Soda for sale?

Scott Jagow Mar 14, 2007


SCOTT JAGOW: Shares of Cadbury Schweppes shot up yesterday. Billionaire Nelson Peltz bought a 3 percent stake. That’s making people think Cadbury might sell its American soft drinks business — 7-Up, Dr. Pepper, Snapple. We turn now to Harry Wallop, a business correspondent for the Daily Telegraph. Harry, so Peltz bought a small stake. Why is that fueling this speculation?

HARRY WALLOP: Well he has a track record in these things, I mean he bought a 5.5 percent stake in Heinz and with a relatively small stake in Heinz, he managed to get himself and an associate a seat on the board. He persuaded the company to spend more money on marketing, to shake up its balance sheet and the shares have risen by 25 percent.

JAGOW: Well if Cadbury did get rid of the soft drinks business, what would it focus on then?

WALLOP: Well it would be left with I suppose one of the great chocolate brands the world has ever seen — and I’m speaking as an Englishman here but Cadbury’s Dairy Milk is in many ways the father of all chocolate brands and it’s in many ways particularly strong in developing markets. I mean, for instance, India one of the fastest-growing markets in the world, I think it has a 70 percent market share in chocolate. And these markets are growing so much faster than American fizzy drinks. And indeed if they got rid of the soft drink business, that confectionary business would undoubtedly attract attention from private equity bidders, from Kraft, from Nestle and I suppose the argument goes, the company would increase its value from shareholders.

JAGOW: And what kind of Cadbury chocolate do you like? The chocolate eggs?

WALLOP: Well Cadbury’s Creme Eggs, yes to anyone who hasn’t had one, they are very strange. They’re filled with this overly-sweet goo, but anyone who’s brought up with them loves them. And they recently bought a little-known, I think you guys will start to know about it, organic and fair trade chocolate company called Green & Black’s. Very up-market, I mean it costs $3 for not a particularly large bar. It’s absolutely delicious and it’s been a huge success for the company.

JAGOW: OK Harry, thanks so much.

WALLOP: Great, all the best.

JAGOW: Harry Wallop of the Daily Telegraph in London.

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