Analysis of the Kraft Food- Cadbury Merger

The Nine –Cell industry attractiveness/business strength matrix will have the industry attractiveness on the vertical axis and the competitive strength will be on the horizontal axis ; to the far left corner will be a large bubble representing U.S. grocery and The U.S. snacks indicating that the U.S. Grocery and the U.S. snacks have both favorable industry attractiveness and competitive strength and thus warrants priority attention . In addition the U.S beverage, U.S. cheese and the U.S. convenient meals seem to huddle in the 3 diagonal cell stretching from the lower left to upper, indicating they merit intermediate attention by the Kraft incorporation, however these segments of the company can be profitable if the company can investigate the possibility of improving consumers demand for beverages, cheese and convenient meals through innovation and by providing the consumers with what they want.

Cadbury is a British multinational confectionery company wholly owned by Mondelez International since 2010. It is the second-largest confectionery brand in the world after Wrigley's. Cadbury is internationally headquartered in Uxbridge, West London, and operates in more than 50 countries worldwide. It is famous for its Dairy Milk chocolate, the Creme Egg and Roses selection box, and many other confectionery products. Cadbury was established in Birmingham, England in 1824, by John Cadbury who sold tea, coffee and drinking chocolate. Cadbury developed the business with his brother Benjamin, followed by his sons Richard and George. George developed the Bournville estate, a model village designed to give the company's workers improved living conditions. Dairy Milk chocolate, introduced in 1905, used a higher proportion of milk within the recipe compared with rival products. By 1914, the chocolate was the company's best-selling product. Cadbury, alongside Rowntree's and Fry, were the big three British confectionery manufacturers throughout much of the nineteenth and twentieth centuries.

2. Kraft’s marketing strategy will benefit significantly from buying Cadbury in two different ways. Firstly, when we look at the brand portfolio of Kraft, which is the world’s second biggest food company. It is clear that there are plenty of old-timer cash cows, such as cheese, Nabisco and Suchard, but there are only very few rising stars. According to the Boston Matrix, cash cow means a product with a high share of a slow growth market, which can generate a stable

The chocolate industry operates in an oligopoly market. An oligopoly is when a small number of firms dominate the market. While not a quite a monopoly, an oligopoly market is still controlled by a select number of companies and the market can be directly impacted by one or two major firms (Oligopoly Investopedia). Hershey’s has control of the largest market share, holding 44.4% (U.S Market Share). Mars Incorporated follows behind in second by holding 28.9%. While these two companies hold much of the control and power within the industry, LIndt/Ghirardelli and Nestlé maintain a combined share of 15.1% of the industry’s market. This means that four companies hold a combined 88.4% of the market, with two of them holding a combined 73.3%. The market was not always this way however. Up through the 1960s many candy suppliers were regional.

Cadbury uses market penetration strategies to keep people aware of their brand. They do this all in their current market. They do this by selling more to existing customers, like selling their products in multi-packs. This means that the customers can buy their products in larger quantities and it will encourage them to do so as they can have more of the product instead of buying it individually. They also use product development strategies such as selling new products in an existing market.

Kraft Foods Inc. is the leading foods and Beverage Company in US and the world second largest business after Nestle. Kraft has been offered consumers delightful and wholesome foods for more than 100 years. Kraft Foods headquarter is in North America. Kraft Foods has many of the best-known brands in the world with operations in 72 countries and sales in 155 countries. Kraft Foods has 140,000 diverse employees around the world and this is one of the reasons why they can succeed.

Eventually, the globalization of cocoa beans brought an idea to the minds of two young men in the 1800s. According to an article “The Creation of a Company Culture: Cadburys” by Charles Dellheim, the start of Cadbury wasn’t even chocolate. Instead, John Cadbury, the founder of the company, traded tea and coffee in Birmingham which later grew to become a factory process. However, when his sons George and Richard Cadbury took over, the company was already dwindling and on the verge of collapse when they ingeniously changed the product from tea and coffee to cocoa and chocolate. They also changed the process of cocoa making and utilized the Dutch process to make the chocolate taste better and it resulted in a much higher quality chocolate (Dellheim, 17). Even from the very start, the Cadbury company might not have succeeded without globalization, as it was the Dutch process of chocolate-making that allowed the British firm to really take off in the mid-19th century, with its signature Dairy Milk bar released in 1905. The family-run business gradually expanded over the years throughout England and then built its first overseas factory in Australia in 1919. This was during the modern period when other brand names such as Coca-Cola, Remington, and Campbell started making themselves known on the global market

ycles” material that otherwise would’ve gone to a landfill. TerraCycle reuses packaging to make new, useful products. Today, Kraft Foods is the largest sponsor of TerraCycle “brigades” – collection points – with more than 30,000 Kraft Foods-sponsored locations, and nearly seven million people signed up to collect waste across the United States at these locations. The program has been so successful that it has expanded internationally to the United Kingdom and Canada, and there’s more in the works.

According to Kraft, “because political conflict is endemic to policymaking, almost all policies represent a compromise on the goals being sought as well as the policy tools proposed to achieve them” (Kraft, 2015).

I investigated the Kraft-Heinz merger of 2015. I wanted to go back that far so that I would be able to see if the new company has stood the test of time, as it takes years for a merger to be completed.

The net profits for The Heinz Company for the past five years were obtained and compared to the same period for Con Agra Brands Inc., and Campbell’s. The assignment instructed students to obtain net profit for the past seven years, however, due to the complexity of operations in The Heinz Company and its mergers, and restructuring, gathering seven years was challenging. Data utilized was readily available for five years on the Marketwatch website but no other sites for periods prior to 2012.

Heinz derives 60% of its sales from places other than North America with 25% coming from emerging economies.

Customers are another important group of stakeholders who must be satisfied in order for Rogers’ to achieve growth. Customers are increasingly paying attention to company’s sense of corporate social responsibility (CSR) (Carpenter, Saunders & Harling, 2012). They have also become interested in health effects and benefits of chocolate and are concerned about ethical production of chocolate in third world countries. Rogers’ supplier did not have the capabilities yet to develop organic or fair-trade ingredients, which are being demanded by customers. Therefore, Rogers’ would have to source organic versions for all ingredients, which would cost extra money, time and effort. An easier alternative may be to emphasis the natural ingredients already

Cadbury was bought by Kraft in 2010 and is now a part of Mondelēz International, a US company. It will be fair to call it a messy deal and it left a bitter taste in many mouths. This takeover was clearly seen as an attempt to achieve the short- term gains of the shareholders and managers. Despite previous assurances the merger was followed by the closure of the Somerdale plant in Bristol leading to several hundred job losses. Kraft also moved the corporate Headquarter of Cadbury's to Switzerland, thus taking the tax money out of UK. This merger was seen as an act of bad faith and many suggested that takeovers like these which threatened British jobs and economy should be banned.

The Kraft Heinz Company successfully merged on July 2, 2015 when Heinz owned by Berkshire Hathaway and 3G Capital teamed up with Kraft Foods Group. The deal is considered one of the top most mergers in the food and beverage industry worldwide. Currently the company has its strong presence worldwide. Moreover both 3G Capital-a Brazilian Equity Firm and Warren Buffet together contributed by investing $10 billion in the deal making the company worth about $46 billion.