Cadbury Schweppes is a global company which manufactures markets and distributes two closely products: beverage and confectionary, in almost 200 countries with over 36,000 employees world-wide. The headquarter is in London, the UK It is the world’s third largest soft drink company which has got bottle manufactures in 10 countries . It has a lot of brands that we are familiar with such as: Schweppes, 7-up, Dr. Pepper, Mott’s and Snapple in North America, and Spring Valley in Asian and Africa. It is also the world’s fourth largest confectionery company, which mainly supplies Cadbury, Trebor, Fry’s, Pascell, Red Tulip and Cottee’s.
Recently, it is not just presenting chocolate but also sugar and chewing gum. Main body History Cadbury Schweppes is merged by two companies which named Cadbury Ltd and Schweppes Ltd respectively, and listed on the London Stock Exchange in 1969. It continued the world-wide expandable programmes of these two companies. After 17 years, the company moved its American Depository Shares to the New York Stock Exchange under the ticker symbol “CSG” and just 3 years later, it was listed on the Melbourne Stock Exchange in Australia because of the fast growth of overseas business.
Until 1993, Cadbury Schweppes had achieved a market capitalisation of i?? 4. 3 billion. Development Jean Jacob Schweppes, which was born in Witzenhausen, Germany is the origin of Schweppes. It was opened as a sole trader in 1740 and entered into a partnership to expand the business and established a factory in London, England in1790. There was only one owner of Schweppes when it was sole trader and two for partnership. This situation led to small scale of Schweppes, which caused higher average cost than bigger company.
Therefore, the mainly objective of the sole trader and partnership Schweppes is to earn its living. It didn’t change a lot when it became partnership from sole trader. Owners, whatever only John or with his partner, had to take unlimited liability for their company, while they could get all the profits. However, there were still some differences between sole trader and partnership. Firstly, more money can be raised by two persons than one to expand and less risk had to afford when the business of Schweppes was fail.
Lastly, Jean and his partner had to make decisions together. Near 100 years later, Jean Jacob Schweppes became a limited company in 1885. In 1897, it is floated as a public company. It seems like that it was hard for Schweppes to be a limited company from a partnership business, which took 100 years, but much easier to expand to a public company from a limited company, which took only 12 years. Basically, the reason is that it costs a great deal of money to be a limited company and there were not enough assets when Schweppes was partnership.
Unfortunately, Schweppes did not make significant profit although it was popular and even was awarded the Royal Warrant by Queen Victoria. In other word, Schweppes is not a company which developed suddenly by catching good opportunities but it is a real branded company. There were a lot of benefits to be a limited company, for example, Schweppes was enabled to set up specialist department. The most advantage and difference to be a public company from a limited company is that shares sale.
When Schweppes became a public company, it was easy to fund money just by selling their shares if it needed for developing or promoting a new product. Disadvantages would be occurred, too. There would be more legal requirements with Acts for Schweppes and longer term for making a decision. John Cadbury opened a shop called Cadbury in 1824 with selling tea, coffee, hops and new sideline-cocoa and drinking chocolate, which he prepares himself. In order to expand, John took his brother into partnership in 1847. Cadbury developed into a private company in 1899 with 2,600 employees.
Cadbury developed step by step as Schweppes, from sole trader which is the simplest one to private limited company, but Schweppes reached to public limited company, it might because of the longer history of Schweppes. What we can find out easily is that it took much shorter period for Cadbury floated as private limited company than Schweppes. There were two reasons for that fast increasing of asset. One of them was that the UK government reduced tax on imported cocoa beans, which was for reducing the cost of the product, and brought products within the reach of a broader section of the British population.
Another one was that Cadbury received the first Royal Warrant as ‘manufacturers of cocoa and chocolate to Queen Victoria’. The sales of Cadbury could be promoted great because of the free but strong advertisement. Cadbury was a private limited company until the merger took place. 1969 was the most important year for both Schweppes and Cadbury, they merged together to create the third company called Cadbury Schweppes, which is multinational. There are several objectives for them to merger. Firstly, they can expand the business network.
Because these two companies supplied different types of products and got their own markets, once they merged, they can supply both types of the products, thus Schweppes and Cadbury increased their markets and made profits together. Since they merger, Cadbury Schweppes expand to world-wide much quickly. Its shares was listed in London Stock Exchange in 1969, then its ADS share issued on the NASDAQ United State soon and this share moved to New York Stock Exchange two years after, in 1989, its share also listed on the Melbourne Stock Exchange in Australia.
Compare with Schweppes, rapid international development can be seen easily. Timeout which is one chocolate launched by Cadbury in 1992 rolled out to more than 15 countries during the 1990’s. Secondly, they can increase their asset in order to grow the buying power. When Cadbury and Schweppes were two individual companies, they would not help each other free if one of them was lack of asset, thus they would loss a lot of opportunities to reach acquisitions. Merging make more relationship between Cadbury and Schweppes, there were more free to use asset belongs to both company.
Also, the larger amount asset would help them to acquire better brands. Plenty of evidences can be shown for this benefit, the obvious one is that Cadbury Schweppes acquired the Duffy-Mott company, which was the largest apple processors in the world in 1982. Thirdly, they can be economies of scale. Because their products are similar, it was easy to promote the business. For the internal economies of scale, when they were in common on the product, it was easier to produce new products together. Cadbury Schweppes can create new product like chocolate drink.
For external, being a multinational can get the lowest raw material among different countries and sell at highest profit in another country. The last point, merging is helpful to combat competitors. Cadbury Schweppes invested a great deal of money on brands DR Pepper and Seven Up to against Pepsico, and it spent 70,000,000 pounds in acquiring Lion Nathan Group which a bottle company of Pepsico. Those actions cost a large amount of money, which was not so easy to be achieved by the single company Schweppes.
However, there were some disadvantages, too. When Cadbury and Schweppes merged, there must have redundancies of employment, in this case, a lot of employees would loss their jobs. The different cultures of these two companies will be difficulties for communicating, because Cadbury was private limited company but Schweppes was public limited company. In other word, the structure of Schweppes was flatter than Cadbury’s and lower position staffs had more power than the staffs in Cadbury. It would take time to adapt this situation.