Strategic Decisions: Vision into Action and Beyond 16 September 2009 Welcome • Refer you to our forward looking statements • Operating under the UK Takeover Code • Unable to repeat or update near-term targets or growth expectations • All our conversations with the market will need to be monitored by an approved financial adviser Todd Stitzer Chief Executive Officer 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 our ability to execute • Delivering on our Vision into Action targets • Well positioned to capitalise on future growth opportunities Our Vision into Action sets clear goals Performance Scorecard 4-6% organic revenue growth Total confectionery share gain Mid-teens margins by 2011 Strong dividend growth Priorities Growth Efficiency Capabilities Improved Return on Capital Efficient balance sheet Sustainability
Over the last five years revenue growth has been strong Cadbury 5-year CAGR 6. 3% pa 7. 2% 6. 4% 7. 2% 6. 9% 4. 0% Market 5-year CAGR 5. 3% pa 2004 2005 2006 2007 2008 Note: Growth rates are rebased to prior period exchange rates, and exclude Australia Beverages At the same time our market share has significantly increased Global Confectionery Share +100bps share gain 10. 3% 9. 3% 2003 Source: Euromonitor, Historic regional / global values are the aggregation of local currency country data at current prices converted into the common currency using fixed exchange rates. 008 We adapted well to challenges of cost inflation to sustain good levels of revenue growth Up 7. 2% Up 6. 4% Up 4. 0% 5% price mix Up 6. 9% Up 4% 6% price mix 6% price mix 2005 2006 2007 2008 H1 2009 Price Mix Volume 2007–09 objective has been to recover increased input costs Note: Growth rates are rebased to prior period exchange rates, and exclude Australia Beverages Despite higher prices, our commercial strengths ensure we continue to grow market share Growing H1 2009 Market Share 50% share growth >25 bps 25% Declining 5% share declining >25 bps Source: IRI/Nielsen and company analysis Long-term trend for good growth in confectionery 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 future revenue growth and market share gains * Euromonitor 2008 Future growth is expected to be driven by higher 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 economic growth • Relevant innovation is expected to build per capita consumption Our key emerging markets are expected to grow over 10%* in next three years • Increased penetration of higher value brands * Euromonitor 2008 What key strategic choices are we making to drive growth and market share gains? Route to Market Emerging markets Marketing & Innovation White space What key strategic choices are we making to drive growth and market share gains? Route to Market Emerging markets Marketing & Innovation White space
Strength of our Routes to Market represents a key competitive advantage • Significant proportion of confectionery is sold through the small format traditional trade • Around 50% of products sold through traditional trade • Rises to around 80% in emerging markets • Even more important for higher margin gum • Investment in Route to Market sustains a competitive advantage • Creates barriers to new market entrants • Increases impact of sales and merchandising activities • Underpins strong positions and leading market shares Case study Transformation of our UK Route to Market
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 resource deployed 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 Our first half 2009 growth in the UK benefited from the increased focus on impulse Market performance • Category grew 2% • Cadbury grew 14% • Market share up 210bps ? 50m evenue from new products in first half 2009 revenue growth +17% Q1 +12% Q2 +230 bps share gain in impulse Overtook Mars as the number one supplier to impulse +14% H1 Improved performance in ‘independents’ was reflected in our 2008 trophy cabinet Outstanding UK performance helped drive a strong chocolate performance Group chocolate revenue growth by quarter – 2009 +13% +10% +7% Q1 Q2 H1 Case study Mexico and Brazil #1 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 1 • Sales force calls directly on 220,000 stores • Around 45,000 check-outs: 45% of modern trade • 70% market share* in gum * Source: Nielsen Other Route to Market initiatives included… India South Africa Turkey Increase direct distribution and investment in sales and merchandising capabilities Invest to target key congregation points with increased distribution and coverage H1 2009 revenue up 20% H1 2009 revenue up 17% YTD May 2009 gum market share* Integration of Kent and Intergum sales teams up 320bps Further opportunities exist to strengthen competitive advantage * Source: Nielsen
What key strategic choices are we making to drive growth and market share gains? Route to Market Emerging markets Marketing & Innovation White space Sustained growth in emerging markets Cadbury 5-year CAGR 12. 0% pa +13% +14% +12% +9% +12% Market 5-year CAGR* 9. 8% pa 2004 2005 2006 2007 2008 Double digit compound average growth over last 5 years * Source: Euromonitor 2008 Emerging market growth Emerging market contribution to revenue growth in H1 2009 Share of revenue Share of revenue growth 38% Up 7%* 62% 69% 31% Up 2%* Emerging markets Developed markets * Revenue growth in period Case study India • ? 00m business • Over 70% share1 of chocolate category • • • Chocolate drinks Small format indulgences Sharing products ? 97m Revenue 2004 – 2008 ?198m • ‘Pay day’ An indulgence to share with the family 04 05 06 07 08 Cadbury growth in India 20% pa* 1 Source: Nielsen * Revenue CAGR 2004-2008 Case study South America • ? 430m business • Leading gum brands • • • • Trident Beldent Chiclets Halls ?233m Revenue 2004 – 2008 ?430m • Leading candy brand • 80% of products sold through a fragmented impulse channel • Serving over 600,000 stores in the region 04 05 06 07 08 Cadbury growth in South America 17% pa* * Revenue CAGR 2004-2008 Case study
South Africa • ? 160m business • Leading shares in chocolate, gum and candy • Well positioned in both modern and traditional trade • Manufacturing footprint to support activities across Southern Africa Revenue 2004 – 2008 ?163m ?93m 04 05 06 07 08 Cadbury growth in South Africa 15% pa* * Revenue CAGR 2004-2008 What key strategic choices are we making to drive growth and market share gains? Route to Market Emerging markets Marketing & Innovation White space Since 2002 we have transformed our investments in marketing and innovation Marketing spend Science & Technology ?67m 13. 6% Innovation* ?584m 6. 2% ? 213m ?4m 02 08 02 08 02 06 07 08
Ongoing investment is driving volume growth * Share of additional revenue from new products and product extensions in total revenue World class brands and award winning marketing underpin investments in innovation Strong pipeline of chocolate innovation to support growth Cadbury market position* UK Australia 9 major markets India Ireland Poland South Africa Canada New Zealand France #1 #1 #1 #1 #1 #1 #3 #1 #6 Growth initiatives Fairtrade, innovations in CDM and countlines CDM relaunch Chocolate innovations Snack bars Chocolate innovations Wedel relaunch Efficiencies Various renovations CDM relaunch Drive share of new channels Euromonitor 2008 Building innovation momentum to capture share Large bags ?27m since April launch* Fun on the Farm Sub-brand growth +14% * Source: August YTD Gum growth driven by innovation Centre-filled and long-lasting gum um ing g ast ong-l 2006 L ed h launc ?200m global platform ?230m global platform Centre filled gum launched 2005 Gum pipeline focused on leveraging platform innovations
Cadbury market position* US Developed France Japan Canada Spain Mexico Emerging Brazil Argentina Turkey Russia #2 #1 #2 #1 #2 #1 #1 #1 #1 #2 Growth initiatives Platform innovation, core brand renovations and new products Continued roll-out of new platforms Continued roll-out of new platforms Continued roll-out of new platforms Various renovations and extensions Leverage new innovations Various platform extensions Continued roll-out of new platforms Platform extensions Continued roll-out of new platforms Renovation and platform extensions Invest behind stable route to market * Euromonitor 2008
Trident Layers • New platform in gum – initially targeted at the US • Positive response from the trade • In-store launch in September Building innovation momentum to capture share Chiclets Sugar-free gum market2 up 500bps Bubbaloo Cadbury India bubblegum share1 10% Trident Trident/Beldent franchise3 up 23% 1 Sourced from Nielsen, 2 Sourced from Euromonitor, 3 Revenue growth in HY 2009 Well positioned brands to capitalise on Candy market growth Cadbury market position* US Mexico Halls Brazil Venezuela Spain Canada Traditional bags Other #1 Roll-out of The National Confectionery Co.
Extend strong brands, rationalise weak SKU’s Eclairs renovation in India and China Halls Creamy Innovation New flavours Additional renovation and new formats Growth initiatives Indulgent * Euromonitor 2008 Capitalising on Candy innovations 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 well positioned to drive growth Strong innovation pipelines + + Marketing Capabilities Market Leading Positions = -6% Revenue Growth What key strategic choices are we making to drive growth and market share gains? Route to Market Emerging markets Marketing & Innovation White space Cadbury benefits from significant geographic 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 to market in many geographies – Innovation and category expansion to drive growth – Bolt-on acquisitions to strengthen brand portfolio and Route to Market
Case Study Pakistan Key highlights • Delivered strong growth as the business accelerated • Transition from candy-led to chocolate-led growth • Established leadership in chocolate with 30% share % 70 60 50 40 30 20 10 0 2005 Revenue Growth Cadbury Dairy Milk +76%1 Four brands contribute 86% of revenue Eclairs +36%1 Softmints +40%1 Perk +102%1 2006 Market * 2007 2008 Cadbury Pakistan Revenue growth CAGR 2004-2008 * Source: Euromonitor 2008, 1 Indian Sub-continent Population Pakistan Bangladesh Nepal Sri Lanka Bhutan 170 150 26 19 0. 7
US$ per capita consumption 1. 1 0. 6 0. 5 1. 8 1. 1 Existing Cadbury markets Adjacent market opportunities * Source: Euromonitor 2008 Southern Africa Population Angola Malawi Zambia Zimbabwe Namibia Botswana 18 17 13 12 2 2 US$ per capita consumption 0. 6 0. 2 0. 5 0. 4 2. 6 5. 0 Existing Cadbury markets Adjacent market opportunities * Source: Euromonitor 2008 South America Population Peru Chile Ecuador 29 17 14 US$ per capita consumption 13. 7 38. 7 12. 5 Existing Cadbury markets Adjacent market opportunities * Source: Euromonitor 2008
Category led white space opportunities can leverage our strongest chocolate markets Cadbury market position* UK Australia 9 major markets India Ireland Poland South Africa Canada New Zealand France #1 #1 #1 #1 #1 #1 #3 #1 #6 Gum White space opportunity Gum Gum Gum Gum Gum, Candy * Euromonitor 2008 Additional opportunities to leverage our strong gum positions in key emerging markets Cadbury market position* US Developed France Japan Spain Mexico Emerging Brazil Turkey Russia #2 #1 #2 #2 #1 #1 #1 #2 Chocolate Chocolate Chocolate Chocolate Chocolate Candy, chocolate White space opportunity Euromonitor 2008 Acquisition priorities • 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 Cadbury and Dan Products • Acquired the leading gum brand in South Africa • Successful integration drove gum share for last two years Kent and Intergum • Integration of leading Gum and Candy businesses in Turkey • Strong platform or growth in Middle East and former CIS The Natural Confectionery Co • Expanded business out of core Australian markets into the UK and Ireland driving average growth of 15% per annum • Further markets targeted in next two years Exploiting the breadth of our participation Leveraging our strengths into total confectionery positions Total Confectionery Strength Australia South Africa Canada UK Dual Category Strength Single Category Strength Entry Level Mexico Japan Brazil India US France Russia China 1 2 Category Participation * Euromonitor 2008 Painting the World Purple Global Chocolate: Countries where Cadbury revenues >? 5m Painting the World Purple Global Gum: Countries where Cadbury revenues >? 5m Painting the World Purple Global Candy: Countries where Cadbury revenues >? 5m Our efficiency priorities are delivering benefits in line with our expectations Sources of annual saving 100 % of expected annual savings Central costs, SG&A and outsourcing 50 Supply chain reconfiguration 0 2008 2009 2010 2011 Strong free cash flow 010+ free cash flow drivers Positives • Revenue growth & improving operating margin • Working capital movements • Declining restructuring spend through to 2011 • Lower capital expenditure 2007-09 free cash flow drivers Positives • Revenue growth & improving operating margin Negatives • Restructuring investments • Restructuringrelated working capital Vision into Action Performance Scorecard 4-6% organic revenue growth Total confectionery share gain Mid-teens margins by 2011 Strong dividend growth Sustainability Improved Return on Capital Efficient balance sheet
Well positioned to capitalise on revenue growth opportunities, sustain best-in-class margins whilst reinvesting in further efficiency initiatives Average annual growth 2004 – 2008 + + 6. 3% Revenue CAGR + 20bps 10% Global market share pa 40bps + Underlying operating margin pa Total shareholder return pa* Growth or change shown on a base business, constant currency basis * Past performance is not a guide to future performance
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 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 industry’s 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 forward looking statements.
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