Thursday, April 8, 2010

Kiwi feathers ruffled by chocolate change

http://www.odt.co.nz/news/dunedin/87625/kiwi-feathers-ruffled-chocolate-change

By Mark Price on Tue, 29 Dec 2009

CLICK PHOTO TO ENLARGE

Cadbury Australia-New Zealand managing director Mark Callaghan.

He was born at Queen Mary Maternity Hospital, grew up at Green Island and went to primary school in Caversham.

Now Mark Callaghan has Cadbury's top job in Australia and New Zealand, lives in Melbourne and finds himself frequently trying to explain the Kiwi psyche to his Australian colleagues.

"I've had a hell of a hard time over here defending my countrymen," Mr Callaghan, Cadbury's Australia-New Zealand managing director, told the Otago Daily Times as he reviewed a difficult year.

In May, the company created a furore in New Zealand by introducing palm oil to its chocolate and then, in August another minor furore by introducing softer Minties sweets.

Mr Callaghan said he did not change the Minties formula, only the way the sweets were made, causing them to feel "a little different".

"And you know what? It got on the front pages of the newspapers. Do you know what my Aussie colleagues were telling me about Kiwis at that point? `You guys are nutso. Get a life. Was it a bad news day or what?' So I've had a hell of a hard time over here."

Mr Callaghan, who has worked in New Zealand, Australia and Britain, believes New Zealanders are resistant to change.

"We come from a small country where lots of things are going against us and we take a lot of this change quite personally.

"The way I like to look at myself and my colleagues in New Zealand is that we are a very balanced lot. We have two massive chips on each shoulder."

Mr Callaghan estimated changing Cadbury's chocolate recipe to include palm oil and then changing it back again in the face of public dissatisfaction, cost the company millions of dollars.

"I don't have a figure. It's not something I was ever going to want to go and look up. But it's certainly millions of dollars."

Mr Callaghan said the decision to use palm oil was a response to increased costs, including a doubling of cocoa prices over two years.

He said two factors drove up the price of cocoa.

One was competition for cocoa from United States investment funds moving out of the sharemarket and into commodity markets during the recession, and the other was increased demand for chocolate as the recession bit.

The result was a "massive impact" on Cadbury's profitability.

Mr Callaghan said the Australia-New Zealand operation got "an instruction from upon high" to change the recipe - replacing some cocoa butter with palm oil.

"We did the testing to make sure the consumer was happy with the taste and then went about it. And then, the rest is history."

Consumers in New Zealand, concerned about jungle in Borneo being cleared to make way for palm oil plantations, would not buy the new chocolate and eventually Cadbury went back to the old recipe.

Mr Callaghan stands by the company's stance that the palm oil it was using came from sustainable, non-rainforest sources.

"We really worked our buns off to stick to our values. Our Quaker values are pretty dear to our heart. But it didn't matter. Consumers didn't listen; weren't interested.

"We felt a little bit hard done by but . . . you've got to take it on the chin."

Considering reverting to the old recipe created a "massive debate" within Cadbury.

The final decision was made by Cadbury chief executive in Britain, Todd Stitzer.

Australian consumers did not think the taste was "that bad", were "comfortable" about the company's source of palm oil and "did not react in any way, shape or form at all like the Kiwis".

Mr Callaghan acknowledged changing the recipe was a mistake and now the company was paying to earn back consumer trust.

"We've got a long, hard row to hoe to build back Kiwis' trust . . . and I'm probably having to pay for it a little bit at the moment."

He was not concerned if Cadbury's prices made it hard for chocolate maker Whittakers, which drew public attention to the palm oil recipe.

"It's called competition. When I lost some of my trust, I had to play a little bit harder than I normally would have."

mark.price@odt.co.nz

Cadbury staff to taste Kraft style

http://www.odt.co.nz/search/apachesolr_search/cadbury+kraft

By Mark Price on Wed, 7 Apr 2010

News: Dunedin | Cadbury | Kraft

Workers at Dunedin's Cadbury chocolate factory will get a taste of the management style of the new owners when negotiations over a new collective agreement begin in the next few weeks.

The 186-year-old British chocolate company was sold to United States food giant Kraft, for $27.4 billion, in February.

Otago Service and Food Workers Union spokesman Neville Donaldson said yesterday the current agreement with Cadbury expired in August and the union had initiated the process that would lead to negotiations with the new owner.

Mr Donaldson said the negotiations would enable the union to raise some issues with Kraft, including job security, the relevance of previous agreements with Cadbury and the likelihood of further restructuring.

There was concern among workers about the future of the plant, which has just gone through a major upgrade as a result of a decision made by the previous Cadbury management.

"Now we've got Kraft . . . a whole new group of people who look at things significantly differently."

He believed there were "a lot of arguments" for the Dunedin plant to have a future, "but whether they are arguments Kraft are prepared to consider or listen to is another matter".

Mr Donaldson said he had been in contact with the new Dunedin operations manager, Peter Lennox, who had replaced long-standing operations manager John Booth.

Mr Lennox was unavailable to speak to the Otago Daily Times yesterday and is travelling to Kraft's Cadbury headquarters in Melbourne today.

A Kraft spokesman in Melbourne did not return calls to the ODT yesterday.

Thursday, April 1, 2010

Kraft's ruthlessness means tough task for Rosenfeld

http://www.ft.com/cms/s/0/5bfb2412-3d27-11df-b81b-00144feabdc0.html

Kraft's bold ambition means tough task for Rosenfeld

By Elizabeth Rigby

Published: April 1 2010 03:00 | Last updated: April 1 2010 03:00

Irene Rosenfeld's leap into the big league was underlined this week when the chief executive of Kraft Foods overtook her counterparts at PepsiCo and Coca-Cola to become one of the best-paid heads in consumer goods in the US.

Having spent recent months slogging it out to secure Cadbury, Ms Rosenfeld has been richly rewarded. She was awarded $26.3m last year for "exceptional" leadership during Kraft's $19.1bn takeover of the British confectioner, as well as for Kraft's improved performance on completion of a three-year turnround plan.

Now she has the potential to turn the maker of Oscar Mayer meats and Oreo cookies from the biggest US food producer into a "global powerhouse".

The company she has led since 2006 now boasts a 14.8 per cent share of the global confectionery market, just ahead of Mars with 14.6 per cent.

More than half of its revenues now come from outside the US - the figure was 43 per cent before the Cadbury deal. Most crucially, a quarter of sales come from developing markets such as China, Brazil and India, against a fifth pre-Cadbury.

A bigger Kraft is now bolder in ambition. Ms Rosenfeld has set her long-term revenue growth target at 5 per cent, against 4 per cent before the merger.

She expects growth in earnings per share to reach 9-11 per cent, compared with 7-9 per cent before the deal, and has also promised $675m of annual cost synergies by the end of the third year after completion (although the deal also comes with $1.3bn of reorganisation costs).

But in spite of Ms Rosenfeld's enthusiasm over the tie-up, the unwieldy food group remains unloved.

Kraft has lagged behind its peers during Ms Rosenfeld's turnround, underperforming food products in the S&P 500 by 8.5 per cent from the beginning of 2006 to the middle of 2009. Since September, when Kraft announced the Cadbury deal (using a big tranche of its shares), it underperformed the S&P 500's food producers by 5.4 per cent.

"This is a very large company in a lot of different categories and geographies," says David Driscoll, analyst at Citigroup. "Kraft wanted to achieve faster growth rates than it has been able to achieve so far. Are investors irritated that management thought they could do better than they did? Yes. Did they think they would get the franchise better than they did? Yes."

In spite of having made strides towards "rewiring" Kraft for growth by investing in marketing, new products and better ingredients, Ms Rosenfeld has struggled consistently to increase sales above its 4 per cent target while also hitting earnings-per-share targets.

But she has delivered on sales, with a compound annual growth rate of 5.5 per cent in the three years to the end of 2009. Underlying growth in earnings per share has come in at just 2.3 per cent, according to Deutsche Bank estimates.

On a diluted earnings-per-share measure, performance rose at 6.1 per cent over the three years - missing Ms Rosenfeld's range of 7-9 per cent, though she did hit 7 per cent in 2009.

It leaves many pondering how Ms Rosenfeld can now deliver more ambitious goals following the deal.

"If you look at the company in total, the sales growth objective of 5 per cent plus [of the merged group] is too aggressive," says Eric Katzman, analyst at Deutsche Bank.

The execution risk of the deal is also increased because it was a hostile approach - very different from Ms Rosenfeld's friendly $7.6bn acquisition of LU Biscuit from Danone in 2007.

Missteps over Cadbury's Somerdale plant near Bristol - which Kraft said it would keep open only to reverse its decision within days of doing the deal - have caused unnecessary upset in the UK.

However, she has at least managed to get Cadbury's operational heads to stay on in the enlarged company.

As she integrates Kraft, Ms Rosenfeld may also face pressure from activist shareholders such as Nelson Peltz's Trian Group to dispose of some of the slower growth businesses, possibly including the Kraft cheese brand itself.

Shareholders will urge more focus on the high growth combination of chocolate and biscuits that has been strengthened by the Cadbury deal.

She has already tested the patience of some, with Warren Buffett, Kraft's biggest shareholder, critical of the deal. The billionaire investor is unhappy that Ms Rosenfeld sold Kraft's successful DiGiorno pizza business to Nestlé for $3.7bn to help finance the bid, while he has also complained that undervalued Kraft stock was "a very expensive currency" to be used in an acquisition.

But Mr Buffett also thinks Ms Rosenfeld is a "good operator". Her supporters say investors should keep their eye on the bigger prize. With Cadbury under its arm, Kraft is becoming more focused on confectionery and snacks, with more than half of its turnover now in these areas.

"She has transformed it into a niche company in emerging markets and it is going into chocolate that doesn't have much private label competition so now the five-year and 10-year terms get better and better," says Mr Driscoll.

Additional reporting by Jonathan Birchall in New York

Friday, March 26, 2010

Cadburys - Another one bites the dust

Sanjay Purohit quits Cadbury

http://economictimes.indiatimes.com/Corporate-Announcement/Sanjay-Purohit-quits-Cadbury/articleshow/5725140.cms

26 Mar 2010, 0231 hrs IST, Pramugdha Mamgain & Mahima Puri, ET Bureau

NEW DELHI: A 11-year veteran of Cadbury India has quit to head jeanswear brand Levi Strauss’ India operations in what is seen by insiders at the

chocolate maker as a fallout of its global merger with rival Kraft two months ago. Sanjay Purohit, Cadbury’s Asia-Pacific head for chocolates, was also an executive director in the company board. He will join the $4.1-billion Levi Strauss & Co as MD of its Indian operations.

“It’s with a heavy heart that I am quitting Cadbury. But I am equally excited to work with an iconic consumer brand with such an incredible heritage,” Mr Purohit told ET. Levi India’s MD Shumone Chatterjee will move into a regional role in the Asia-Pac region making way for Mr Purohit, said company officials.

US food major Kraft had acquired Cadbury in a $19.7 billion deal in January 2010. The maker of Oreo and Toblerone had recently announced a new structure for the chocolate maker’s key executives in India. Accordingly, Anand Kripalu, managing director of Cadbury India, will be part of Kraft’s Asia-Pacific team and report to Pradeep Pant, president of the new Kraft Foods Asia-Pacific region.

Mr Kripalu also gets additional responsibility for South Asia and Indo-China. Bharat Puri, senior vice-president, chocolates global category team, will continue in his current role.While neither Mr Purohit nor the company would give any reasons for his exit, Cadbury officials seeking anonymity told ET that he was expecting to be made the company MD. They said that Kraft had offered Mr Purohit a plum role in the merged entity’s Indian operations, but failed to satisfy him.

Mr Purohit was an ‘A’ lister, a top performer recognised within the system as one with potential to be groomed as a leader, in the Rs 2,000-crore firm. A marketing expert, he was the most visible face of the company that has been growing at an annual rate of 20% for the last three years. “Sanjay will join us at an exciting time when we celebrate our 15th year in India and gear up for more growth in a country of significant opportunities,” Aaron Boey, president of Levi Strauss Asia Pac, told ET. He is expected to join Levi India sometime in June 2010.

Cadbury India has delivered a 20% sales growth and a 30% jump in profit in the past three years. Cadbury also has a 70% market share in chocolates and a 30% share of the local confectionery market. Kraft’s interest in Cadbury globally was primarily to get an entry into emerging markets like India where the brand enjoys a dominant market share. Brands such as Cadbury’s Dairy Milk and Bournville has made India a money-spinner for the UK-based Cadbury’s. Sales has been growing at 20% for the last three years, and profit at 30%.

Levi Strauss & Co is one of the world’s largest branded apparel companies with brands such as Levi’s, Dockers San Francisco and Signature.

Saturday, March 20, 2010

The Cadbury Colour Purple

This is the colour we've heard so much about folks

Cadbury adopted the colour purple, Pantone 2685C, way back in 1905, for its royal associations to send a message that “eating its chocolate was a rich and indulgent experience”

The "colour purple" is Pantone colour 2685C (In the Hex system is #3B0084)

Here it is in its splendour and glory:

PMS

Hex

Colour

2685C

-61

132

#3B0084

Source: http://en.wikipedia.org/wiki/User:GeeJo/Sandbox/Cadbury_purple
http://www.umsiko.co.za/links/color.html
http://www.inspirationbit.com/signature-colours/
This is something that I've always wondered about.

Kraft says sorry for broken promises

Job losses: Kraft is under fire for backtracking

http://www.thisismoney.co.uk/markets/article.html?in_article_id=501219&in_page_id=3

Kraft says sorry for broken promises

Rupert Steiner, Daily Mail
17 March 2010, 8:42am

Reader comments (7)

Kraft executives have made the extraordinary admission that key elements of their bid for Cadbury were based on information gleaned off Google.

Representatives from the US conglomerate told MPs they pored over satellite images of factories owned by the chocolate maker before making a pledge to keep its Somerdale plant in Keynsham open.
This emerged as Marc Firestone, a Kraft executive vice-president, issued his firm's first apology to workers.
He said he was 'terribly sorry' for breaking the promise on Somerdale, adding: 'I do sincerely personally express my apology.'
Keeping Somerdale open was a key pledge made during the controversial £11.9bn bid battle for Cadbury. Kraft reneged on it just days after winning control last month.
The American company insisted it did not know 'tens of millions of pounds' of equipment had been installed in a new Polish factory.
Firestone was hauled in front of the Commons Business Select Committee for a grilling on whether Kraft had misled workers, unions and politicians.
In a fiery exchange, the American lawyer claimed Kraft had acted in 'good faith', and was acting on limited information because the bid was hostile.
Cadbury was not sharing information with them, he said. 'We believed we had adequate time to keep the factory open,' said Firestone.
'We Googled it and had satellite images of it, but could only see the outside.'
Politicians were incredulous that Kraft had 'lifted the hopes' of the 400 workers only to dash them so quickly on such 'flimsy' research.
Peter Luff, chairman of the committee, described the decision as 'very cynical'. He said the damage to Kraft reputation in Britain had been 'considerable'.
Firestone was parachuted in to the Commons to deputise for Kraft chairman and chief executive Irene Rosenfeld. MPs were furious that Rosenfeld had snubbed them, instead fielding three middle-ranking managers.
Conservative MP Brian Binley said: 'It is a sizeable discourtesy that Irene is not here.' Firestone replied that Irene 'has the deepest respect for this body' but had had to attend a board meeting.
But Luff said the date of the meeting had been set at Kraft's behest.
When asked to offer some cast iron guarantees for the future of Cadbury's workers, Firestone, who was visibly shaking throughout his testimony, would only promise no compulsory redundancies or factory closures for the next two years.
One MP Lindsay Hoyle, accused Kraft of acting like a Viking 'pillaging' great British companies.
Firestone said: 'We are a strategic investor and are not, to use the metaphor, Vikings.'