Dirk Van de Put, chief executive of Mondelez, owner of Cadbury, says Britain has become a more difficult place to do business. Photo: Andrew Fox
Cadbury needed to be taken over to improve its declining business, its US owner's chief executive said.
Dirk Van de Put, chief executive of Mondelez, the Chicago owner of Cadbury, said his company has improved the British chocolate maker after its controversial 2010 takeover. We took the cure, but in the end the business is in a much better position than it was when we took it.”
Many would disagree with the claim that Cadbury was having a hard time when Kraft Foods went into production. hostile bid for the company in 2009.
The chocolate maker controlled about 10% of global confectionery sales and about a third of the UK market. Worldwide sales rose by 11% to £591m in 2009 and in the UK alone they were £1.36bn despite the global economic downturn.
Today Cadbury's market share in the UK is more or less unchanged from when it was absorbed. , about 31 pcs. Industry estimates put UK sales at around £1.8bn last year.
However, Mr Van de Put argued that Cadbury was only able to maintain its market share through investments of scale that only a large conglomerate like Kraft Foods could provide. (Kraft Foods chocolate and biscuit brands were spun off from Mondelez in 2012.)
Mondelez said it has invested around £300m in Cadbury's UK operations over the past decade to improve chocolate factories, which it claims European competitors have been underperforming.
Mr Van de Put says : “Look at the health of Cadbury as a brand and business now and when we took it over. Numbers, consumers… It's day and night.»
The £11.5bn hostile takeover of a British business by foreign companies was the most controversial takeover of a British business by foreign companies this century.
The deal was opposed by all , from unions to politicians and even city investors.
The prospect of a predatory American firm buying up the beloved British brand was taken up by the then business secretary, Lord Mandelson, who accused Kraft of wanting «short-term profits and quick cash.»
He said the deal would meet «tremendous resistance not only from the labor force and the local population, but also from the British government.»
Unions warned that up to 30,000 jobs could be cut. under threat of takeover, and protesters picketed Cadbury's Birmingham headquarters after the deal was announced, with one poster urging Kraft to «go to hell.»
Even Legal & General, the investment giant that was Cadbury's second largest shareholder, opposed the sale of «this iconic and unique British company.»
Ultimately, however, money won out and the 199-year-old chocolate maker was sold to US. (Lord Mandelson admitted he was powerless to stop the deal, but urged Kraft to continue producing «perfectly shaped creme eggs» in the UK.)
Kraft Foods appears to have proven its critics right by closing the Cadbury plant in Bristol, despite a promise not to do so during the takeover process.
The incident received a rebuke from the British takeover regulator.
The decision in 2017 to move the production of some dairy products to Poland also caused outrage, as Kraft promised to continue production of the brand. at Cadbury's Bourneville headquarters following the takeover.
Mondelez defended the move as a temporary measure as it modernized the Birmingham plant.
Louise Stigant, head of Mondelez in the UK, said there are still a small number of dairy products produced in Poland today, but «the majority» is again produced in the brand's historic homeland.< /p>
Cadbury's presence in Birmingham dates back to 1824. Photo: Christopher Furlong/Getty Images
Another £15m has been spent to upgrade the Bourneville plant in 2021 so it can produce an additional 125m large milk-milk bars annually.
Ms Stegan said: «The Bourneville plant needed a very significant investment to make it competitive.»
Mondelez operates nine factories across the country employing over 4,000 people. In addition to the British chocolate maker, Mondelez also owns Oreo, Toblerone, Ritz and Green & Black's.
However, Mr. Van de Put describes Cadbury as «the jewel in the crown».
Cadbury produces about 132,000 tons of chocolate a year in Bourneville, of which about 90% sold in the UK and Ireland.
Leading up to Easter, over a million Cadbury Creme eggs and 400 million Cadbury dairy products. Buttons are made there every day.
Mr. Van de Put has been in charge of Mondelez since 2017. He replaced Irene Rosenfeld, architect of the Cadbury deal.
Mr Van de Put said it had become more difficult to work in the UK in recent years.
The 62-year-old said: “[UK ], certainly not the easiest country in the world to do business in.”
The Belgian-born managing director is disappointed with the UK's exit from the European Union. outlived itself.
“What we make in the UK, most of it stays in the UK, but we also export to Europe. With Brexit, this has become more difficult. We have to relocate production, so the additional costs we have are quite large.
“It’s not that the UK should have to abandon Brexit, but if it could… get another deal that would make it easier us a task. .”
However, Mondelez remains committed to the UK and believes the business can still succeed in doing so, he said.
“Does this mean you will invest less in the UK? No, absolutely not. Does this mean that we think that our business will not be as successful in the future? Not at all. It's just harder.”
Like all businesses, Mondelez is suffering from rising costs, and Mr. Van de Put says “labor inflation, transport inflation, product inflation” is the biggest headache.
Rising costs have pushed up the price of chocolate and snacks, but he denies that this is boosting profits.
«Our prices are going up, but our percentage margins are down.»
Asked, what he thinks about the ongoing allegations that big food companies are pushing overpriced prices, he said: «I can't speak for the industry, but in our case it's not true.»
< p>«We took as a principle, that we want to offset our production costs as much as possible».
More than 1 million cream eggs are produced each day in Bourneville around Easter. Credit: Simon Dawson/Bloomberg
The company has decided to cut some products rather than raise prices. For example, in 2022, the company reduced the size of its medium-sized milk bars from 200g to 180g, but kept the price the same.
Ms. Stegan and Mr. Van de Put spoke at the company's headquarters in Bournville, near the founding site of the chocolate brand.
The company was founded in 1824 by John Cadbury, a Quaker who started selling tea, coffee and chocolate in central Birmingham.
Cadbury produced its first chocolate bar in 1849 and received a royal warrant from Queen Victoria in 1854 .
Bournville became the company's manufacturing center in the 1870s and has remained so ever since. It was created as a «model village» with hundreds of cottages and workers' houses.
It was part of a paternalistic approach to capitalism that extended to paying workers unusually high wages for the time, creating health care services for them, and introducing pension schemes.
Cadbury's story in pictures
In recent years, competitors have questioned the ethical principles of Cadbury.
Tony's Chocolonely, a Dutch chocolatier who has publicly spoken out against ending forced labor in the chocolate supply chain, lambasted the company in 2022 after a Channel 4 documentary claimed children as young as 10 worked in Ghana picking cocoa — beans. declared goods ended up in Mondelez's supply chain.
Mr Van de Put said Mondelez immediately opened an investigation and insists the company is committed to eliminating forced labor from its supply chain.
>He noted that this is a much more difficult task for a company the size of Mondelez due to the sheer number of farmers it works with and the complexity of the supply chain.
“Is it possible to take positions? like Tony when you're little and your supply chain is tightly controlled? Yes. If you get bigger like Cadbury or any other brand of chocolate, we will need to work on a more systematic solution and we have extensive programs in place.
“It will take some time, but this is not how we abandoned towel and said the problem would never be solved.”
Mr. Van de Put added: “Personally, I think we have done a very good job and we are running the business very well.”
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