Download - 20979600 Cadbury Presentation by Todd Spitzer CEO at Sanford Bernstein Strategic Decisions Conference September 16 2009[1]

8/3/2019 20979600 Cadbury Presentation by Todd Spitzer CEO at Sanford Bernstein Strategic Decisions Conference September 16 2009[1]

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Strategic Decisions:Vision into Action and Beyond

16 September 2009


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Welcome

Refer you to our forward looking statements

Operating under the UK Takeover Code

Unable to repeat or update near-term targets orgrowth expectations

All our conversations with the market will need to

be monitored by an approved financial adviser


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Todd Stitzer

Chief Executive Officer


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Vision into Action and Beyond

Compelling strategy to drive growth

Bottom up plan of priorities and actions

Stretching but achievable goals Clear differentiation to enable success

Confectionery: an attractive growth market

Investing in and benefiting from growth markets

Delivering on our promises and confident in ourability to execute

Delivering on our Vision into Action targets

Well positioned to capitalise on future growthopportunities


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Our Vision in t o Act ion sets clear goals

Sustainability

Performance Scorecard

Growth Efficiency Capabilities

Priorities

Strong dividendgrowth

Efficient balancesheet

4-6% organic

revenue growth

Mid-teens margins

by 2011

Improved Return

on Capital

Total confectioneryshare gain


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Cadbury5-yearCAGR

6.3% pa

6.4%

4.0%

7.2%

2005 2006 2007 2008

6.9%

Note: Growth rates are rebased to prior periodexchange rates, and exclude Australia Beverages

Over the last five years revenue grow th hasbeen strong

Market5-yearCAGR

5.3% pa

7.2%

2004


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2003 2008

At the same time our market sharehas significantly increased

+100bpsshare

gain

Global Confectionery Share

Source: Euromonitor, Historic regional / global values are the aggregation of local currencycountry data at current prices converted into the common currency using fixed exchange rates.

9.3%

10.3%


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We adapted well to challenges of cost inflationto sustain good levels of revenue grow th

200709 objective has been to recover increased input costs

Price Mix Volume

Up 6.9%

2008

6%

pricemix

Up 4.0%

2006

Up 6.4%

2005

Up 7.2%

2007

5%

pricemix

H1 2009

Up 4%

6%

pricemix

Note: Growth rates are rebased to prior periodexchange rates, and exclude Australia Beverages


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Despite higher prices, our commercial strengthsensure we continue to grow market share

Grow

ing

Declining

H

12009Ma

rke

tShare 50%

25%

25%

Source: IRI/Nielsen and company analysis

sharegrowth

>25 bps

share

declining

>25 bps


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Long-term trend for good grow th inconfectionery looks set to continue

Spend on confectionery remains high, up 4%* in 2009

Our emerging markets are sustaining high levels of growth

Our category mix benefits from stay at home behaviour

Private label remains a small segment of the market

Long-term dynamics for growth in gum remain strong

Functional benefits of the product driving per capita use

Innovation set to broaden mass appeal of the product

Many of our strategic choices focus on driving futurerevenue growth and market share gains

* Euromonitor 2008


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Future growth is expected to be driven byhigher volumes and further share gains

Reduced need for significant price increases

Lower levels of input cost inflation

Stronger growth from traditional gum markets

Activity driven demand should respond to economicgrowth

Relevant innovation is expected to build per capitaconsumption

Our key emerging markets are expected to growover 10%* in next three years

Increased penetration of higher value brands

* Euromonitor 2008


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What key strategic choices are we makingto drive growth and market share gains?

Emerging markets

Marketing & Innovation

White space

Route to Market


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Emerging markets


White space

Route to Market


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Project Mercury

Refreshed talent and leadership

Put our best talent where they could create most value

Re-segmented our customer base

Redeployed resources to win

Independent channel: strongest selling resourcedeployed to influence change at outlet level

Grocery and Impulse channel: 3rd party field teams to

emphasise execution rather than selling

Fewer, better priority in store: 3 objectives per call

Case study

Trans fo rm a t ion o f ou r UK Rou t e t o Mark e t

f h lf h h b f d


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Our first half 2009 growth in the UK benefitedfrom the increased focus on impulse

Market performance

Category grew 2%

Cadbury grew 14%

Market share up 210bps

Overtook Mars as the number one supplier to impulse

+17%

+12%

+14%

Q1 Q2 H1

2009 revenue grow th

+230 bpsshare gain

in impulse

50mrevenue

from new

products in

first half

I d f i i d d t


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Improved performance in independents wasreflected in our 2008 trophy cabinet

O t t di UK f h l d d i


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Outstanding UK performance helped drive astrong chocolate performance

Group chocolate revenue growth by quarter - 2009

Q1 Q2 H1

+7%

+10%

+13%


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Case study

Mexico

Sales force calls directly on 350,000 stores

82% gum share* underpinned by

- 80% distribution in traditional trade

- 100% distribution in organised trade

Brazil

Sales force calls directly on 220,000 stores

Around 45,000 check-outs: 45% ofmodern trade

70% market share* in gum

#1

#1

Mex ico and Braz il

* Source: Nielsen


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Other Route to Market initiatives included

India

South Africa

Turkey

Further opportunities exist tostrengthen competitive advantage

Increase direct distribution andinvestment in sales and

merchandising capabilitiesup 20%

Invest to target key congregationpoints with increased distribution

and coverageup 17%

Integration of Kent

and Intergum sales teams up 320bps

H1 2009 revenue

H1 2009 revenue

YTD May 2009 gum market share*

* Source: Nielsen

What key strategic choices are we making


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Emerging markets


White space

Route to Market


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Sustained growth in emerging markets

Cadbury5-yearCAGR

12.0% pa+14%

+9%

+12% +12%

Market5-yearCAGR*

9.8% pa

+13%

2005 2006 2007 20082004

Double digit compound average growth over last 5 years

* Source: Euromonitor 2008


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Emerging market growth

Em er g i n g m a r k e t co n t r i b u t i o n t o r e v en u e g r o w t h i n H1 2 0 0 9

* Revenue growth in period

Share of revenue Share of revenue growth

31%

69%

Up

7% *

Up

2% *

Emerging markets Developed markets

62%

38%


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Case study

200m business

Over 70% share1 of chocolate

category

Chocolate drinks

Small format indulgences

Sharing products

Pay day

I n d i a

Cadbury growth in India 20% pa*

An indulgenceto share with

the family

198m

04 0705 06 08

97m

Revenue

2004 - 2008

* Revenue CAGR 2004-2008

1 Source: Nielsen


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Case study

Sou t h Am er i ca

Cadbury grow th in South America 17% pa*

430m business

Leading gum brands

Trident

Beldent

Chiclets

Leading candy brand

Halls

80% of products sold through afragmented impulse channel

Serving over 600,000 stores in

the region

430m

04 0705 06 08

233m

Revenue

2004 - 2008


C d


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Case study

Sou t h A f r i ca


Cadbury grow th in South Africa 15% pa*

160m business

Leading shares in

chocolate, gum and candy

Well positioned in bothmodern and traditionaltrade

Manufacturing footprint tosupport activities acrossSouthern Africa

163m

04 0705 06 08

93m

Revenue

2004 - 2008

What key strategic choices are we making


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Emerging markets


White space

Route to Market

Since 2002 we have transformed our


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Since 2002 we have transformed ourinvestments in marketing and innovation

Science & TechnologyMarketing spend Innovation*

Ongoing investment is driving volume grow th

213m

584m

4m

67m

13.6%

02 08 02 08 02 0806 07

6.2%

* Share of additional revenue from new products and product extensions in total revenue

World class brands and award winning


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World class brands and award w inningmarketing underpin investments in innovation

Strong pipeline of chocolate innovation to


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g p psupport growth

Fairtrade, innovations in CDMand countlines

CDM relaunch

Chocolate innovationsSnack bars

Chocolate innovations

Wedel relaunch

Efficiencies

Various renovations

CDM relaunch

Drive share of new channels

9majormarkets

UK #1

Australia #1

India #1

Ireland #1

Poland #1

SouthAfrica

#1

Canada #3

NewZealand

#1

France #6

Cadburymarket position*

Growthinitiatives

* Euromonitor 2008

Building innovation momentum to capture


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g pshare

Large bags27m since

April launch*

Fun on the FarmSub-brand

growth +14%

* Source: August YTD

Gum grow th driven by innovation


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Gum grow th driven by innovation

Cen t re - f i l l ed and l on g - last i ng gum

200m

globalplatform

230mglobal

platform

Centre filled gumlaunched 2005

Long-lastingg

um

launched2

006

Gum pipeline focused on leveraging


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Platform innovation, core brandrenovations and new products

Continued roll-out of

new platformsContinued roll-out of

new platforms

Continued roll-out ofnew platforms

Various renovationsand extensions

Leverage new innovationsVarious platform extensions

Continued roll-out of new platformsPlatform extensions

Continued roll-out ofnew platforms

Renovation andplatform extensions

Invest behind stableroute to market

Emerging

Developed

US #2

France #1

Japan #2

Canada #1

Spain #2

Mexico #1

Brazil #1

Argentina #1

Turkey #1

Russia #2

g gplatform innovations


Growthinitiatives

* Euromonitor 2008

Trident Layers


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Trident Layers

New platform in gum - initially targeted at the US

Positive response from the trade

In-store launch in September

Building innovation momentum


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to capture share

BubbalooCadbury India

bubblegumshare1 10%

ChicletsSugar-free

gum market2

up 500bps

TridentTrident/Beldent

franchise3

up 23%

1 Sourced from Nielsen, 2 Sourced from Euromonitor, 3 Revenue growth in HY 2009

Well positioned brands to capitalise on


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Halls Creamy

Innovation

New flavours

Additional renovation and newformats

Roll-out of The NationalConfectionery Co.

Extend strong brands, rationaliseweak SKUs

Eclairs renovation inIndia and China

#1

US

Mexico

Brazil

Venezuela

Spain

Canada

Traditionalbags

IndulgentOther

Halls

Candy market grow th


Growth initiatives

* Euromonitor 2008

Capitalising on Candy innovations


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Capitalising on Candy innovations

Halls Creamy


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Halls Creamy

Double-digit growth in the first half

Excellent trade buy-in

Encouraging repeat sales

280 bps share gain* in Brazil

* Source: Nielsen

Our commercial strengths leave us w elliti d t d i th


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positioned to drive growth

Strong innovation pipelines

Market Leading Positions

4-6% Revenue Growth

+

=

Marketing Capabilities

+

What key strategic choices are we makingt d i th d k t h i ?


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to drive growth and market share gains?

Emerging markets


White space

Route to Market

Cadbury benefits from significant geographicand category white space opportunities


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and category white space opportunities

Geographic

Cadbury has strong brand recognition in many

markets with weak local representation

Category

Opportunities to capitalise on strong routes tomarket in many geographies

Innovation and category expansion to drive growth

Bolt-on acquisitions to strengthen brand portfolio andRoute to Market

Case Study


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y

Four

brandscontribute

86% ofrevenue

Cadbury DairyMilk

+76% 1

Perk

+102% 1Softmints+40% 1

Eclairs

+36% 1

* Source: Euromonitor 2008, 1 Revenue growth CAGR 2004-2008

Key highlights

Delivered strong growth as the business accelerated

Transition from candy-led to chocolate-led growth

Established leadership in chocolate with 30% share

Pak is tan

0

10

20

30

40

50

60

70%

Revenue Growth

Market * Cadbury Pakistan2005 2006 2007 2008

Indian Sub-continent


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Existing Cadbury markets

Adjacent market opportunities

1.1

0.6

0.5

1.8

1.1

Pakistan 170

Bangladesh 150

Nepal 26

Sri Lanka 19

Bhutan 0.7

Population US$ per capitaconsumption


Southern Africa


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0.6

0.2

0.5

0.4

2.6

5.0

Angola 18

Malawi 17

Zambia 13

Zimbabwe 12

Namibia 2

Botswana 2



South America


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13.7

38.7

12.5

Peru 29

Chile 17

Ecuador 14



Category led white space opportunities canleverage our strongest chocolate markets


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leverage our strongest chocolate markets

9majorm

arkets

UK #1

Australia #1

India #1

Ireland #1

Poland #1

SouthAfrica

#1

Canada #3

NewZealand

#1

France #6


Gum

Gum

Gum

Gum

Gum, Candy

Gum

White spaceopportunity

* Euromonitor 2008

Additional opportunities to leverage ourstrong gum positions in key emerging markets


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Emer

ging

Develope

d

US #2

France #1

Japan #2

Spain #2

Mexico #1

Brazil #1

Turkey #1

Russia #2

strong gum positions in key emerging markets

* Euromonitor 2008


Chocolate

Chocolate

Chocolate

Chocolate

Chocolate

Candy, chocolate

White spaceopportunity

Acquisition priorities


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Bolt-on in nature

Likely to be emerging market focused

Objective to strengthen our

Route to market

Brand positions

Consumer relevant products or technologies

Earnings and Return on Invested Capital

accretive

Case Studies


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Cadbu r y and Dan Pr odu c ts

Ken t an d I n t e r g u m

Th e Natu r a l Con fec t i on ery Co

Acquired the leading gum brand in South Africa

Successful integration drove gum share for last two years

Integration of leading Gum and Candy businesses in Turkey

Strong platform for growth in Middle East and former CIS

Expanded business out of core Australian markets into theUK and Ireland driving average growth of 15% per annum

Further markets targeted in next two years

Exploiting the breadth of our participation


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Leverag ing ou r st reng t hs i n t o t o t a l con fect i one ry pos it i ons

* Euromonitor 2008

Total ConfectioneryStrength

Dual CategoryStrength

Single Category

Strength

Entry Level

1 2 3

Category Participation

South Africa

Canada

US

UK

France

Australia

MexicoBrazil

IndiaJapan

Russia

China

Painting the World Purple


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Globa l Choco la te : Coun t r ies w her e Cadbu ry r evenues > 5 m



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Globa l Gum : Coun t r i es w he re Cadbu r y r evenu es > 5 m



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Globa l Candy : Coun t r ies w her e Cadbu r y r evenu es > 5 m

Our efficiency priorities are deliveringbenefits in line w ith our expectations


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Sources of annual saving

0

50

100

2008 2009 2010 2011

Central costs, SG&Aand outsourcing

Supply chainreconfiguration

%o

fexpected

annualsavin

gs

Strong free cash flow


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2007-09 free cash flow drivers

Negatives

Restructuringinvestments

Restructuring-

related workingcapital

Positives

Revenue growth& improvingoperating margin

2010+ free cashflow drivers

Positives

Revenue growth &improving operatingmargin

Working capitalmovements

Decliningrestructuring spendthrough to 2011

Lower capital

expenditure

Vision into Action


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Well positioned to capitalise on revenue growthopportunities, sustain best-in-class margins whilst

reinvesting in further efficiency initiatives

Strong dividendgrowth

Efficient balancesheet

4-6% organic

revenue growth

Mid-teens margins

by 2011

Improved Return

on Capital

Total confectioneryshare gain

Performance Scorecard

Sustainability

Average annual grow th 2004 - 2008


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Underlying operating margin pa Total shareholder return pa*

Revenue CAGR Global market share pa

Growth or change shown on a base business, constant currency basis

* Past performance is not a guide to future performance

+20

bps+6.3%

+10%+40bps


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Except for historical information and discussions contained herein, statements contained in these

materials may constitute forward looking statements within the meaning of Section 27A of the US

Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as


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, , g ,

amended. Forward looking statements are generally identifiable by the fact that they do not relate only

to historical or current facts or by the use of the words may, will, should, plan, expect,anticipate, estimate, believe, intend, project, goal or target or the negative of these words

or other variations on these words or comparable terminology. Forward looking statements involve a

number of known and unknown risks, uncertainties and other factors that could cause our or our

industrys 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 such forwardlooking statements. These forward looking statements are based on numerous assumptions regarding

the present and future strategies of each business and the environment in which they will operate in the

future. In evaluating forward looking statements, you should consider general economic conditions in the

markets in which we operate, as well as the risk factors outlined in our Form 20-F filed with the US

Securities and Exchange Commission and posted on Cadbury plcs website www.cadbury.com. Thesematerials should be viewed in conjunction with our periodic half yearly and annual reports and other

filings filed with or furnished to the Securities and Exchange Commission, copies of which are available

from Cadbury plc, Cadbury House, Uxbridge Business Park, Sanderson Road, Uxbridge UB8 1DH, UK and

from the Securities and Exchange Commissions website at www.sec.gov. Cadbury plc does not

undertake publicly to update or revise any forward looking statement that may be made in thesematerials, whether as a result of new information, future events or otherwise. All subsequent oral or

written forward-looking statements attributable to Cadbury plc or any person acting on their behalf are

expressly qualified in their entirety by the cautionary statements above.
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