getting fresh: Kraft's Cadbury gambit
When I wrote my editorial for the September issue ofCandy Industry, I did so with a bit of trepidation. In the second half of the piece, I talked about Kraft’s pursuit of Cadbury and how I didn’t see an early resolution of the matter.But as we all know these days, just about anything can happen anywhere, anyplace and immediately change the best strategies, plans and lives. Just ask Tiger Woods.
Consequently, I was slightly apprehensive about a deal being consummated before the issue came out. Fortunately, that wasn’t the case, and I looked sage-like with my comments.
Fast-forward those comments of mine to the Kraft/Cadbury hostile takeover attempt today, and we see that the game is still “in play.” Now that Kraft has officially submitted a $16-billion offer for the British confectionery giant, Cadbury has responded in suit, indicating that it will have its formal reply next Monday.
Keep in mind that the Hershey Trust has given its blessings to Hershey executives to also pursue Cadbury, the most recent scenario being that of a joint bid by Hershey and Nestlé.
A recently published article in theTelegraph newspaper out of the United Kingdom profiled Kraft’s chairman and ceo, Irene Rosenfeld. In reconstructing her early family life going back to grade school, reporters James Quinn and Amy Wilson painted a picture of an individual who shouldn’t be taken lightly. Despite Rosenfeld’s very low-key public profile, they noted her competitiveness and drive. They warned that Cadbury Chairman Roger Carr “would do well to look beyond the public persona.”
I’m sure Carr has done his homework. Moreover, I suspect that both corporate leaders have examined a variety of chessboard scenarios.
Unlike the Bobby Fischer- Boris Spassky championship match in Reykjavik in 1972, Carr and Rosenfeld don’t have the burden of Cold War pressures on their shoulders. Nevertheless, they do have reputations on the line.
Thus, it will be curious what kind of endgame strategies the two come up with. I would suspect that Carr won’t be averse to playing the Hershey/Nestlé defense, albeit as the ultimate checkmate move.
That said, I’m also curious whether Cadbury really needs to “bulk up” after going through an internal reorganization aimed at making it more entrepreneurial as well as more profitable. Will Cadbury as part of Kraft make it a better-run candy company? Will a Hershey/Nestlé/Cadbury combo stimulate innovation?
I suspect those very same questions can be asked of Mars and its Wrigley acquisition. I think the jury’s still out on that one.
Hey, there’s no denying that smaller companies can benefit from being acquired by organizations that have more resources. But I wouldn’t necessarily call Cadbury a mid-sized company.
Guess I’m hoping that this most recent chess game involving Kraft, Cadbury, Hershey and Nestlé ends up in a draw, with Cadbury remaining independent. I know, there are a lot of shareholders that will bemoan such a move, noting a missed opportunity to make a profit.
But after what happened with the most recent global financial meltdown, I’m a bit more proactive about making companies run better than making them look good on paper. After all, making good use of one’s pawns often results in winning the prize.
Photo by Kim Naylor
Independent evaluators cite progress in minimizing child labor on cocoa farms
Results from independent evaluators assessing the International Cocoa Initiative (ICI)’s efforts to eradicate abusive child labor practices in Ghana reveal that the programs are working. The evaluation team -- consisting of professional, external evaluators, representatives of the communities, local districts and ICI’s local partners, among others -- found that in ICI-supported cocoa-growing communities “there is a significant change in attitudes and behavior, combined with a reduced exposure of children to hazardous labor.”The ICI reports that in the 250 communities where it’s present in Ghana as well as the Ivory Coast, “…most children no longer spray cocoa farms or carry heavy loads while local schools report increased enrollment and improved attendance. In fact, some communities go so far as imposing fines on parents whose children are on the farm when they should be at school.”
It’s been seven years since media accounts shook the cocoa industry by revealing child labor abuses in West African cocoa-growing regions. The outcry prompted a broad-based partnership between non-governmental organizations (NGOs), trade unions, and major cocoa processors and chocolate manufacturers to eradicate child labor, thus creating the ICI.
By sensitizing cocoa-growers to abusive and dangerous practices while enabling them to plan how best to protect their children and their livelihood, the ICI says it is changing the way cocoa is grown and bringing about “long-term, sustainable change for cocoa-growing communities.”
Working with 14 local NGO partners who speak the native dialect, the ICI has built ties and established strong linkages between communities, local authorities and the administrative and political leadership. To date, the effort has reached 615,000 people and has had a direct impact on 217, 215 community members regarding child labor, the ICI asserts.
For more information about the evaluation, visitwww.cocoainitiative.org/programme-evaluation-in-ghana.html. Additional specifics about the ICI’s efforts to protect children are available atwww.cocoainitiative.org.
Kit Kat Bar goes Fairtrade in UK, Ireland next month
As part of its ongoing Cocoa Plan, Nestlé UK’s four-finger Kit Katbar will sport Fairtrade logos in the United Kingdom and Ireland come mid-January.“Nestlé sells moreKit Katsin the UK than anywhere else in the world, and I am delighted that following the global launch of The Cocoa Plan,Kit Kat -- our leading confectionery brand -- will now be Fairtrade-certified in the UK and Ireland,” says David Rennie, managing director for Nestlé Confectionery.
“UK consumers are increasingly interested in how we source and manufacture their favorite products and certifying our largest and most iconic brand is one of the ways in which we are committing to improving the lives of as many cocoa farming families as possible,” he continues.
The Fairtrade Foundation, established in 1992, is an independent non-profit organization that ensures disadvantaged farmers and workers in developing countries get a better deal. According to the Foundation, the move should benefit thousands of farmers in the Ivory Coast because they’ll receive a Fairtrade or market price for cocoa.
Farmers’ organizations also will receive additional premium payments to invest in community and business development projects of their own choosing, such as education, healthcare, the environment and their businesses.
“Cocoa farmers in Côte d’Ivoire [Ivory Coast] struggle under the relentless pressures of poverty with shockingly high levels of illiteracy and poor access to health care,” says Harriet Lamb, executive director of the Fairtrade Foundation. “The significant volumes of cocoa that go into makingKit Katwill open new possibilities for these farmers in Côte d’Ivoire, giving them a more sustainable livelihood.”
Although news ofKit Katgoing Fairtrade in the United Kingdom and Ireland was welcomed by most, several U.S.-based organizations, such as Global Exchange, Green America, the International Labor Rights Forum and Oasis USA, expressed reservations about the move, saying Nestlé should make a larger commitment to farmers and laborers.
For more information, visitwww.nestle.co.ukandwww.fairtrade.org.uk.
ISM Celebrates 40th Anniversary
For 40 years, the International Sweets & Biscuit Fair in Cologne, Germany, held each year at the end of January/early February, has attracted the global confectionery community. In 1971, 351 companies kicked off what was to become “the” confectionery trade show for the world.”Today, about 1,500 companies are expected to exhibit their wares amidst 110,000 square meters of exhibit space Jan. 31-Feb. 3, with nearly 80% of exhibitors coming from outside Germany. Among those exhibiting, 41 will have participated in every fair since 1971, marking a significant milestone for those companies as well as ISM.
To commemorate the anniversary, fair organizers have planned a 1970s-style anniversary party. In addition, the fair will feature the premiere of the Convenience Summit, the debut of new products specifically selected by journalists in the "New Product Showcase" and a special “Displays” show.
For more information, visitwww.ism-cologne.com.
