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Lotte group set to acquire Wedel in Poland from Kraft

By Jane Byrne , 28-Jun-2010
Last updated on 02-Jul-2010 at 14:04 GMT

Ending months of speculation, Asian confectionery giant Lotte Group will acquire the Wedel business in Poland from Kraft Foods, subject to regulatory approval.

Kraft has been forced to sell the Polish business under EU competition rules as part of its Cadbury takeover in February. The 150-year-old confectioner is Poland’s oldest chocolate brand and became part of the Cadbury Corporation in 1999.

The sale, which is subject to approval by the European Commission, includes the E. Wedel business, its related brands and a manufacturing facility in Warsaw.

And approximately 1,000 Cadbury Wedel employees will transfer to Lotte Group.

Kraft said it will keep the remaining Cadbury business in Poland, including the Halls brand and other non-E. Wedel-branded chocolate and sugar confectionery products sold in Poland as well as two manufacturing plants in Skarbimierz.

And the US group added that, if deemed acceptable by the regulators, it will also retain a third Cadbury plant in Bielany Wroclawskie.

When asked by ConfectioneryNews.com about the duration of the deliberations with the Lotte group, a Kraft spokesperson said the company was not disclosing such information at this stage.

Surprise move

Jonathan Thomas, principal marketing analyst at Leatherhead Food Research, expressed some surprise at the announcement, referring to the fact that the Lotte group had not been cited as a potential candidate in the run up to the deal.

However, he noted that the Asian confectionery manufacturer has publically stated its intention to increase its share of global confectionery sales by 20 per cent in the next few years, and this latest move “will go some way towards achieving this.”

The acquisition of Belgian firm Guylian in mid-2008 for €105m spring boarded the Lotte group into the European premium chocolate sector.

Polish promise

And Thomas told this publication that Poland remains a growing market for chocolate products, with the more than six kg per capita consumption ranking above the regional average.

“Once the economic situation improves, I think the trend towards higher quality premium chocolate will resume, and Lotte’s Guylian brand may benefit from this,” continued the analyst, who maintains that the Eastern European confectionery market has considerable potential to expand further.

Kraft’s Romanian business Kandia-Excelent, with an annual chocolate production capacity of 20,000 tonnes, is also on the block – again a consequence of EU takeover rules.

However, conjecture on the Kandia sale has been somewhat absent in comparison to the speculation that surrounded the Wedel deal. Kraft said that an announcement on the Romanian business is pending.

The multinational Lotte Group, with headquarters in Tokyo, has annual sales of approximately $40bn (€32bn). Founded in 1948 as a chewing gum company, it currently operates in a variety of sectors, including food and confectionery, retail, travel and tourism, industrial chemicals and construction, and finance.

As the original business, confectionery is at the core of the Lotte Group's operations and its confectionery portfolio includes leading Asian brands, such as Xylitol, Koala March and Ghana. It is the largest chewing gum manufacturer in Asia and third largest in the world

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