US-Cadbury sees healthy growth in US gum

CHICAGO (Reuters) - Cadbury Schweppes Plc (CBRY.L: Quote, Profile, Research, Stock Buzz), the world's largest confectionery group, is looking at its new liquid-filled and soft chewing gums to expand its market share as it fights against rival Wm. Wrigley Jr. Co. WWY.N, one of its top U.S. executives said on Wednesday.

London-based Cadbury said new products like liquid center-filled Trident Splash and Dentyne soft chew helped to grow its gum business by 13 percent last year against a U.S. gum market that saw overall growth of 7 percent.

"We feel we can sustain a good level of growth and innovation is all part of that growth," Jim Cali, president of commercial strategy for Cadbury Schweppes Americas confectionery, told the Reuters Food Summit in Chicago.

Cadbury, which became a truly global confectionery group when it bought Adams in 2003 for $4.2 billion, currently has a 30 percent share of the U.S. gum market against just over 60 percent for the world's biggest gum maker -- Chicago-based Wrigley.

"Sugar-free gum is growing at 10-12 percent against a U.S. gum category growing at 7 percent, and some 90 percent of our portfolio in the U.S. is in sugar-free gum," Cali said.

He pointed out Cadbury is growing market share in the U.S. largely at the expense of smaller gum players.

New products are now contributing to 15 percent of sales across Cadbury's Americas region rather than the 4 percent to 6 percent Adams saw before its takeover by Cadbury, and although Cali says the 20 percent growth last year of Trident across the region is probably unsustainable, there is still plenty of growth potential in North and South America.

"We feel pretty confident about our pipeline going forward, that is not just looking at flavor but also at technology as well," he added.

Cadbury's Hall's cough drops, which Cali describes as the biggest confectionery brand in the world, are benefiting as the sugar-free cough drop U.S. sector grows at 20 percent annually with Hall's having a 63 percent share of the category.

"Consumers are driving the sugar-free segment and we are giving them the choice. But our brands are still treats, it is not about having a bar of chocolate for dinner," Cali said.

Cadbury's Americas confectionery unit, which makes nearly 15 percent of group profit, beat the company's overall sales and margin targets with 2005 revenues up 10 percent and operating margins one percentage point ahead at 14 percent.

Overall, the group is aiming to raise sales 3 to 5 percent and operating margins by 50 to 70 basis points annually over the four years 2004-2007. In 2005, it showed a 6.3 percent sales rise but failed to reach its margin target due to higher energy and U.S. hurricane disruption costs at its drinks unit.

Sales in its Americas region have been