Kraft Wants to Gobble Up Cadbury for Indian Market

The Journal reports that, according to AC-Nielsen, Cadbury -- which entered India in 1947 -- now controls 70% of the Indian chocolate market. And while chocolate is a big favorite with Indians, Cadbury estimates that “more than half of India’s more than one billion people have never tasted chocolate.”

Apparently Kraft would also like the ability to tap into Cadbury’s distribution network in India, including small kiosks and family-owned stores.

This information intrigued me because I just watched, thanks to Netflix, the 2006 American movie “Outsourced” about call center manager Todd Anderson from Seattle (played by actor Josh Hamilton) who has to train his replacement in India. When Todd complains that the call center workers don’t understand America, they retort that he doesn’t understand India, which indeed he does not.

Cadbury has done business in India for a very long time. Will Kraft be able to change its corporate culture to accept how business is done in India? Lip service is nice, but actions speak louder than words.

A few months after I got my M.B.A. from The Wharton School of the University of Pennsylvania I went to work in the international marketing department of Max Factor, then still located in Hollywood. In those days of telexes to foreign countries, we would try to make our American products fit into the markets of Japan and Europe. But there were market differences that meant that our products didn’t always directly “translate” abroad.

Although the world is wired globally, this does not mean that at the grassroots level, where Cadbury sells its chocolates in India and Kraft hopes to sell its chocolates, American business know-how will fuse easily with Cadbury-Indian traditions.

While the Kraft offer of $16.8 billion sounds like a great deal of money for a confectioner company takeover, the money could easily melt away due to any number of missteps.

The September 9th Wall Street Journal story “War of Words Heats Up Over Cadbury” included the quote from Kraft Chief Executive Irene Rosenfeld that Cadbury has “limited opportunity” to create value for shareholders on its own. That may be – and at Wharton we were taught to always build value for the shareholders, but it would be a shame if Kraft bought Cadbury and then managed to mess up Cadbury’s recipe for successful chocolate sales in India.

Written by Phyllis Zimbler Miller
http://www.MillerMosaicLLC.com