£500m Up for Grabs - Holding Companies Only Need Apply

28 January 2005

The global creative advertising account of confectionery and beverage giant Cadbury-Schweppes, said to be worth around £500 million ($941.65m; €719.86m), is reportedly out for tender.

And reports from within the inner sanctum say the business in its entirety could be placed with a single agency holding company.

Insiders say that a number of agency holding companies and networks have been invited to explain: (a) How they would construct Chinese walls to avoid account conflict; and (b) what cost savings might accrue from placing the business beneath a single umbrella.

A first tentative step toward consolidation of the Cadbury business was taken in 2002 when the Publicis Worldwide network assumed creative responsibility for the client's confectionery brands in five key international markets - Australia, Canada, India, South Africa and the UK.

Although there were no potential conflict issues affecting the confectionery range, the same would not be true of Cadbury's beverage brands, among them Schweppes, 7-Up and Dr Pepper.

All would clash dissonantly with Coca-Cola, also serviced by the PW network. But neither Leo Burnett nor Saatchi & Saatchi, sibling nexii within the Publicis Groupe holding company, have any such encumbrance.

The move by brand giants toward consolidating their business within a single holding company is gaining momentum. For example, Ford with WPP; while a similar move is currently contemplated by Colgate-Palmolive [WAMN: 09-Dec-04].

However, this trend, more than most, is destined for a limited shelf-life. The process is progressively self-defeating: the more clients that opt for a single holding group, the flimsier the Chinese walls.

UK-headquartered Cadbury has recently emerged from a cost-cutting purge - sanitized by the euphemistic title Fuel for Growth - which reduced its worldwide workforce by ten per cent. The company now seeks similar savings from consolidation of its advertising business.

Data sourced from BrandRepublic (UK); additional content by WARC staff