Cadbury set for £500m ad overhaul

The confectionery giant has fired the starting gun on a global agency rethink.

Cadbury-Schweppes is considering consolidating its global creative business, which is estimated to be worth around £500 million, into one holding company.

The confectionery and drinks giant has asked agency networks and holding companies to show how they would accommodate its brands to avoid conflict.

It has also asked them to demonstrate how such a move could provide cost savings.

Cadbury moved towards consolidation in 2002 when it handed Publicis the global creative task for its Cadbury confectionary brand in key markets including the UK, Australia, South Africa, India and Canada. However, Publicis' position on the Coca-Cola roster prevents it from working on Cadbury brands such as Schweppes, 7-Up and Dr Pepper, the majority of which are held by Young & Rubicam.

The remainder of the business is split between a number of networks including McCann Erickson, which is also on the Coca-Cola roster, while Nestle is a major Publicis client.

Talks are at an early stage, but agencies are working on proposals to show the advantages of consolidation. It is unlikely one agency network could handle the entire portfolio because of conflict issues, so Cadbury is considering a single holding company.

The initiative follows a period of cost-cutting at the company, which has seen it reduce its workforce by 10 per cent. The programme is dubbed "fuel for growth" within Cadbury and achieved £75 million in savings during 2004.

Media, which is handled by Starcom Motive in the UK, is so far unaffected by the review.

In 2003, the company's global sales rose 34.5 per cent to $11 billion, contributing to a 26 per cent growth in net income to $653 million. In December, it said it was on track to hit its financial targets for 2004, although it would be at the bottom of its expectations.

Cadbury did not return calls from Campaign.