Cadbury Schweppes is poised to acquire the family-owned Danish chewing gum business Dandy for GBP350 million. It may also buy US gum firm Adams from Pfizer, as part of its strategy to enter faster growing markets. However, it could now find itself battling with Wrigley in both the chewing gum and confectionery markets.
Confectionery and soft drinks giant Cadbury Schweppes is continuing its drive to expand into overseas markets by taking over Dandy. The chewing gum manufacturer, which produces brands such as Stimorol, is one of the leading producers in Europe.
Dandy occupies an important position in many fast growing markets - including Russia, where it has a well-developed distribution network. Its Stimorol brand targets young adults and is promoted through links with sports including skateboarding and snowboarding. Dandy is also involved in the distribution of Hollywood, a French chewing gum brand, which Cadbury acquired from Kraft Foods in 2000. The acquisition of Dandy should propel Cadbury Schweppes into a desirable position throughout most of Europe.
In recent years, Cadbury Schweppes has endeavored to move into faster growing markets than its traditional sugar confectionery and chocolate products. The anticipated takeover of Dandy fits into this strategy. Cadbury is also preparing an attempt to acquire Adams, a US confectionery manufacturer, from pharma group Pfizer. Adams produces the Trident and Dentyne brands, and is valued at around GBP2.8 billion.
Cadbury's move into chewing gum is simultaneous with Wrigley's diversification into sugar confectionery. Wrigley, which is a family-owned business like Dandy, controls about half of the world chewing gum market. The company recently announced its intention to begin the manufacture of small sweets, especially mints. As a result, Cadbury could be facing stiff competition in both markets.