Cadbury Beverages, Inc.

- Crush Brand

Cadbury marketing team decided to take up a challenge of relaunching the Crush,

Hires and Sun-Drop soft drink brands, recently acquired from Procter&Gamble
(October 1989). In the beginning, the marketing executives intended to focus on
relaunching the Crush brand on the soft drinks market. As a result, three main
issues need to be tackled. The key issues that were foreseen by Cadbury
executives were the rebuilding a cooperative relationship with bottlers, developing
a base brand positioning consistent with the brand equity, developing (objectives,
strategies) and budgeting the advertising and promotion program.

Cadbury Beverages, Inc. is the beverage division of Cadbury Schweppes PLC, a

major global soft drink and confectionery marketer, located in London, England;
worldwide headquarters are in Stamford, Connecticut. Company is the world’s first
soft drink maker and 4th largest soft drink marketer with a market share of 3.4% in
1989. In 1989, Cadbury Schweppes PLC acquired soft drink brand Crush from
Proctor & Gamble for $220 million and PLC had worldwide sales of $4.6 billion,
produced by product sales in more than 110 countries. Beverage accounted for
60% of world wide sales and 40% were confectionary. Crush offers several
beverages under the Cadbury Beverages, Inc. Typically they are sold in bottles
and cans, except for fountain service (e.g. McDonald’s). Beverages fall under the
following categories; Carbonates (Canady Dry, Sunkist, and Crush); Waters
(Schweppes, Canada Dry, Pure Spring) and Still Drinks/Juices (Oasis, Mott’s,
Clamato). Over the years, Cadbury Schweppes has established a diverse product
portfolio of water and juices in addition to its carbonates. Today, trailing only Coca-
Cola and PepsiCo, Cadbury Beverages, Inc. is the third largest soft drink marketer
in the world

In 1989, the carbonated soft drink industry had $43 billion in retail sales which
translates to 46.7 gallons of carbonated soft drinks. The production and distribution
of carbonated soft drinks in the US is composed of three major participants:
concentrate producers, bottlers and retail outlets. For regular soft drinks,
concentrate producers manufacture the basic flavors and sell them to bottlers who
add a sweetener to carbonated water and package the beverage in bottles and
cans. However for diet soft drinks, concentrate producers include an artificial
sweetener such as aspartame with their flavors. Coca Cola, PepsiCo and Dr
Pepper/Seven Up account for 82% of industry sales in the concentrate producer
segment. Bottlers are either owned by concentrate producers or franchised to sell
their brands. The principal retail channels for carbonated soft drinks are
supermarkets, convenience stores, vending machines, fountain service and
thousands of small retail outlets.

There are more than 900 registered brand names in the U.S. Top 10 brands are
marketed by the 3 leading U.S. soft drink companies: Coca-Cola, PepsiCo, and
Dr.Pepper/7Up. The cola flavor is the most popular soft drink consumers spend
their money on in the U.S. with 65.7% of market share. The orange flavor is in the
3rd position with only 3.9% market share. Currently, there are two segments of
orange category: Regular and Diet. Consumers drink more soft drinks than tap
water and purchasing any soft drinks are usually in supermarkets and are
unplanned. Consumers are sensitive to price promotions, in-store displays and all
point of sales promotions. Consumers are family households, 3-5 people in size,
and/or mothers with children under the age of 18, currently living at home.
Predominantly, teenagers consume Crush regularly and individuals over 25 years
of age consume more diet beverages while teenagers are heavy users of regular
soft drinks. The company’s geographic presence also places an important role in
segmenting its consumers creating different consumption patterns amongst
regions.

Cadbury Beverages PLC acquired rights to Sunkist, a competing orange soft drink.
Sunkist enjoys 14.4% of the orange soda market share, while Crush had 7.5%.
PepsiCo. And Coca-Cola make the two major competitors, Mandarin Orange Slice
and Minute Maid Orange which had market shares of 20.8% and 14.4%
respectively. These two top competitors accounted for 84% of all advertising in
this product category. Both brands have positioned themselves as fresh and
natural orange and better for you and have targeted the 18-24 year old market.
Both Sunkist and Crush have positioned themselves for consumption by a younger
audience. In re-launching Crush, Cadbury Beverages Inc. must position itself to
avoid cannibalization of Sunkist sales and to attract a greater share of the diet
market. Crush focuses on Teens and households with children living in it. There is
an opportunity for them to focus on their orange flavour as well as households with
children living in them.

Crush brand would move back to its traditional message and away from Sunkist.
Avoid cannibalization with Sunkist in positioning the Crush brand name on the
family with children at home segment. Through its history, the Crush brand has
been marketed to an all family target, ages 13-39, using a position based on
superior orange taste. This positioning and target had achieved a 22% market
share in 1985. It even was able to hold its ground against Minute Maid and Orange
Slice in 1986 with an 18% market share. In the same year, Sunkist went from 32%
to 20%. The Company would adjust ad/promotion in order to regain traditional
brand equity and market share. There is already high brand awareness so the
company would use limited advertising but emphasize both the push strategy
through merchandise promotion (end-of-aisle displays) and pull strategy of
consumer promotion (coupons). For relaunching the Crush brand, some specific
promotional techniques, such as coupons, special volume offers, contests, may be
employed to attract the maximum of customers. Both are important to get the
average supermarket purchaser to buy more Crush.

Question

1) Do Cadbury need to emphasize on merchandise promotion (in store

display) to enhance sales in retail shops as part of relaunching Crush?
Why?

2) What communication mix must Cadbury Beverages, Inc. employ in order to

successfully re-launch Crush soft drink?

3) Does Cadbury need to avoid direct competition from main players ( Pepsi )
and stay in niche market? What does effect to Cadbury’s Brand and Sales?