You can tell a lot about the modern business, just by taking a look at words recently introduced to the dictionary, or by considering new phrases that suddenly seem to permeate conversation or media reports. An example of a new word that says it all is the verb “to google.” A phrase which seems to sum up the Anglo Saxon mentality of spend now, pay later is “retail therapy,” not new necessarily, but a phrase used a lot more often. Another phrase which seems to get bandied about more and more, is “better than chocolate”. Maybe its got something to do with the fall in the popularity of smoking in the UK, and maybe its got something to do with the media reflecting the views and sensibilities of females over males more often, but chocolate fast seems to becoming the yardstick by which all other pleasures are measured.
And while the dictionary becomes fatter with words for the modern era, we demand ever higher quality. The growing popularity of more expensive wines is well documented, and the UK consumer’s more exacting standards in food are obvious and well illustrated by the ever growing popularity of cooking TV programmes. Even the world of snacks has received the upmarket treatment, with Kettle’s leading the way, our taste in the no longer humble potato chip is decidedly “posh” these days.
And perhaps inevitably then, chocolate moves towards the luxury end of the market, with the media showing ever more interest in more expensive forms of the brown cocoa derivate product.
Perhaps it’s no surprise then, that Cadbury Schweppes saw a 13% rise in profits over the last year, with its recently bought subsidiary Green and Black, with its ‘oh so better than chocolate’ chocolate, enjoying a 49% rise in sales.
Globally, though it was the growing might of the drink Dr Pepper that was the main contributor to the rise in profits, as the company overtook Mars as the world’s number one in the sector.
The company is a lot more focused these days, having recently sold its European beverages arm for £1.3bn, with more sell offs planned. It’s using the money to plug its pension deficit and grow into developing markets.
But focus is all very well, but what about the dangers of putting all your eggs into one basket? If we are going to be a purest about this, the company should sell off its cash cow, the Dr Pepper business in the US, and just focus on chocolate. Indeed rumours have circulated that this is precisely what the company plans to do, but yesterday the company tried to distance itself from this speculation.
But before you conclude, as we nearly did, that you can predict a company’s profits just by looking at the dictionary of new phrases, spare a thought for Thorntons. Like for like sales at the retail chain in the first half were down 6.4%, with chief executive Peter Burdon talking about the worse conditions in living memory.
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