Cadbury Schweppes will axe a tenth of its workforce and 20% of its factories as part of a new global cost-cutting initiative dubbed Fuel for Growth.

The strategy, which is designed to reduce costs by £400m a year by 2007, will be complemented by ‘Smart Variety’, a new programme designed to accelerate sales growth through marketing and innovation, paid for by savings from Fuel for Growth.

Part of the programme includes cross-selling the company’s full range of chocolate, sugar confectionery, gum and beverages into countries where it is under-represented. The cuts include the previously announced closures of the Adams plant in Manchester, which makes Halls Lozenges, and the Trebor plant at Chesterfield, which makes Black Jacks and Fruit Salads.

Chief executive Todd Stitzer said the business had become inefficient due to the acquisition of 21 businesses over the last three years. “Nobody else has our combination of portfolio reach, range and route to market. It's now time to focus on exploiting their full potential.”

Merrill Lynch said it was “refreshed to see a management that recognises the reality of their marketplace”.