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Hershey-Cadbury hook-up not such a sweet idea
Takeover might make business sense – but many fear for the quality of the chocolate
There are new bidders for Cadbury's making the takeover of the British confectioner a potential four-way M&A battle. Over the weekend, Hershey, the US confectionary giant, came closer to launching a challenge to Kraft's £10.4bn offer, while the Swiss chocolate maker Nestle, makers of Nescafe coffee, Rowntree and San Pellegrino water, is also preparing an bid.
The Italian producer Ferrero, makers of Nutella and Ferrero Rocher, is also exploring options, including a possible hook-up with Hershey.
Roger Carr, the chairman of Cadbury's, told Hershey - the firm's preferred partner - to pay up or face disappointment. The company has already told Kraft that its offer is considered "derisory."
Hershey's trustees have given their blessing to a bid and it may also make better strategic sense for Cadbury as neither firm has much presence in the other's primary market.
But Nestle is cash-rich and could almost certainly complete the deal. "If they wanted it, they'd have it, it's a bit of a slam dunk. Nestle has the financial resources," says Jon Cox, an analyst at Kepler Capital Markets in Zurich.
But will this be good for chocolate enthusiasts? Many fear not - especially if Hershey emerges as the winner. The firm, run from the single-industry town of Hershey in Pennsylvannia - 'The Sweetest Place on Earth' - is the world's largest chocolate maker.
But Europeans find Hershey products - Hershey Bars, Reese's Pieces, Hershey's Kisses - as well as US-distributed Cadbury products, inferior and disappointing. Hershey products tend to be low in cocoa content, waxy in texture, chemically-enhanced and overly sweetened. Many do not even contain cocoa, but chocolate-flavoured vegetable oils, called 'vegelate', instead.
There is a precedent for this concern: four years ago, Hershey bought a boutique chocolate company named Scharffen Berger, an American chocolate that was designed to be as good as a European confection.
The New York Times writer Arthur Lubow says Scharffen Berger quality soon deteriorated. "The texture was chalky," said Lubow. "The cherry notes had vanished. It was becoming just another mediocre American chocolate."
Lubow worries that Cadbury-owned Green & Blacks - a coastal hit in the US - could suffer the same fate if brought under Hershey ownership. "I have started the search for my next chocolate bar," he says. ·
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I entirely agree! My uncle worked for Cadbury's and would bring us "chocolate waste" - another oxymoron! when we were children. Even the home grown product has deteriorated - the chocolate on a Crunchie used to be much thicker, as was the bar itself. But American chocolate and sweets are very poor compared with European products. I love sweet things, but I wouldn't eat a Hershey bar under any circumstances. Fight them off, Cadbury's, or you are doomed.
The only chocolate I have ever thrown away was a bar of CDM, which I bought when out in LA a few years back - it was made by Hershey, and was singularly disgusting!
I would imagine however, that given how much we dislike American chocolate (an oxymoron if ever there was one!), Hershey would not shoot itself in the foot by changing the UK product.
And if it does change? Well, then they may well have a diet product on their hands; after all, it would definitely put *me* off ever eating it again!