Memorandum submitted by Cadbury Schweppes
(O66)
EXECUTIVE SUMMARY
1. Cadbury Schweppes supports the submission
made by our trade body, the Biscuit, Cake, Chocolate and Confectionery
Association, which makes the following points about the options
for reform of the EU Sugar Regime:
(a)
The current regime is unsustainable and anomalous.
It leads to an EU price almost three times higher than the world
price (the UK price is higher still), which is driving British
jobs overseas.
(b)
Option 1—no change—is a misnomer, since
change is inevitable. But to attempt to maintain the current regime
would seriously damage British (including agricultural and processing)
interests.
(c)
Although there are attractions to Option 3, and this
should ultimately be the objective, it is not realistic to imagine
that this can be achieved at present. There are also concerns
over the unpredictability of the implications of rapid change
and the risk of some EU governments introducing protectionist
measures. It is also more attractive to larger companies than
to SMEs.
(d)
We therefore support Option 2, believing this to
be in the best interests of British consumers, farmers and industry,
and the economy generally.
(e)
However, there must be a clear timetable with a start
date as soon as possible, and the transition period should extend
for no more than five years.
(f)
Quotas should, as proposed, become tradeable, and
should be increased until they gradually become meaningless.
CADBURY SCHWEPPES'
PERSPECTIVE
2. Cadbury Schweppes is the largest confectionery
company headquartered in the EU, and as such is a major user of
sugar, purchasing over 200,000 tonnes per annum in Europe. In
fact, in several markets in the EU, including the UK, Cadbury
Schweppes is one of the largest users of sugar. We are therefore
directly affected by the EU Common Agricultural Policy and regulations
for the supply of sugar, which mean that at present we often have
to pay three times as much for sugar as our global competitors.
3. Cadbury Schweppes would therefore like
to take this opportunity to illustrate the impact of the current
regime and the need for reform (as proposed in Option 2) with
some examples from our own business' experience.
(a) We have experience of purchasing sugar
in many different markets and in our experience the absolute price
of UK sugar is higher than in many other European markets.
(b) Furthermore we have also seen a trend
of rising UK sugar prices against other European markets where
prices fall as well as rise. For example, over the past couple
of years French pricing has reduced, due to some limited competition,
whereas the UK sugar price has increased each year despite fluctuations
in currency and improvements in efficiency.
(c) EU enlargement will also draw attention
to the detrimental effect of the regime on companies such as Cadbury
Schweppes as it will highlight the increased prices companies
have to pay for sugar in the EU market. For example, on the date
that Poland accedes to the EU, Cadbury Wedel, our Polish operating
company will have to purchase sugar at substantially increased
prices.
CONCLUSION
4. Cadbury Schweppes is in favour of complete
liberalisation of the sugar regime, the Commission's third option,
but recognises the need for a transition period to allow for market
participants, and particularly farmers, to adjust to the new regime.
5. Accordingly, Cadbury Schweppes would
like to see the Commission's intermediate option, Option 2, carried
forward, but with a maximum transition period of five years.
1 April 2004
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