Clever marketing ideas invite imitation, as Sweetmate Ltd has learned to its cost. When the company decided that the traditional approach to retailing sweets - in large glass jars - was no longer effective, it found customers agreed. The company built up a burgeoning point-of-sale sweets business by buying up other manufacturers' toffees, jelly babies, wine gums etc, and repackaging them in half pound bags. Four years ago they had 45% of the market, with their own labels accounting for another third. Big manufacturers like Trebor Bassett - the sugar confectionery division of Cadbury Schweppes, whose products Sweetmate was rebagging - could only muster 15%.
Trebor Bassett's managing director, John Sunderland, decided it was time to hit back. Today the market share position has been reversed, with Trebor Bassett having an estimated 42% share and Sweetmate down to only 17%. Sweetmate, in extremis, appealed to the Office of Fair Trading. Its allegations of predatory pricing have been rejected, though the OFT warned that it intends 'to monitor the state of competition in sugar confectionery'.
Dominic Cadbury, who heads the chocolates and soft drinks empire, entered sugar confectionery in 1989 when he rescued the Bassett Liquorice Allsorts business from the clutches of Procordia, the Swedish conglomerate. He then bought the privately-owned Trebor. Cadbury already owned Pascall and Murray. He transferred John Sunderland from the soft drinks side with a brief to bang all the businesses together.
Few businesses have been more dramatically rationalised. A dozen brand names were reduced to six. Sunderland closed three head offices and set up a new HQ in Hertfordshire. Three factories were also closed and production moved elsewhere. Profit margins have risen from about 6% to 11% while market share has increased to around 25%. For Sunderland, certainly, life is sweet.