‘We didn’t ruin Cadbury – we made it better’

Cadbury needed to be taken over to improve its flagging business, the chief executive of its US owner has claimed.

Dirk Van de Put, chief executive of Mondelez, the Chicago-owner of Cadbury, said his company had improved the British chocolate maker since its controversial 2010 takeover.

He said: “It’s like you’re sick and you need to take some medicine. We took some medicine but in the end, the business is in a much better position than it was when we took it over.”

Many would take issue with the claim that Cadbury was struggling when Kraft Foods launched a hostile bid for the company in 2009.

The chocolate maker controlled about 10pc of the global confectionery sales and around a third of the market in Britain. Global sales were up 11pc in 2009 and it took £1.36bn in Britain alone despite the global economic downturn.

Today Cadbury’s market share is more or less flat in Britain compared to when it was taken over, at around 31pc. Sales were around £1.8bn last year in Britain, according to industry estimates.

However, Mr Van de Put argued that Cadbury has only been able to maintain its market share thanks to investment on a scale that only a major conglomerate such as Kraft Foods could provide. (Kraft Foods’ chocolate and biscuit brands were spun off as Mondelez in 2012.)

Mondelez said it has invested nearly £300m into Cadbury’s operations in the UK over the last decade to improve chocolate factories that it argues were under-performing European rivals.

Mr Van de Put said: “Look at the health of Cadbury as a brand and as a business now and when we took it over. The numbers, the consumers… It’s night and day.”

The £11.5bn hostile takeover of Cadbury was the most controversial foreign takeover of a British business so far this century.

The deal was opposed by everyone from unions to politicians and even City investors.

The prospect of a predatory American firm snapping up a beloved British brand was seized on by then-business secretary Lord Mandelson, who accused Kraft of wanting to “turn round a short-term profit and make a quick buck”.

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He said the deal would face “huge opposition, not just from the workforce and the local population but also from the British government”.

Unions warned that up to 30,000 jobs could be at risk from the takeover and protestors picketed Cadbury’s Birmingham headquarters after the deal was announced, with one sign urging Kraft to “go to hell”.

Even Legal & General, the investment giant that was Cadbury’s second biggest shareholder, opposed the sale of “this iconic and unique British company”.

However, ultimately money won out and the 199-year–old chocolatier was sold to the US. (Lord Mandelson admitted he was powerless to stop the deal but urged Kraft to continue making “perfectly formed Creme Eggs” in Britain.)

Kraft Foods appeared to prove its critics right when it almost immediately shut a Cadbury factory in Bristol, despite promising not to do so during the takeover process.

The incident earned a rebuke from Britain’s takeover regulator.

A decision in 2017 to move production of some Dairy Milk products to Poland also sparked outcry given Kraft had vowed to keep making the brand at Cadbury’s Bournville headquarters in the aftermath of the takeover.

Mondelez defended the move as a temporary measure as it upgraded the Birmingham factory.

Mondelez’s UK boss Louise Stigant said a small handful of Dairy Milk products continue to be made in Poland today, but “the majority” is now once again being made in the brand’s historic home.

Another £15m was spent upgrading the Bournville factory in 2021 to allow it to produce an additional 125 million large sharing bars of Dairy Milk each year.

Ms Stigant said: “The Bournville plant needed some very significant investment to make it competitive.”

Mondelez operates nine factories across the country, employing over 4,000 people. As well as 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 around 132,000 tonnes of chocolate per year in Bournville, of which about 90pc is sold in the UK and Ireland.

In the lead up to Easter, over one million Cadbury Creme Eggs and 400 million Cadbury Dairy Milk Buttons are made there every day.

Mr Van de Put has been in charge of Mondelez since 2017. He succeeded the architect of the Cadbury deal, Irene Rosenfeld.

Mr Van de Put said Britain has become a tougher place to operate in recent years.

The 62-year-old said: “[The UK] is certainly not the easiest country to do business in in the world.”

The Belgian-born executive is frustrated with how Britain’s exit from the European Union has played out.

“What we produce in the UK, a big chunk stays in the UK but we also export to Europe. With Brexit that has become complicated. We have to shift production around so the additional costs we have are quite big.

“Not that the UK should go back on Brexit, but if it could… get another agreement that would make it more easy for us.”

However, Mondelez remains committed to Britain and believes businesses can still make a success of it, he said.

“Would that mean that you would invest less in the UK? No, not at all. Would that mean that we think our business will not be so successful going forward? Not at all. It’s just more difficult.”

Like all businesses, Mondelez is being buffeted by rising costs, with Mr Van de Put reeling of “labour inflation, transportation inflation, commodities inflation” as the biggest headaches.

Rising costs have forced prices of its chocolates and snacks higher, but he denies this is aide of pushing up profits.

“Our prices go up, but our percentage margin has gone down.”

Asked what he makes of ongoing allegations that big food companies are pushing through over-inflated price increases, he said: “I can’t speak for the industry, but in our case, that is not true.

“What we have taken as a principle is that we do want to offset our input costs as much as we can.”

The company has chosen to shrink some products rather than increase prices. It cut the size of its medium Dairy Milk bars from 200g to 180g in 2022, for instance, but kept the price the same.

Ms Stigant and Mr Van de Put were speaking at the company’s Bournville headquarters close to where the chocolate brand was founded.

The company was established in 1824 by John Cadbury, a Quaker, who started off selling tea, coffee and drinking chocolate in the centre of Birmingham.

Cadbury launched its first chocolate bar in 1849 and, in 1854, was granted a royal warrant by Queen Victoria.

Bournville became the company’s centre of manufacturing in the 1870s and has remained so ever since. It was set up as a “model village”  with hundreds of cottages and houses for workers.

It was part of a paternalistic approach to capitalism that extended to paying workers unusually high wages for the time, creating a health service for them and introducing pension schemes.

In recent years, rivals have questioned Cadbury’s ethical credentials.

Tony’s Chocolonely, the Dutch chocolatier that has taken a public stance against eradicating forced labour in the chocolate supply chain, criticised the company in 2022 after a Channel 4 documentary claimed to have found children as young as 10 working in Ghana to harvest cocoa pods that it claimed ended up in Mondelez’s supply chain.

Mr Van de Put said Mondelez immediately launched an investigation and insisted the company is committed to eradicating forced labour in its supply chain.

He pointed out it is a far more complex task for a business the size of Mondelez because of the sheer number of farmers it works with and the complexity in the supply chain.

“Is it possible to take positions like Tony’s when you’re small, and your supply chain is very controlled? Yes. If you become bigger, like Cadbury is, or any other chocolate brands, we need to work on a more systematic solution, and we have extensive programmes.

“It’s going to take a while but it’s not like we’ve thrown in the towel and said this is never going to get solved.”

Mr Van de Put added: “I personally think that we’ve done a very good job and we’ve been very good stewards of the business.”

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