Kraft mandates banks to sell Cadbury plants

By Staff reporter

- Last updated on GMT

Related tags Cadbury Chocolate European union United kingdom

US food group, Kraft, has recruited the services of financial powerhouses HSBC and BNP Paribas to help divest it of the Polish and Romanian businesses of Cadbury, according to media reports.

The sale of the two assets is unlikely to generate more than €500m for the US foodmaker which bought Cadbury for £11.6bn this year, according to market analysts.

The European Commission gave Kraft the all clear in January for the acquisition of Cadbury but stated that the US food group would have to sell the Romanian and Polish businesses of the Dairy Milk maker to a third party as the takeover would cause competition concerns in those particular confectionery markets.

Kraft’s major brands in Europe are Milka, Cote d’Or and Toblerone, and since these are more in line with continental rather than British tastes, they were not deemed by the Commission to be in direct competition with Cadbury’s brands.

And the Cadbury brands dominate the chocolate confectionery market in the UK and Ireland, where consumers prefer British-style chocolate over continental tastes and where Kraft traditionally had a low market share.

British chocolate often uses vegetable fat instead of all cocoa fat, and tends to be sweeter and milkier than continental chocolate. Cadbury’s Dairy Milk brand is said to be particularly British in its appeal.

So the only markets that posed a problem, claimed the Commission, were Poland and Romania, with both companies having a large market share and close competition between their brands, especially in chocolate tablets.

Kraft therefore said it would sell Cadbury’s Polish business, marketed under the Wedel brand, and Cadbury’s domestic chocolate business in Romania.

Meanwhile, Cadbury is said to be studying the possible launch of a “cocoa house” concept that would see it establish branded outlets that compete with high street coffee shops in the UK.

The Financial Times reported that as many as 60 outlets could be opened during the next three to five years as part of a deal with a retail consortium.

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