Kraft may be the second-largest food company in the world but new first quarter numbers show that the business was going precisely nowhere until it acquired UK chocolate maker Cadbury in a hotly-contested and highly controversial $18.9bn takeover in January.
Cadbury brands made a big contribution to Kraft’s disappointing revenue growth of just 7.3 per cent in North America while in Europe and emerging markets, where the numbers were substantially better, it accounted for the vast majority. In fact without it Kraft would hardly have grown at all in any of these markets. In all Cadbury contributed 26 per cent of Kraft’s net revenue of $11.3bn in the quarter.
One prominent Kraft investor, sage of Omaha Warren Buffett, opposed the bid for Cadbury because he thought Kraft CEO Irene Rosenfeld overpaid. That may still prove to be the case as Kraft borrowed over $11bn to finance the bid and that burden could hurt Kraft (and indeed Cadbury) in the future.
But Ms Rosenfeld would have had some thoroughly dreary figures to report without the Dairy Milk chocolate maker.
And how will Cadbury brands fare under Kraft?
Well they’ll surely be run for profit in the first instance to pay down that debt. And even before the acquisition of Cadbury Kraft had a job lot of other European chocolate brand acquisitions including Milka, Terry’s and Toblerone. It’s quite clear from these figures that Cadbury was beating them into a cocked hat.
But will Cadbury, under Kraft’s ownership, go the same way as this bedraggled trio?