morgan stanley global consumer...

Morgan Stanley Global

Consumer Conference

Todd Stitzer

3 November, 2004

3

Changing Times, Constant Values

AGENDA

• Advantaged business model

• Update on progress against goals and priorities

4

Long Established Brands

1927

1871

17831885

19051905

1824

5

Portfolio Development

• Business significantly strengthened through M&A

• Acquired

- Snapple (2000)

- Hollywood (2000)

- Orangina (2001)

- Dandy (2002)

- Adams (2003)

• Sold

- Beverage operations in over 160 countries (1999)

6

Strong Positions in all Geographies and Product Categories

Hershey

Mars

Wrigley

Nestle

CS

23.0%

19.9%

5.7%

5.3%

5.2%

Share (%)N.America

CS

Nestle

Kraft

Mars

Hershey

Wrigley

16.4%

8.6%

4.3%

2.8%

2.7%

1.8%

Share (%)Latin.America

CS

Nestle

Mars

Ferrero

Kraft

Wrigley

10.3%

10.1%

8.0%

7.3%

7.1%

4.4%

Share (%)EMEA

Lotte

CS

Meiji

Nestle

Mars

Perfetti

11.5%

8.8%

5.0%

4.5%

3.9%

3.7%

Share (%)Asia Pacific

Chocolate

Sugar

Gum

Total Confectionery

#1 and #2 share positions in

top confectionery markets

Source: Euromonitor 2003/2002

14

15

29

23

7

Multi-Category Participation

UK

France

Spain

Poland

S.Africa

US

Canada

Mexico

Brazil

Australia

Japan

Thailand

India

Chocolate Sugar GumKey Markets

EMEA

Americas

Asia Pac

8

Focusing our Beverage Investments

still

carbonate

0%

20%

40%

60%

80%

100%

1997 2003

still

carbonate

Sales Contribution by Product • Focus on Americas, Europe,

Australia

• Acquisitions broadened product

portfolio in scale markets

• CSD positions: Number 2

- France, Australia

• CSD positions: strong number 3:

- US, Mexico, Canada, Spain

9

Advantaged Business Model

• Attractive and growing markets

• Expandable consumption

• Strong positions

• Impulse categories less exposed to retail consolidation

• High barriers to entry

Attractive and Resilient Returns

10

Organisational Change

• Comprehensive structural and leadership change

• Consolidated operational structure

• Increased scale of each regional operating unit

• Separated supply chain management from commercial

management

11

Our Goals and Priorities

5. Reinforce reputation with

employees and society

• Ratchet up innovation

• Hone people and systems capabilities

4. Ensure our capabilities are

best in class

• Integrate North America Beverages

• Integrate Europe Beverages

3. Profitably secure and grow

regional beverages share

• Integrate Adams and “Beat the Model”

• Execute “Smart Variety”

2. Profitably and significantly

increase global

confectionery share

• Deliver annual contract

• Execute “Fuel for Growth”

1. Deliver superior

shareowner performance

• Motivate, develop & reward our people

• Continue high CSR standards

12

TSR Performance

* All assuming constant currencies 5

Peer Group TSR Performance 2004 Year to Date

-20%

-10%

0%

10%

20%

30%

40%

Cok

eUnileve

rColga

teNes

tle

CCE

Diage

oGile

tte

Cam

pbell

Dan

one

Heinz

CSM P&G

Con

agra

Kraf

t

Peps

iSa

ra le

e

CS

Allie

d

Scot

tish

& N

ewca

stle

Kello

gg

PBG

Wrigley

Reck

itt

ABF

Pern

odHer

shey

Tate

Lind

tTotal Shareowner Return

(%

)

Cadbury Schweppes

13

Financial Goals: 2004 - 2007

• Operating margin growth of 50 – 75* basis points pa

• Net sales value growth of 3% - 5%* pa

• Free cash flow of £1.5bn* over the period

* All assuming constant currencies 5

14

Execute “Fuel for Growth”

• Targeting a 10% reduction in direct and indirect costs

− 20% reduction in factory base

− 10% reduction in headcount

• Savings across: supply chain; commercial; back office

• Total cost of £900m over 4 years

− £450m in restructuring

− £450m in capital spend

• Up to a third of benefits reinvested in top line growth

• Operational gearing from volume growth

£400m pa reduction in costs by 2007

15

2003/4 Announced in 2003/4

completed (yet to be completed)

Factory closures 7 7

• All regions on track with their plans

• £25m of cost savings in 2003; £75m expected in 2004

Execute “Fuel For Growth”:Progress

• Creating manufacturing centres of excellence

• Shared Business Service Centre in US

16

Our Goals and Priorities

5. Reinforce reputation with

employees and society

• Ratchet up innovation

• Hone people and systems capabilities

4. Ensure our capabilities are

best in class

• Integrate North America Beverages

• Integrate Europe Beverages

3. Profitably secure and grow

regional beverages share

• Integrate Adams and “Beat the Model”

• Execute “Smart Variety”

2. Profitably and significantly

increase global

confectionery share

• Deliver annual contract

• Execute “Fuel for Growth”

1. Deliver superior

shareowner performance

• Motivate, develop & reward our people

• Continue high CSR standards

17

Confectionery Share Gains

EuropeUK: Cadbury Dairy Milk +1.5 ptsFrance: Poulain +1.0 ptsFrance: Hollywood + 2.6 pts Spain: Trident: +2.7 pts

North AmericaCan: Trident +4.4 ptsUS: Trident +0.6 ptsUS: Dentyne +0.3 ptsMexico: Trident +1.4 ptsMexico: Clorets + 0.3 pts

Latin AmericaBrazil: Trident +2.3 ptsBrazil: Clorets +0.6 ptsVenezuela: Trident +3.0 ptsColombia: Trident +3.4 pts

Asia Pacific: –Aus: CDM + 3.0 ptsJapan: Whiteen +1.2 ptsThailand: Trident +2.9 pts Thailand: Clorets + 3.1 pts

Souce: Nielsen/IRI for 2004 YTD

18

Adams Integration

• Performance in line with acquisition case

• Cost synergies being generated

− Country integrations ahead of schedule

− Transition from Pfizer systems in the US successful

• Beginning to capture revenue synergies

• Base business performance improved

19

Improvement in US Gum

90

95

100

105

110

115

120

Sales M

AT Dec 00 =

100

US Gum Sales

Dec 00 June 04

20

“Smart Variety”

• Powerful offer of local and regional brands

• “Smart Variety” leverages the advantage of

− Range of our products

− Geographic reach

− Strong routes to market

• Commercial and manufacturing benefits

21

Cadbury Dairy Milk - Australia

0

50

100

150

200

250

'99 '00 '01 '02 '03

Cadbury Scan Sales Growth

Values $ M

illion

+12%

+6%

+16%

+8%

H1 2004 +15%

22

Cadbury Dairy Milk - UK

23

Cadbury Dairy Milk - UK

0%

5%

10%

15%

20%

25%

CDM growth in year pre- and post- relaunch

+14%

+22%

To Sept 2003 To Sept 2004

24

Masterbrand Share of Voice

11.5

22.6

0

5

10

15

20

25

Cadbury Master brand Share of Voice in Chocolate

%age Share of

Voice

2003

2004 F'cast

25

Hollywood Masterbrand

26

Gum Share in France

51.0

45.3

5.7

51.0

47.0

4.0

52.9

49.9

3.0

Wrigley’s

- Freedent

- Other brands

48.3

34.2

14.1

47.5

30.8

16.7

45.4

32.1

13.3

Others 0.7 1.5 1.7

2002 2003 2004 Ytd

Cadbury Schweppes

- Hollywood

- Other brands

Source : Nielsen Grocery – Market share in value

27

France Market Share

Nestlé : 11.4 %

Ferrero : 10.8 %

Kraft : 10.3 % Lindt : 7.7 %

Wrigley’s : 7.2 %

Mars : 6.1 %

Haribo : 2.5 %

Others : 16.3 %

PLB : 9.9 % Cadbury : 17.8 %

Source : Nielsen Grocery 2003 – Market shares in value

28

Multi-Category Promotion

29

Smart Variety in Gum

France: Hollywood Spain: Trident

30

Smart Variety in Gum

31

Smart Variety with Halls

32

Smart Variety in Sugar

33

The Natural Confectionery Range

34

Our Goals and Priorities

5. Reinforce reputation with

employees and society

• Ratchet up innovation

• Hone people and systems capabilities

4. Ensure our capabilities are

best in class

• Integrate North America Beverages

• Integrate Europe Beverages

3. Profitably secure and grow

regional beverages share

• Integrate Adams and “Beat the Model”

• Execute “Smart Variety”

2. Profitably and significantly

increase global

confectionery share

• Deliver annual contract

• Execute “Fuel for Growth”

1. Deliver superior

shareowner performance

• Motivate, develop & reward our people

• Continue high CSR standards

35

Continued Recovery in Dr Pepper

IH ‘03 2H ‘03 IH 2004

Y-o-Y

Chg (%

)

-4.0%

-2.0%

0.0%

2.0%

4.0%

36

Growth in Diets

• CSAB has 6 of the top 10 non-

cola diet brands in the US

• 23% growth in diet CSDs led

by Dr Pepper and Diet Rite

• Under represented versus the

market30%+9%Total Market

22%+23%DPSU Diets

100%+64%Diet Rite

28%+33%Diet A&W

30%+0%Diet 7 UP

21%+18%Diet Dr Pepper

Diet % of Total

IH growthBrand

14%+70%Diet Sunkist

Source: DPSU/Nieslen/Beverage Digest

37

Flavour Brand Growth

-10%

-5%

0%

5%

10%

IH 03 2H 03 1H 04

YOY Volume Increase %

Flavours including 7UP

Flavours excluding 7UP

38

Re-focussing on non CSDs

39

European Beverages

• Poor summer weather – markets

down significantly

• Smooth transition of Orangina

plants into bottling joint venture

• New management team in place

in Germany

40

Our Goals and Priorities

5. Reinforce reputation with

employees and society

• Ratchet up innovation

• Hone people and systems capabilities

4. Ensure our capabilities are

best in class

• Integrate North America Beverages

• Integrate Europe Beverages

3. Profitably secure and grow

regional beverages share

• Integrate Adams and “Beat the Model”

• Execute “Smart Variety”

2. Profitably and significantly

increase global

confectionery share

• Deliver annual contract

• Execute “Fuel for Growth”

1. Deliver superior

shareowner performance

• Motivate, develop & reward our people

• Continue high CSR standards

41

Enhanced Commercial Capability

• Global Head of Science and Technology appointed

• Investment in:

- Consumer segmentation in confectionery

markets

- Innovation management software

42

Beverage Innovations

43

Masterbrand Innovation: Expanding Footprints

44

Masterbrand Innovation: Driving Value

£1.29 RSP £1.75 RSP

34p RSP

51p RSP

45p RSP

£2.25 RSP

45

Our Goals and Priorities

5. Reinforce reputation with

employees and society

• Ratchet up innovation

• Hone people and systems capabilities

4. Ensure our capabilities are

best in class

• Integrate North America Beverages

• Integrate Europe Beverages

3. Profitably secure and grow

regional beverages share

• Integrate Adams and “Beat the Model”

• Execute “Smart Variety”

2. Profitably and significantly

increase global

confectionery share

• Deliver annual contract

• Execute “Fuel for Growth”

1. Deliver superior

shareowner performance

• Motivate, develop & reward our people

• Continue high CSR standards

46

Share Price Performance

280

330

380

430

480

530

Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04

CS Share Price (p)

47

Corporate Social Responsibility

48

Cadbury Schweppes Today

• Advantaged Business Model

• Unique portfolio of brands

• Attractive, growing categories

• Strong platform to exploit potential

• Clear goals and priorities

1905 2005

49

This material may be deemed to include forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. These forward-looking statements are only predictions and you should not rely unduly on them. Actual results might differ materially from those projected in any such forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In evaluating forward-looking statements, which are generally identifiable by use of the words “may”, “will”, “should”, “expect”, “anticipate”, “estimate”, “believe”, “intend” or “project” or the negative of these words or other variations on these words or comparable terminology, you should consider various factors including the risks outlined in our Form 20-F filed with the SEC. Although we believe the expectations reflected in forward-looking statements are reasonable we cannot guarantee future results, levels of activity, performance or achievements. This presentation should be viewed in conjunction with our periodic interim and annual reports and registration statements filed with the Securities and Exchange Commission, copies of which are available from Cadbury Schweppes plc, 25 Berkeley Square, London W1J 6HB, UK.