Cadbury and the amazing chocolate brain drain

News that Kraft would trim its global marketing operations following the acquisition of Cadbury may not have surprised most observers. Yet, the news has awoken fears that Kraft’s plans for the British confectionery giant is leading to a “brain drain”.

Since rumours of the takeover surfaced late last year, critics have consistently warned that Kraft could remove the strongest brand assets from the Cadbury brand and move to its own operational structure.

On agreeing the deal in January, Kraft made assurances to say this would not be the case. The company said its final offer “represents a compelling opportunity for Cadbury securityholders” and “will provide thse potential for meaningful cost savings and revenue synergies”. It also pledged to take a “best of both approach” to its marketing “augmenting the world-class capabilities of both Kraft Foods and Cadbury”.

At the time, experts said that Kraft may well be keen to take on the strategic innovation Cadbury had become famous for in its advertising over the past few decades. Yet, the departures of key strategists and marketers have raised fears that the US food giant is engineerinf a brain drain.

Liz Newell, a director at Mannerisms, explains: “When Kraft bought Cadbury there was immediate fears and all the media focused on Cadbury’s past ads as a pointer to how it became so successful. It was hoped that this would continue to be the way forward for the brand, but instead we are seeing a super conglomerate being created and several key personnel leaving the enlarged business. The brain drain is rearing its ugly face once more.”

Key staff to announce they are leaving Cadbury include Mark Reckitt, the chief strategy officer, global brand director Lee Rolston, UK marketing director Phil Rumbol and Dionne Parker, head of global corporate communications. Other non-marketing senior executives have also left. Tamara Minick-Scokalo, formerly president of global commercial is the only face to re-emerge as president of the chocolates division while UK managing director Trevor Bond has been named president of Kraft Foods Europe.

As Marketing Week revealed a fortnight ago, several Cadbury global marketers could face redundancy if they do not sign new regional contracts under Kraft. This follows a shift to a category-led business structure meaning Cadbury staff on global contractual terms are being offered new regional or brand-specific jobs within the enlarged Kraft Foods business instead. In all, there are 165 senior managers at the company’s headquarters, and reports suggest that only 45 roles are available.

Marketing is already under pressure. Kraft’s executive vice-president for corporate and legal affairs, Marc Firestone, told the government’s business, innovation and skills select committee that “Kraft will keep Cadbury’s marketing and sales operations in the UK because they understand the British market”. Yet, earlier this year Marketing Week revealed that Kraft officials in Europe will handle strategic decisions.

Eyebrows have been raised over recent ads, Cadbury pulled a Flake ad for being too sexy. Critics suggested that the TV ad by Saatchi & Saatchi was far too rude for Cadbury’s new parent Kraft and its boss, Irene Rosenfeld. The ad showed “a lascivious devil character throwing Flakes at virginal women who gorge on the chocolate in a sexually suggestive manner”.

Cadbury denied Kraft had a role in vetoing the ad in favour of the currently airing artistic ad. “The decision not to proceed with the Saatchi & Saatchi ad was taken in late 2009 by the marketing director of Cadbury and the Flake brand managers because we simply felt it would not work with female consumers. That’s why a new Flake ad was commissioned and is currently on air. All the decisions pre-date the Kraft acquisition,” the company says.

However, one ad agency source close to the brand denies these claims and says Kraft’s opinion does carry weight. “If you look at what’s come out of late, there is a lot of retrospective ads like bringing back the Caramel bunny and the Maynards moose, because it is felt these reassure consumers. Even the Chocolate Charmer ad doesn’t drift into Gorilla or Cars territory, it has chocolate everywhere. The surreal and beautiful is out and the traditional is in. It’s not quiet the strategy of the Cadbury everyone knows and loves.”

A core reason behind this brain drain seems to be a reluctance from Cadbury staff to relocate. Despite Kraft’s decision to centralise its global chocolate research and development into the Cadbury head offices in Bournville, in a bid to “bring together Cadbury and Kraft Foods talent to create a global centre of excellence for chocolate research and development – senior jobs seem to be scattered across the world. Understandably these senior staff are less than keen to move their entire families.

Thomas Winterbourne, principal analyst at international consultancy ZX Consulting, says: “It’s a real problem that the synergies that Kraft wanted to see happen are falling apart in front of them. Basically, we’re seeing a real brain drain and Kraft is harnessing its own wisdom, rather than the best of both. What we’re seeing now is just the beginning, but ironically all the fears Cadbury had of losing its intrinisic value through a takeover are becoming dangerously close to being realised. Kraft must produce a firm roadmap for the company if it wants to keep the brand close to its chest like this.”

This will be easier said than done, according to one former Cadbury marketing director.

“What we’ll begin to see as the integration becomes formalised is one or two Cadbury brands added to its list of power brands – namely Kenco, Philadelphia, Dairylea and Terry’s Chocolate Orange. I’d guess Dairy Milk, Halls and Trident will also be on the list as their main global priorities and will be the core focus of marketing – but we’ll see a much more straight forward approach to ads than has been Cadbury’s forte in the past.”

He adds other brands like Oreo and Mikado biscuits, Toblerone and Milka chocolate, Ritz crackers and Maxwell House and Carte Noire coffee, as well as Maynards candy and other bars will rely on their own brand equity to sell them, making Kraft’s reassurances meaningless.

It seems the calls for a meaningful “best of both” approach has fallen on deaf ears as Kraft sinks and the dreaded “brain drain” continues to deepen. While what was a Pick’n’mix opportunity for Kraft appears to have turned into a more lacklustre Selection box – the key question for the US food giant now is “Can an old Gorilla teach Kraft some new tricks?” Watch this space.