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Call my crazy but I just don’t want the makers of Velveeta messing with my Cadbury bars. Kraft Foods bid (underbid?) $16.7 billion for Cadbury this week, declaring they were offering stock holders a 42% increase on Cadbury’s median share price. Cadbury pushed back, declaring the proposal undervalued their stock and they were confident in their "stand-alone strategy and growth prospects as a result of...strong brands, unique category and geographic scope”. The New York Times reports “a takeover of Cadbury would help Kraft, the biggest food conglomerate in North America, compete with its larger rival, Nestle”, especially in Britain and India. Nestle makes dog food, don’t forget. Kraft’s next move will likely be a run at a hostile takeover, just when you thought those corporate vampires were dead and buried back in the 1990’s. When a giant food conglomerate best known for bologne, hyper-processed cheese-like substances and Kool-aid seeks to attain a company best known for chocolate, I worry about my chocolate.
Cadbury was founded in 1824 by Quaker John Cadbury in Birmingham, England. It is a national treasure in England. Even to its biggest critics (possibly investigative journalist Carol Alt, author of BITTER CHOCOLATE decrying corporate chocolate’s role in the history of slavery), or those who prefer higher grade couvertures, Cadbury does more good in the chocolate world than bad. We’ve just seen what happens when giant corporations consume smaller ones - Hershey devoured premium brand Scharffen Berger, only to close SB’s picturesque California factory and merge operations. Will the flavor be the same? How could it be? Something, something essential, is lost when these things happen. Cadbury milk chocolate - maybe you like it, maybe you don’t - but you sure don’t want it run through whatever hydrolic machine turns milk and whey into Velveeta; you don’t want it’s essence scrutinized by people who specialize in watering down the Kool-Aid for higher yield. I hope the chocolate warriors beat back the food conglomerage vampires, and Cadbury continues to stand alone as a chocolate company with character and tradition.

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Tags: cadbury, chocolate, kraft

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Comment by Clay Gordon on September 21, 2009 at 1:21pm
Cybele: Thanks for the reference. I guess that settles it ... :: Clay
Comment by cybele on September 21, 2009 at 12:33pm
Clay - I finally found a citation that shows that Cadbury makes the chocolate crumb for Hershey's-produced Dairy Milk:

Tony Bilsborough, a spokesman for Cadbury-Schweppes in Britain, said his company ships its specially formulated chocolate crumb -- a mash of dried milk and chocolate to which cocoa butter will be added later -- to Hershey, Pa. What happens next accounts for the differences.

It's from the NYTimes: World's Best Candy Bars? English of Course
Comment by Clay Gordon on September 10, 2009 at 4:57pm
Cybele - it makes sense that Cadbury doesn't want to reveal their crumb recipe to Hershey because they are direct competitors; though why Cadbury granted the license to Hershey is beyond me for the same reason.

US import duties on chocolate products are assessed based on their sugar content so it strikes me as unnecessarily expensive to import sugar into the UK, make crumb, then export it to the US where they could be subject to some stiff import duties on top of ones they might have had to pay to get it into the UK.

Funny, I was planning to take some US Dairy Milk with me to London in October to to a side-by-side assessment.

As for Cadbury staying put - it's for the shareholders to decide (before the court gets its chance). If the shareholders want the money then they will vote for the takeover. Here in the US, shareholders (or more properly analysts) don't value programs like Fairtrade because the majority of the benefits are intangible and don't return results on a quarterly basis.
Comment by Susie Norris on September 10, 2009 at 4:23pm
amen!
Comment by cybele on September 10, 2009 at 4:13pm
Clay - I was told in conversation by a Hershey person that they used Cadbury crumb, mostly because Cadbury did not wish to disclose their complete manufacturing recipe/technique. But that may not be true - I cannot find any independent corroboration online and didn't notice any issues during the famous Salmonella incident a few years back with the American products.

The big difference, as far as I'm concerned, between the UK & US versions is the vegetable oil.

I have some of both right now (Buttons & American Dairy Milk miniatures) that I was going to do a head to head taste test.

Regarding the fair trade ... my suspicion is that Hershey's doesn't want to mark Cadbury as fair trade when they're so far behind simply going no-slave-trade on their other chocolate products that it would only call attention to the issue. But that's just me being jaded. It appears that Big Chocolate in the United States is being very tight lipped & quiet about fair trade besides owning fair trade subsidiaries (Dagoba, Divine & Seeds of Change).

Interesting that you point out the licensing issues. Hershey's has ended up in a rather strange position as a result of these before - especially with KitKat, which is owned by Nestle everywhere else as result of their purchase of Rowntree.

Personally, I think Cadbury should stay strong and stay put. (And quit putting vegetable oil in their chocolate.)
Comment by Clay Gordon on September 10, 2009 at 3:48pm
if only things were this straightforward - which I fear they are not.

Cadbury aficionados know that the product tastes different around the world because the recipes are altered to fit local taste preferences. There is, in fact, a raging debate about whether UK or South African or Australian Cadbury Dairy Milk tastes best (which, to me, is sort of like debating the relative merits of Marmite and Vegemite).

The differences in taste between the US and UK products leads me to believe that Cadbury in the US is NOT made with crumb imported from the UK, which is why there is no US certification of Fairtrade on US Cadbury Dairy Milk.

In fact, if I were Hershey, I would sue to block the merger. Not sure exactly what the grounds might be, but the transfer of ownership of Cadbury to Kraft raises some pretty interesting competition issues all around. I can see how Kraft (a US-based company) might object to Hershey continuing to hold the license to manufacture products with the Cadbury name - and I could see how Hershey might object to the license being revoked. So no matter what gets reported in the press my feelings are that the decision will end up in a US court.
Comment by Susie Norris on September 10, 2009 at 2:45pm
No, this these are such good issues!! Co-opt away!! As far as I know, Cadbury's fair trade initiatives were very well received publicly, don't you guys agree?? And we know that fairtrade branding is a growth business, despite the recent dip for most companies due to the economy. That would leave the biggest obstacles for Cadbury-under-Kraft to continue fair trade sourcing as these: Production & Cost. Uh-oh.
Comment by cybele on September 10, 2009 at 1:39pm
Clay - maybe you have an answer for this regarding Cadbury's fair trade plans for the US. (Sorry to co-op the comment thread Susie.)

If Hershey's makes their US Cadbury products with chocolate crumb from Cadbury UK, won't they effectively be using fair trade cacao? Or will Cadbury maintain a separate sourcing for that?
Comment by Clay Gordon on September 10, 2009 at 1:33pm
Let's throw in another ironic iconic curve here - Cadbury is manufactured in the US under a license to ... who else but Hershey (which is why Cadbury products in the US are not going Fair Trade, but those in Canada are).

I think that Cybele's point about Cadbury moving toward more ethically-sourced cacao is the most emblematic and problematic aspect of a takeover of Kraft. Frankly, was worried that Cadbury would halt the work G&B has been doing down in Belize. Instead, the G&B efforts seem to have had an influence on their new corporate parent.
Comment by Susie Norris on September 9, 2009 at 10:18pm
Right, and they own Cote d'or, and I think owned a German chocolate company for a while. But they specialize in large scale, processed food - the more bland the better. I think if Cadbury wants their independence, they should be able to keep it, partly because of their pioneering heritage. It's a romantic notion, I confess, because as you say they are certainly big chocolate. But to go from big to bigger and familiarly mild chocolate all the way to bland would indeed be a shame. While Scharffen Berger didn't make all their chocolate in their original facility, it was certainly how and where they invented it and where they honed their original recipes. It was the spirit of the place. Spirit is an easy thing to loose...or sell!

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