Brand power and determination.

• Position: Interview with Dominic Cadbury, Group Chief Executive of Cadbury Schweppes PLC - Special Section: Being a Global Leader - Interview

Brand Power And Determination

Directors & Boards: What is your competition in your product segments at the moment?

Dominic Cadbury: We're competing with a few real giants, who have tended to become even bigger giants. In beverages, we compete with Coca-Cola and PepsiCo, companies that are many times our size. The competition, though, runs the whole spectrum to much smaller operations than ours that may be producing single brands in a relatively small geographic area and are highly competitive in that area. The competition increasingly can be from private labels around the world - a smaller manufacturer that specializes in producing for a major supermarket group, such as a Sainsbury or Tesco in the U.K., or a Carrefour in Europe. They're cutting out considerable costs - marketing costs, distribution costs, selling costs - and becoming very powerful competitors in their own rights. That is something that has not been too big in the United States, but it is already a major factor in our markets in Europe, Canada, and Australia. In the years to come, private-label competition could easily grow in the U.S.

In confectionery, we have four major worldwide competitors. Philip Morris has recently come into the confectionery business, with the acquisition of Jacobs Suchard. Nestle acquired Roundtree, which was actually a bigger confectionery company than Nestle. But Nestle, with its ambitions to be a global confectionery player, had to buy Roundtree if it was going to fulfill that strategic objective. Mars, which is privately owned, is a global competitor, and there is Hershey, a very substantial company but, geographically, largely restricted to the U.S. The confectionery market is more evenly spread around than the beverage market.

D&B: How do you see that competition evolving in your businesses over the next 10 years?

Cadbury: Everybody's got their own guess, and I don't think it can be much more than a guess because too much happens too quickly that completely changes the tables. Who would have said that RJR Nabisco was going to turn from being, arguably, a company just as ambitious in global markets as Philip Morris is today into, in a matter of months, a totally different animal? Philip Morris wanted to be a major global competitor in coffee. It bought Suchard, which gave them that opportunity. It also took them into confectionery. Will they decide to be a global competitor in confectionery? If so, everybody knows that they've got the cash flow...