Melting Big Chocolate

Vineet Katiyaar

MBA-IT IInd sem

Indian Institute of Information Technology, Allahabad

“Kuch Meetha ho jaye”, the slogan that represents more than a brand of Chocolate for India, it signifies strong consumer affection and delight with all its festive felling. Cadbury not only in India but also worldwide has emerged as an appealing confectionary product brand. It is has major market dominance in chocolate, gum and candy – Cadbury Dairy, Trident and Halls. Its astronomical market growth of around 40% in emerging market such as south Asia and Africa is remarkable in recent past.

However, from the last four-month the performance and brand, was not the reason of chaos, which started war of public statements from Cadbury management to media. From September 9, 2009 to January 19, 2009 Global business witnessed stigmatic M&A scenario, which ended with acquisition of Cadbury by U.S. food giant Kraft. The acquisition ended with offer of 11.9 billion pound ($19.7 billion) in which Cadbury investors will get 840 pence a share, including 500 pence in cash and the rest in stock. Cadbury shares had shown high jump of 40% after the offer of acquisition by Kraft. Kraft revised its bid offer amount after disapproval of original biding of 10.8 billion pound. After the acquisition Kraft has became world’s largest candy maker replacing Mars. Company after merger will be $50 billion in annual sales.

Kraft food which is having history of such hostile acquisitions followed by massive layoffs that sends a warning signal for Cadbury employees. Since last five years, Kraft has laid off around 60,000 employees as the measure of cost cutting hence 47,000 employees of Cadbury face a fear of losing their jobs.

International Confectionary Industry is showing a profit growth rate of just 6-8% that makes us believe that the money borrowed from market by Kraft will be difficult to pay off without cutting the workforce.

Warren Buffet rightly said that Growth for the sake of growth is insignificant without adding the value to the shareholders

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