much of its non-US beverage interests to Coca-Cola seven years ago. Following the lat­est disposal, the group remains active in only four drinks markets - the US, Canada, Mexico and Australia.

Some analysts have pre­dicted that Cadbury may eventually withdraw from beverages altogether, freeing the group to focus solely on confectionery - in particular its fast-growing chewing gum brands.

But, while ruling nothing out, Todd Stitzer, group chief executive, says he has no plans for more disposals. Selling the European bever­age business, which ac­counted for just 10 per cent of group sales, made sense, he argues, because it lacked the scale to compete effec­tively with Coke and Pepsi.

CSAB, in contrast, has a powerful 12 per cent of the $95bn US non-alcoholic bev­erage market and 17 per cent of the soft drink segment.

"Our European beverages are a good business but they need more critical mass and more investment," says Mr Stitzer.

"We already have that crit­ical mass in the US. The money we would have had to invest in Europe would be better invested in Amer­ica, where we can do it more efficiently."