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Cadbury invests in R&D to grow Asia sales

By Dominique Patton , 03-Aug-2006

Global confectionery maker Cadbury Schweppes has opened its first R&D centre in south-east Asia, as it seeks to drive growth in emerging markets like China, Malaysia, Thailand and Indonesia.

The new facility in Singapore, costing S$4.3 million (€2.1m), will develop new gums and hard candies, especially products sold in individual pieces, for these growing markets. Cadbury's Asia-Pacific sales are significantly smaller than its European and US turnover, accounting for 18 per cent of the group's revenue in 2005.


The mature Japan and Australia markets have generated most of the firm's sales in the region but younger, fast-growing markets are becoming more important for the group. According to a spokeswoman, Cadbury currently makes around one third of its total Asia Pacific sales from 'emerging markets', up from just 17 per cent four years ago.


In India, it is now the leading chocolate maker, with about 75 per cent market share, and seeking to increase consumption. In Thailand, it has won 60 per cent of the gum market in recent months, thanks to its sugar-free range, while its Halls registered growth of 34 per cent in south-east Asia during the first six months of this year thanks to local flavours like green tea and citrus lemongrass. Cadbury has also recently announced a distribution agreement with Kinh Do in Vietnam, which will launch its Clorets gum in the second half of the year, its first product in this market.


The group is keen to keep up its growth momentum in the area, where confectionery markets see annual increases of 8 per cent in 2005, compared with barely 5 per cent in developed markets, according to Euromonitor. The new facility in Singapore will employ 10 researchers to create products "of high quality and also highly affordable", said Cadbury Schweppes in its press release.


Asian consumers tend to buy sweets in individual pieces and Cadbury wants to increase its offering in this area, with the R&D investment helping this drive. "It's scientifically challenging to make superior quality pieces at an affordable price," said a spokeswoman.


The company cited a recent example of innovation from its Bombay R&D centre. Chocfuls, launched in India last month, is a caramel candy with a hard shell and soft chocolate centre that costs just 4 cents per piece. Cadbury has said that it wants 15 per cent of its global revenue to come from new products each year, although it has not yet reached this target.


The Singapore facility is close to the group's regional headquarters and will also network with other research organizations in the area. It has recently joined up with the National University of Singapore in a knowledge-sharing project that may see it develop novel food ingredients.

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