Todd Stitzer has faced some fierce criticism in recent months as he looks to revitalise Cadbury Schweppes. Dean Best looks at why the man at the helm of the world’s largest confectioner had reason to smile this week.
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There was a more relaxed air around Cadbury Schweppes chief executive Todd Stitzer when he spoke to reporters in London on Tuesday (19 February).
Last summer, when Cadbury announced plans to revitalise the company, a tense Stitzer faced questions about why the company’s performance lagged behind its peers – and whether the management team was up to the job.
Since then, Stitzer has faced some more criticism, including fierce protest in the UK at plans to streamline its business in its home market. Activist investor Nelson Peltz, meanwhile, has been busy cranking up the pressure for improvement at the world’s largest confectioner.
This week, however, the 55-year-old kicked off his analysis with a joke that highlighted a new sense of optimism at the company.
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By GlobalData“In China, 2007 was the year of the snake; at Cadbury, it was the year of the gorilla,” he smiled, referring to the TV ad that has helped revive sales of Cadbury Dairy Milk in the UK. The brand’s recovery in the UK helped drive a 7% rise in the company’s global confectionery sales, a sign perhaps that Stitzer and his team may be getting to grips with the business.
Stitzer also issued a bullish message to Cadbury’s investors that the company can meet its margins targets. “We are on our way to delivering mid-teens margins by 2011,” Stitzer said.
Despite Cadbury’s upbeat results announcement, its shares fell more than 5% on Tuesday morning amid news that it would not return cash to shareholders when it demerges its beverages business in the Americas. There has also been a lot of debate in UK financial circles about whether Roger Carr, incoming chairman for Cadbury’s stand-alone confectionery unit, is the right man for the job.
Let’s be clear: Cadbury has had a rollercoaster couple of years and there is much work to be done to fully turn the business around and see it approaching the financial performance of rivals like Wrigley.
Nevertheless, Stitzer can rightly believe that, once Cadbury’s drinks unit is spun off, the strengths of the company’s confectionery business will emerge.
