BRAND MASTERS: John Sunderland - Sweet success. Shareholder value means everything to Cadbury Schweppes' CEO, says Jane Bainbridge

A storm thunders overhead throughout my interview with John Sunderland but, unlike the weather, he remains calm. You feel he'd be a safe pair of hands in a crisis.

A storm thunders overhead throughout my interview with John Sunderland but, unlike the weather, he remains calm. You feel he'd be a safe pair of hands in a crisis.

Sunderland - a Cadbury Schweppes lifer - has been custodian of the Cadbury master brand since being made group chief executive in 1996. Despite his stint as marketing director of Schweppes UK, he is a man whose affinity lies more with the shareholder than the consumer.

Sunderland revolutionised the way Cadbury Schweppes operates when he introduced his 'Managing for Value' programme in 1997.

When I ask whether the scheme is still being followed, he pushes his notepad across the desk for me to see. There, embossed at the top, reads 'Managing for Value'. It says it on the stationery, so it must be true.

'It has been one of the most fundamental changes at Cadbury Schweppes for many years. It recognises the primacy of the shareholder. It focuses our attention on delivery of value to them.

'It provides management with certain tools to ensure we focus on value creation by improving the quality of our strategic analysis: identifying where optimum growth can be promoted and eliminating anything that is economically unprofitable.

'It requires management to focus on the cost of capital, not just profit and loss, to ensure we develop a positive return on all the capital we employ in the business.'



Greater accountability

Sunderland says employees have embraced this shift in culture to absolute accountability. 'I think people have felt part of a process that has moved Cadbury Schweppes into a more professional, value-creating company, the results of which manifest in our financial performance. It's great to be part of a successful team in business.'

'Managing for Value' has had major repercussions on the company's marketing, as only the most profitable brands receive promotional support. 'All it requires differently of marketing is that you allocate scarce resources - which includes marketing funds - to those parts of the business that can create the most value,' says Sunderland.

I suggest that this could be demoralising for a brand manager on a product deemed to be returning insufficient value, but Sunderland demurs.

'It means the manager has to work with all the other people in the business to get the brand for which he or she is responsible into a healthier state of profitability. If the brand - all the way from the manufacturer to the consumer's mouth - is not returning a profit to the business, then they have to work to ensure it does.

'Being a brand manager doesn't just mean going down to the agency and thinking about promotions and the consumer - it's also about profitability. All 'Managing for Value' has done is sharpen the allocation of resources. We spend more money on marketing than ever before. We are our brands, and investing in them is an ongoing responsibility.'

One area of marketing that has enjoyed a big chunk of support has been the sponsorship of Coronation Street. When the deal was first struck in 1996 at a cost of pounds 10m a year, it was the biggest TV sponsorship of its type.

'I think it's been brilliant. We have a unique positioning in confectionery. If you talk to someone about Cadbury, they immediately think 'chocolate'. The chocolate that goes into our solid bars, the chocolate that goes around brands such as Crunchie, the chocolate that is in some of our account lines such as Flake, the chocolate that surrounds all the different elements of our assortments, such as Roses.

'Only we can say to the consumer 'Cadbury' and have them think of our core product; our competition can't do that. If you say Nestle to someone, that can mean anything from dried milk to soup to a confectionery brand.

And Mars is a Mars Bar. So we have in Cadbury the potential to work the master brand in a unique way.

'Combining the nation's favourite TV programme with its favourite chocolate and using it with those claymatic chocolate characters enforces the consumer's reaction to the word 'Cadbury'.'

Is he a fan of the programme? 'I am actually, I don't see too much TV, but it's one you can dip into, so I see it from time to time. My mother has watched every episode for 40 years. I come from the north, so my identification with it goes back a long way.'



Leveraging the brand name

Marketing the Cadbury master brand is a strategy that has been criticised in some quarters. Detractors say it's the wrong focus in a market where consumers choose a product, not a brand. But Sunderland has no truck with this.

'It's a unique property of this company that our house-name strikes an immediate chord with the consumer. It communicates something they've grown up with from their earliest recollection of pleasurable food taste.

'We can leverage Cadbury chocolate. Is that a more economically efficient way of communicating the properties? I think it is. We don't withdraw completely from individual branding, and we can do both with the Coronation Street sponsorship.'

Sunderland has a persuasive manner in that classic chief executive mould.

He is smooth, charming and ruthless. You can see why the City likes him, although he claims that's not about personalities, just the company's results.

He also takes time to consider his answers. His responses are punctuated with long pauses and I doubt there are many journalists who have garnered a salacious soundbite from this man.

But when challenged on Cadbury's mixed history with NPD, he's straight on the attack. 'Right, you name me the most successful confectionery product launches that have remained in the market over the past five or ten years,' he demands.

Cornered, I suggest Time Out and Celebrations and then we get into an argument about whether Celebrations is a new product or a brand extension. I say it's a brand extension.

'I understand what you're saying,' he says - he's annoyed and mutters that he's letting me off - 'because they are in a way expressions of existing brands, but I think the concept deserves to be described as a new product by Mars, because it created a new type of eating occasion.

'But if you look back, the first point to make is the top brands today are the same as they were ten, 20 ... even 50 years ago. They have enormous longevity and because we invest in those franchises, it makes it difficult for anyone to attack or erode them.

'I think Cadbury's track record for new products which stick is probably the best. I mean, Time Out is a major new product. We've had other successes such as Fuse. I can't think of a Nestle product, and the only one to come from Mars is Celebrations.'

Cadbury's followed with Miniature Heroes, but it was second to market.

'It was the first time we were beaten to market in ten years. But I accept that Mars cleverly identified and created a niche in the market. Good competition is the healthiest thing for any business, because otherwise you get arrogant and cosy.'

Sunderland says that 'Managing for Value' in no way limits the future opportunities for NPD, but rather encourages it, as long as there is a clear sense of the long-term return of the product.

But other aspects of the future market are less clear-cut for Cadbury.

The media landscape for FMCG companies is changing and Sunderland thinks the days when TV ad slogans could unify a generation are gone.

'TV advertising's supremacy is gradually starting to wane, it's more expensive and less efficient and its fragmentation is clearly an issue.

We're all thinking about different ways to reach the consumer,' he says.

But he is not convinced that the internet is necessarily the way forward.

'There's no doubt it's going to be a feature of shopping. But if you go back to when catalogues were first introduced and people said they were wonderful - you get the catalogue posted to you, you choose the item in the luxury of your own home, you don't have the hassle of going out to the store, it's delivered to you - well, it never got more than 10% of the total retail market. I think the internet is a bit like that.'

With confectionery being more of an impulse buy, its place in online shopping is unclear. Sunderland says his company is developing the gifting opportunity, but that it will never be a mainstream activity. Future growth will rather come from Cadbury's core business and acquisitions.

'Our primary focus remains beverages and confectionery and we've benefited from having that focus for the past 15 years. All our acquisitions have been within those two categories, although we are prepared to look at slightly broader definitions.

'So, for example, we were traditionally only in carbonated soft drinks and have bought companies such as Hawaiian Punch and Snapple. And for years we were only a chocolate confectionery manufacturing company, which we broadened to include sugar confectionery.'

With the first Cadbury Cafe opening in the UK, Cadbury appears also to be expanding the more experiential side of the brand, in a similar vein to Unilever. But Sunderland says the two companies' attitudes toward such extensions are necessarily different.

'It's perfectly valid to say, 'we make washing powder - what's the end product? A clean shirt', and take the opportunity to take an active role in the entire supply chain. But what we sell are products that people eat for refreshment or enjoyment, which do not have any product service dimension because we provide the end-product. There are ways in which we can leverage the Cadbury brand, but that's a different point.'

'For example, we opened Cadbury World in Bournville ten years ago and we get half a million visitors a year. We have the benefit of a captive audience for an average of 75 minutes to tell the Cadbury story to. The Cadbury Cafe in Bath is a toe-in-the-water concept to broaden people's Cadbury chocolate experience.

'Providing services like Unilever is a tricky area in terms of satisfaction - just ask Gerald Corbett (formerly) of Railtrack. If someone comes into your house and doesn't clean it properly, the potential spin-off on the brand is potentially very damaging.'

Along with the weather, Railtrack's problems have stolen the headlines that day. He shows me The Telegraph's front page declaring Britain is crumbling, in a manner that suggests he shares its opinion, and we talk about management responsibility in light of Corbett's then unsuccessful attempt at resignation.

Sunderland believes senior management must accept the responsibility that is part and parcel of the job. But his position couldn't be less like Corbett's. Sunderland is enjoying Cadbury's successes and his role in orchestrating them.

The consumer hasn't featured heavily in Sunderland's vision and as the interview winds down, I can't help but ask whether he's a consumer of his own products. 'Oh yes, I eat chocolate every day. Do you want some?' he asks, opening his desk draw and handing over several bars from his personal hoard. 'Although we're all fighting the flab here.'

For a minute I wonder whether he's referring again to Cadbury's allocation of resources - but it seems Sunderland can identify with the average consumer after all.



THE CV

Born: August 14, 1945, Lancashire

Education: MA Social Sciences, St Andrew's University

Career: Joined Cadbury's research department in 1968, where he spent ten years before being appointed to the board of Cadbury Ireland in 1978. Three years later, he moved to the board of Cadbury Schweppes South Africa, before returning in 1983 as marketing director and then managing director of Schweppes Business Units, UK. In 1987, he became founding director of Coca-Cola & Schweppes Beverages. Two years later, he took on the role of managing director of the UK Sugar Confectionery division, subsequently Trebor Bassett. In 1996, he became group chief executive of Cadbury Schweppes, before becoming CEO of the company in 2000.

Family: Married with four children - three sons and a daughter

Lives: London and the Chilterns

Hobbies: Theatre, playing snooker with his sons.



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