Credit: Lee McCoy/Flickr

Cadbury's Kraft saga is a cautionary tale for foreign buyers

The rights and wrongs of takeovers are up for debate but the chocolate brand is undeniably tarnished.

by Jack Torrance
Last Updated: 23 Mar 2016

The politics of foreign takeovers is understandably controversial. Most people are happy to reap the rewards of globalisation, but the selling off of strategic assets like energy infrastructure, as well as beloved consumer brands, can cause real unease. While some hold up foreign ‘investment’ as a sign the UK is open for business, others worry about its impact on British jobs and national security.

Regardless of your take on the issue as a whole, some takeovers have clearly been a bad deal for all involved. Cadbury is a great example. Though its value to Britain’s security and even to its economy was relatively minor, the takeover of this heritage brand by US giant Kraft back in 2009-10 was fiercely opposed by politicians and consumers alike.

Last night a Channel 4 Dispatches documentary delved into how the company has changed since, and things aren’t looking good. The film contrasted Cadbury’s humble Quaker family business origins with its modern incarnation, where production of several products has been shifted overseas to Poland and France, recipes have been tinkered with and working practices in its factories have been aggressively ‘modernised’. Its new owners have even scrapped a scheme that sent retired Cadbury workers a box of chocolates each Christmas - reportedly saving just £210,000 per year. Scrooge would be proud. 

Read more: Buying Britain - The truth about foreign takeovers

Perhaps most telling of Kraft’s (and now the newly spun off Mondelez’s) attitude towards Cadbury is the decision to launch a plethora of new Frankenstein products like Oreo Dairy Milk, Ritz cracker Dairy Milk and even Philadelphia cheese with Dairy Milk. ‘I think what they’ve done with the Cadbury Dairy Milk brand post the takeover is indicative - they see that as a product first, an ingredient rather than a brand,’ Phil Rumbol, Cadbury’s pre-takeover marketing director told Dispatches.

Mondelez has hit back at what it descibed as a 'one-sided, misleading' programme, pointing to £75m worth of investment in Cadbury's historic Bournville HQ as evidence it is committed to the brand. But regardless of the he-said, she-said, it’s hard to deny that Cadbury’s reputation has suffered since the takeover. Last year it fell out of the top 20 in the UK Superbrands list and Brand Finance said its brand value had fallen by 8% (even if the value of such rankings is a little questionable). Things have changed a lot since MT named  Cadbury Britain's Most Admired Company back in 2004 (Here's our interverview with then-CEO Todd Stitzer).

It’s easy to lament what has happened to Cadbury but that doesn’t mean the government should have done more to intervene. From Jaguar Land Rover to O2, there are plenty of companies that have thrived off the back of foreign investment. But Kraft’s failure to appreciate the strength of feeling towards Cadbury and its cack-handed attempts to improve the brand should be a cautionary tale to any foreign company on an acquisition streak.

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