Magazine article Marketing

Mark Kleinman on Marketing and the City: Cadbury's Perfect Recipe

Magazine article Marketing

Mark Kleinman on Marketing and the City: Cadbury's Perfect Recipe

Article excerpt

Strong brands allied to global reach has made the company a tempting prospect for potential buyers.

London's investment banking industry has a lot to thank Irene Rosenfeld for. Starved of salivating mergers to get their teeth into during the financial crisis, there's now a new golden ticket for the City to play with: Kraft's pounds 10bn offer for Cadbury.

A call to the mobile phone last month of Roger Carr, chairman of Cadbury, by Rosenfeld, chairman and chief executive of Kraft, came like a bolt from the blue - but perhaps it should not have been so surprising.

Speculation about Cadbury's purchase or merger with a US rival has done the rounds on City trading floors for years. The company has an international footprint that makes it the most coveted of the 'available' global confectionery manufacturers, with a strong presence in fast-growing markets in Asia, Latin America and Russia - something Kraft lacks by comparison.

Make no mistake about the timing of Kraft's move either: Cadbury's recent marketing excellence is a compelling ingredient in the secret recipe that the US food company wants to gets its hands on.

Cadbury's shareholders justly backed the company's board in resisting Kraft's initial approach. The frenzy of brand awareness generated by the Dairy Milk 'Gorilla' ad of 2007, which rapidly went viral and transformed consumer perceptions, is not easily generated.

While 'Trucks', the successor to 'Gorilla', was not in the same league, 'Eyebrows', which launched earlier this year, marked a return to form, judging by its warm reception among the YouTube generation.

Similarly, the revival of popular 'retro' brands such as Wispa as well as variant launches have restored a reputation for innovation that many of Cadbury's FMCG rivals have lacked for some time.

One obstacle Kraft will not have to face is the challenge of buying a company that has wrapped itself in its national flag. Lord Mandelson, the business secretary, has made it clear that he is keeping a 'weather eye' on the trend in which blue-chip British companies have fallen into the hands of foreign predators. However, given the sensitivity of the threat to so many manufacturing jobs in the run-up to a general election, Mandelson was probably thinking of the ownership of Vauxhall, rather than Cadbury, when he made his remarks.

What is next for the confectionery group? The Takeover Panel, which oversees merger activity in the UK, has given Kraft until 9 November to submit a formal bid. …

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