getting fresh: Vacation footnotes
Greetings, all, from East Falmouth on Cape Cod! We just arrived here yesterday afternoon, so I haven’t had a chance to catch any Great White Shark sightings, but will keep you posted. Don’t worry – I’m not much of a swimmer, so chances are Mr. Jaws would have to be in about five ft. of water to introduce himself to me.Great White Shark sightings, however, aren’t the only headlines making the news today. No doubt the big buzz in the confectionery world is Kraft Foods, Inc.’s attempt to purchase Cadbury, which initially was rejected by Cadbury PLC’s board of directors.
How foolish of me to think that the world of confections would stop just because I went on vacation.
In glancing at today’s e-mails and newspapers – yes, I’m definitely one who appreciates print – I see that analysts are suggesting that a second, higher bid could sway the board’s mind the other way. Currently, the official response from Cadbury is that Kraft’s bid “fundamentally undervalues” the company.
I wouldn’t necessarily call $16.7 billion a low-ball bid, but I understand Cadbury’s board’s point of view, particularly after its efforts to first disengage the company from soft drinks and then reorganize it so it can better compete globally.
The union would create “a global powerhouse in snacks, confectionery and quick meals,” an analyst in aCrain’s Chicago Businessarticle said, while simultaneously giving Kraft a 15% share of the global confectionery market – the same percentage Mars-Wrigley now has.
Word has it Nestle could team up with Hershey in a counter bid, but that’s not a straightforward “go get ‘em and done” alliance.
In digesting the news, I recognize that this all looks well and good on paper, particularly when one sees how the merger of both companies would make a “near perfect geographical fit,” according to analyst Andy Smith of Icap PLC, as quoted inThe Boston Globeyesterday.
But how often have economy of scale benefits and market synergies fallen short of expectations? Is bigger really better when corporate infrastructures fail to take advantage of ever-increasing shifts in consumer needs?
Those folks at Cadbury and Kraft are undoubtedly a lot smarter than this scribe, but I’d venture to say that corporate integration can as often lead to stagnation and lack of execution as to imagined sales increases and profit gains.
That said, let me just share with you a few micro points of view regarding my candy experiences on the road.
First, I had arranged to have some chocolates shipped from Lindt USA to my in-laws the day my wife and I were planning to arrive at their home in New Britain, Conn.
Overwhelmed by the box of goodies (thanks again, Joy), they suggested we take some (not everything, mind you) to share at their niece’s wedding celebration in Holyoke, Mass., over Labor Day weekend.
The chocolates were a great success. As I mentioned in a previous editorial, I was surprised by how young people (the 20-to-30 crowd, in this instance) gravitate toward chocolate, particularly good chocolate.
On that same note, prior to our leaving for the wedding, the youngest daughter of tenants who live at my father-in-law’s two-flat (they’re actually almost members of the family by now), brought home from school a box of fundraising candy.
Naturally, she came by and asked if we wanted to buy any from her. Upon seeing that it was World’s Finest Chocolate, I knew my initial outlay would have to be doubled.
It’s good to see that some school districts haven’t succumbed to a total confectionery ban on fundraising. As it turns out, I later found out from my wife that her school (she’s an assistant principal on the near Northwest side of Chicago) also would be selling WFC chocolates to raise funds for organizing special events, trips, music and art projects.
Finally, again prior to leaving for the wedding, I took my in-laws to the local Polish deli for some last-minute food shopping. As we walked in to check out all the delicious sausages, hams and deli meats, I noticed a flat-screen television providing a travelogue about Poland’s various cities.As I viewed the clips while waiting in line, I was surprised and delighted to see that it was sponsored byE.Wedel, a long famous confectionery brand in Poland now owned by Cadbury. Now that’s targeting your clientele, from London/Warsaw to New Britain.
So that brings me full circle to the Kraft bid for Cadbury. We’ll see what happens.
Barry Callebaut, Natra end negotiations
Barry Callebaut and Natra announced today that they have terminated their negotiations regarding the possible integration of Barry Callebaut’s European consumer chocolate business into Natra, according to a release. The reason given for the termination is a gap in the valuation of the two companies.“Our strategic decision to exit the consumer chocolate business remains unchanged,” says Barry Callebaut Chairman Andreas Jacobs. “However, we are under no time or financial pressure. We will carefully analyze all strategic options to find the best possible solution.”
For more information about Barry Callebaut, visitwww.barry-callebaut.com.
Food safety not a major concern for Americans, NPD reports
The majority of Americans are not overly concerned about the safety of the U.S. food supply, according to a poll by The NPD Group, a Chicago-based market research company.According to the results of its recent NPD Food Safety Monitor, which was issued on Aug. 12 to more than 500 adults, just 10% of respondents were “extremely concerned” with food safety, 17% were “very concerned,” 29% were “somewhat concerned,” 31% were “slightly concerned” and 13% were “not at all concerned."
NPD has issued this same poll question since 2007, and since then, there has been little to no change in consumer response regarding food safety.
For more information about NPD, visitwww.npd.com.
Lil' Drug Store partners with Ricola USA
Starting Oct. 1, Cedar Rapids, Iowa-based Lil’ Drug Store will be the exclusive distributor of Ricola USA’s cough and throat drop sticks to convenience stores across the United States, per a new partnership.Lil’ Drug will offer four popular flavors of the on-the-go size sticks: Natural Herb, Cherry Honey, Lemon Mint and Honey Herb. Ricola cough and throat drops are made with 100% natural herbs cultivated from select Swiss mountain areas and are known for soothing and refreshing taste.
For more information, visitwww.lildrugstore.comandwww.ricolausa.com.
Grocers enlarging bulk food departments, says Bulk is Green Council
Grocers from major chains to small coops are increasing their bulk food offerings as part of the merchandising mix, according to the Bulk is Green Council. A recent poll of grocers indicate that bulk food sales are up an average of 10%, the release notes.
Food packaging contributes an average 8% to the retail cost of food, the USDA estimates, and packaged foods cost more to transport. A recent study by Bulk is Green also found that the price of bulk foods average 35% less than the packaged equivalent and does not limit the consumer’s quantity of purchase.
For more information, visitwww.bulkisgreen.org.
