Cheesed off – jingoism takes the spoils in the Cadbury battle

By Jane Byrne

- Last updated on GMT

Related tags: Cadbury, Stock market, Cadbury plc

Reports of my death have been greatly exaggerated, quipped Mark Twain. Predictions of the demise of Cadbury following the approval of Kraft’s offer are premature and are flawed by knee-jerk anti-Americanism.

Indeed some commentators seem to be at risk of becoming Fruit and Nut cases following the Cadbury board’s backing for the Kraft deal. There have been calls for the UK government to step in to Keep Cadbury British and warnings that the company’s brands and paternalistic Quaker heritage are at risk.

Cadbury is not the crown jewels or Buckingham Palace, and surely does not represent God, Queen and country – it is a maker of chocolate, when I last looked.

And don’t these union jack flag wavers drive German cars to Irish pubs for Belgian beers, then travel home and grab an Indian curry or a Turkish kebab on the way, to sit on Swedish furniture and watch American shows on a Japanese TV.

Is it because the Brits love their Milk Tray?

Or is it because the ‘oversexed, overpaid, overfed and over here’ yanks should not be allowed to come in and get their greedy, capitalistic and non-altruistic paws on a national treasure.

Public company

The confectionery company is listed on the London Stock Exchange, is publicly traded and therefore can potentially be bought by any company of any jurisdiction.

The Cadbury board said it would take an offer over 800 pence to bring the company to the table. Kraft paid up and the board agreed a merger. Business is business for Cadbury as well as Kraft.

Perhaps if the company had never been floated on the stock market it would still be independent. The great granddaughter of company founder George Cadbury called the buy out by a ‘plastic cheese company’ a ‘horror story’. But the Cadbury family sold up and thus forfeited their rights to direct the company.

Were there similar cries of anxiety over brand identity to be heard from these Keep Cadbury British advocates when UK companies similarly bought up US companies?

Moreover, wasn’t the French government mocked in the UK for being protectionist when it threatened to change the law to prevent PepsiCo taking over Danone?

Shareholder identity

And how British is Cadbury? Firstly, it has nearly 40,000 employees outside of the UK and is the second biggest confectionery company in the world after Mars.

If the flag wavers took a quick peek at Cadbury’s shareholder register they would see that three out of the top 10 investors are US institutions, with New Jersey-based Franklin Mutual Advisers the largest shareholder, at 7.67 per cent.

And while I am at it, most of the top 10 Cadbury shareholders are also investors in Kraft, which underscores the fact the investors are focused on hard nosed business practices and surely puts the lid on the notion than the founding Quaker ethics still inform company strategy.

There has been much spewing and spluttering that debt ridden Kraft will have to cut corners and shed UK jobs which were secure under an allegedly more employee friendly Cadbury.

But what of the cost cutting moves by Cadbury in 2007 when it shut factories, made job losses and relocated production to Poland? Where were the Quaker ideals then?

Kraft has insisted that production will remain in Britain and the US firm has even said it will try to save the factory near Bristol that Cadbury was planning to shut.

Ethical decisions

And to return to those altruistic aspirations that the fans of Cadbury keep harping on about: In terms of making difficult ethical decisions, it could be argued that the firm has a tendency to drag its heels, only jumping when it makes sound financial sense to do so.

Their transition to Fairtrade in 2009 was at a time when the world market price for cocoa was above the Fairtrade minimum, so it was a relatively inexpensive decision for Cadbury to make. This was in sharp contrast to 2000 when the Fairtrade minimum was over twice the world market price.

Meanwhile, Kraft has pledged to keep Cadbury's sourcing commitments.

Brands at risk claims

Creme Eggs – how will you eat yours in the future?

Apparently with Philadelphia light in the centre, argue the dissenting voices. But, wait a sec, Kraft has invested in the iconic Cadbury brands through the £11.7bn acquisition, and for a profit orientated company the usual line is ‘if it works don’t fix it.’

There is no benefit for the US food group in seeing a successful brand fail.

A ‘nasty’ foreign company knocking on the door does not have to mean corporate death for firms being swallowed up by the larger organisation. Belgium’s Interbrew acquired Britain’s Bass 10 years ago, and there were concerns at the time of the takeover about brewery closures but Bass beer continues to be brewed in Burton-upon-Trent, and the ailing formerly UK owned Mini has gone from strength to strength under BMW.

Is it death by cheese then for the beloved Dairy Milk and Curly Wurly? Not if Kraft does the maths. Cadbury is dead. Long live Cadbury.

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5 comments

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It couldn't be different, could it?

Posted by Luiz M. Garcia,

It is not Kraft that is taking Cadbury from UK. It was Cadbury´s board of directors that sealed it when they demerged the Beverage business instead of seeking for organically built growth . Cadbury will survive under Kraft's wings at the long run anyway. What will surely fade off is the group of people that managed the company for the last 4 years. This group has got rid of beverage branch of Cadbury Schweppes as it was the reason of all problems on earth. However, the beverage business was exactly what kept 'bids' away. Unfortunately, they were unable to see that. They went for quick money and easy growth and Kraft is 'getting" Cadbury in a similar negotiation. No shame on that. However, if Cadbury had tried to develop both branches of its business (Confectionery and Beverages) with a more professional approach, with its feet on the ground and with real improvement of its management and operational systems, the story would be very different now. A strong, independent and diversified Company protected from undesired bidders. So, Cadbury was taken from UK in the recent past with no participation of Kraft. It all happened in the Cadbury's Headquarters with no external help.

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Hear, hear! (2)

Posted by Dori Schmetterling,

PS. And what's so great about Cadbury-branded chocolate (almost completely banned from being called chocolate by the European Commission because of its high vegetable oil and low cocoa content)?

Maybe now we shall see more of the confectioney products of the quality Continental producers Kraft owns.

My only concern is the huge extra debt Kraft has taken on to finance the deal. Now THAT is a risk.

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Hear, hear!

Posted by Dori Schmetterling,

I absolutely agree with the article and "Done to Cadbury as Cadbury has done to others".

Anything else is unthought-through jingoistic claptrap.

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