An Associated Press report Monday suggested Switzerland's Nestle SA may make a takeover bid for Cadbury, joining Kraft, which has made the same offer twice, and an expected joint offer from Pennsylvania's The Hershey Co. and Italy's Ferrero International SA.
When asked "Who will eventually buy Cadbury plc?", 42% of respondents to a Kraft/CSP Daily News Poll [image-nocss] this week said Kraft will ultimately make the acquisition, while 30% said Hershey/Ferrero, 16% said Nestle, and 6% each said "other" or "none."
Talk of a bidding war pushed shares of British chocolate-maker Cadbury plc to their highest level in at least five years Monday.
Cadbury is the chess piece that could determine who leads the world's confectionery market, depending on whose hands the company ends up in, according to a report from AdAge.
If Cadbury lands in the portfolio of Kraft, that marketer would topple Mars from its perch as the globe's leading confectioner, a status Mars assumed after winning control of Wrigley last year. But with Ferrero and Hershey teaming up to acquire Cadbury, that trio would dwarf Mars even more than a Kraft/Cadbury combo.
According to Euromonitor, Mars had 14.5% of the $167 billion confectionary market in 2008 and Kraft/Cadbury would eclipse that with a combined 15% share. A Cadbury/Ferrero/Hershey matchup, however, would trump them all, yielding a player with 19.3% of the world's confectionery market, Euromonitor figures show, according to the AdAge report.
Of course, it's far from clear howand even whethera Hershey/Ferrero collaboration to take over Cadbury would work, and which Cadbury brands would be assumed by which partner. It's also unclear what such a combination would mean for marketing.
Kraft is a big-time marketer and an accessible public company, the report states. Hershey is also public, but controlled by a family trust; and Ferrero is a closely held Italian company that's long avoided media scrutiny.
Hershey and Cadbury have similar measured-media spending outlays in the U.S., according to TNS Media Intelligence. During 2008, Hershey spent $151 million, while Cadbury spent $134 million, AdAge said. Last year, Cadbury focused most of its spending on bigger brands Trident and Stride, each $40 million or more, while Hershey spread its dollars more evenly across its portfolio, with about $33 million spent on Hershey chocolate, $24 million on Hershey's Bliss, and $22 million on Ice Breakers gum and mints.
The data is likely to shift dramatically in 2009, though, as Hershey has committed to a big year, with increases in spending, according to the report. The company said that Kisses and Reese's have responded to increased support this year. Hershey has also brought Twizzlers and Kit Kat back to television after a five-year hiatus, which will likely upset overall spending by brand. Things would be less likely to change with Hershey in the driver's seat, as the company already licenses Cadbury products in the United States.
Ferrero is more of a mystery. The company, which has said it is reviewing its options for a bid, spent about $35 million in measured media during 2008, focusing heavily on Ferrero Rocher, its Roudnoir dark chocolates and Tic Tacs, according to TNS Media Intelligence. The company does limited support of cult favorite Nutella inside the United States., relying heavily on word-of-mouth.
In a research note, Credit Suisse analyst Robert Moskow sought to tamp down enthusiasm for Hershey as a buyer. "Given Hershey's size relative to Cadbury, bidding for Cadbury is a big task," he wrote, according to AdAge. "Any deal would probably therefore need a third party." The most popular combination, he added, is the additional prospect that Hershey could buy Cadbury's chocolate, while Nestle buys the gum brands.
Regarding the prospect of Hershey teaming up with Ferrero, Moskow cautioned, "It strikes us that any deal involving Hershey and Ferrero would be complicated; there is no obvious way to split the assets, as for the most part both companies could feasibly want any part of Cadbury."
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