Cadbury failed to demonstrate intrinsic value of brands

A more detailed breakdown of the value of each Cadbury brand could have saved the company from a takeover by Kraft, consultancy Brand Finance and the Institute of Practitioners (IPA) have revealed.

According to an analysis by Brand Finance and the IPA, the Cadbury brand portfolio alone is worth about £3.2bn – more than a quarter of the total £11.6bn the confectioner is to be sold for.

The consultancy argues that had this information been published widely, it could have made a difference to the value of the eventual sale. The deal instead focused on fixed assets, estimated to be worth £1.7bn and receivables worth £923m, among other costs that are published by the brand in annual balance sheets.

In September, when Kraft first submitted its bid, Brand Finance told Marketing Week it estimated that Cadbury’s brand value would be £2.3bn before a takeover was completed, based on analyst forecasts. Cadbury’s numerous defences and revised forecasts have helped to increase its value, though this has not been reflected in the accepted takeover bid.

IPA director general Hamish Pringle says: “The Cadbury brand clearly has huge brand equity and brand value, which went entirely unreported in the Cadbury plc balance sheet. The question is whether more detailed reporting of intangible asset values – particularly brands – in its annual reports would have saved Cadbury from takeover. I believe it could have helped to avoid the original opportunistic bid by Kraft.”

Kraft executive vice-president of strategy Michael Osanloo says it will not “harm the history of Cadbury and the integrity of the brands…we will be much more aggressive about investing in marketing and advertising at Cadbury.”


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