Cadbury gets sweeter taste from Year of the Gorilla

By David Jones - Analysis

LONDON (Reuters) - Cadbury Schweppes' (CBRY.L) drum-playing gorilla ad in 2007 helped the world's largest confectionery group boost its underlying sales growth to become one of fastest growing sweet maker and rival gum maker Wrigley.

The London-based Cadbury saw a boost from its gorilla-based advertisements, which were first aired on August 31, 2007, for its Dairy Milk chocolate sales and helped push its underlying worldwide sweet sales up by 7 percent last year.

The advertisement which featured a gorilla playing the drums along to Phil Collins' song "In the Air Tonight", ran for 6-8 weeks and boosted Dairy Milk revenues by 9 percent when the ad campaign was running and by 5 percent over the whole of 2007.

"For the Chinese, 2007 was the year of the pig. For Cadbury, it was the year of the gorilla," Cadbury Schweppes Chief Executive Todd Stitzer told a 2007 results news conference.

The 55-year old Stitzer admitted he was a little skeptical when he first saw the advertisement featuring a man in a gorilla suit banging on drums, but he trusted the creativity of the campaign team, and its success means the ad makers were invited back for a new campaign to start next month.

The gorilla ad with its slow-building music soundtrack is now the most viewed advertisement ever on YouTube, the content-sharing website, and has also benefited from free "viral" distribution over the internet.

This helped Cadbury's chocolate sales grow at 6 percent in 2007, behind the 14 percent for its gums such as Trident, Hollywood and Stimorol, but still higher than its candy such as Halls cough drops which overall grew only 2 percent in 2007.

Stitzer pointed out the group's 7 percent confectionery revenue growth in 2007 was 30 percent above the average of industry market growth of 5.2 percent, and Cadbury's highest level of underlying sales growth for well over a decade.

In Britain, the ad boost came as Cadbury benefited from the relaunch of its Wispa chocolate bar and the introduction of Trident gum at the start of 2007, and by the end of the year it had taken a 10 percent share in a market virtually controlled by the world's biggest chewing gum maker Wm Wrigley Jr Co WWY.N.

For Cadbury, it is a welcome sign that its business is back on track after a British salmonella-related chocolate recall and a Nigerian accounting scandal scarred 2006, while a UK Trident chewing gum ad in early 2007 hit controversy.

Analysts said Cadbury's underlying sales growth is now reaching the 7-percent plus levels seen by gum maker Wrigley, and a long way ahead of U.S. chocolate group Hershey Co (HSY.N).

Britain is still Cadbury's biggest confectionery market and the campaign helped the group hold its lead in the chocolate market with a share of 31.3 percent by the end of 2007, ahead of privately-owned Mars and Nestle (NESN.VX).

By the end of March, Cadbury says a new series of ads will be launched with no gorilla, but the group hopes the magic from the same campaign ad team will work again for its products.

Earlier, Cadbury said there will be no cash return from the spin-off of its Dr Pepper Snapple North American drinks unit in the second quarter and this disappointment for investors sent its share down to close off 5.4 percent at 579-1/2 pence.

The group, which also makes Trebor mints and Bubblicious bubblegum, reported a 2 percent fall in 2007 underlying pretax profit to 915 million pounds ($1.78 billion).

($1=.5133 Pound)