Being the world's largest confectioner doesn't mean you can't react nimbly to challenges in the marketplace. Cadbury Schweppes (NYSE:CSG), best known for brands such as 7-Up, Dr. Pepper, Trident gum, and Halls cough drops, was able to boost sales, profits, and market share through a combination of cost-cutting maneuvers and marketing advances for established products.
In its drinks segment, where it competes against Coke (NYSE:KO) and Pepsi (NYSE:PEP), sales grew by 4% and registered strong growth in Mexico and Australia. In the U.S., it was the launch of its new Cherry Vanilla Dr. Pepper and its 7% increase to top-line sales volume that allowed it to grab an additional 70 basis points of market share. The diet version of the concoction has received particular traction with bottlers and has been better received than its mystery-fruit Red Fusion drink a few years ago.
Cadbury owns some 23 brands that are positioned No. 1 or 2 in the 50 largest confectionery markets, while in soft drinks its portfolio consists of a number of No. 2 and 3 brands. Even some of its oldest names, like Dairy Milk, with a 100-year history, posted exceptional results with sales rising 9% in the first half of the year. Overall, confectionery sales were up 7%, fueled primarily by a 15% increase in Trident sales. Halls revenues grew by 17% because of a strong "cough and cold" season here in the U.S. Cadbury acquired the brands from Pfizer (NYSE:PFE) two years ago.
Cadbury has been making a strong showing this past year, and its stock has responded in kind, up about 15% in that time. According to some analysts, a portion of that rise has been fueled by rumors of a takeover bid, possibly by French yogurt maker Group Danone. However, since that company has been the subject of possible takeover rumor by Pepsi -- which only just shot it down -- the probability of a takeover remains slim. Still there's no mistaking the strong results the candy maker has turned in.
Back in March, Cadbury first reported the outcome of its efforts to turn itself around, and everyone was pleasantly surprised, except perhaps for Warren Buffett, who added the candy maker to his portfolio last year. With a stable of ably performing brands that are stripping market share from their rivals, Cadbury has a good prognosis for continuing its winning streak.
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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy.
