Kraft faces bitter sweet Cadbury anniversary

CADBURY owner Kraft faces a difficult few weeks in the run-up to the first anniversary of its controversial takeover of the Bournville firm.

The beginning of the year has finally seen the closure of the Somerdale plant, near Bristol, which was the subject of so much controversy following the US firm’s £11.5bn acquisition of the chocolate maker last year.

In a bid to win early support from workers and unions, the US company said it would reverse a decision by the previous management to close the plant – only to make an embarrassing U-turn shortly afterwards when on closer inspection, it discovered the closure plans were too far advanced.

The PR disaster was compounded when senior vice president Marc Firestone was brought before the Commons Business Select Committee and told by MPs to explain why the company had reneged on its pledge to keep the factory open.

The company was then rapped on the knuckles by city watchdog, the Takeover Panel for its actions.

Now the factory has closed and production of well loved brands such as Curly Wurly, Crunchie and Double Decker has been switched to Poland.

While it will be pleased to finally draw a veil over the saga of the Somerdale plant, Kraft  now faces fresh controversy on the sub-continent, where Cadbury has a large presence.

Reports out of India claim the country’s finance ministry is looking into whether Kraft should pay taxes to Indian authorities following its acquisition of Cadbury last year. The investigation has been prompted in response to a public interest petition.

The investigation would be the second of its kind in India following the country’s decision to order telecoms giant Vodafone to pay £1.6bn ($2.5bn) tax on its takeover of Hutchison Whampoa’s mobile phone business in 2007.

Many in India are worried that if the probe into Cadbury is followed through with a similar request to Kraft, then many other global conglomerates may be put off from investing in the country, thereby damaging its economy in the long term.

This, added to criticism over Kraft’s decision to reduce the size of some chocolate bars while maintaining their price, mean the first anniversary of its ownership of Cadbury could be a bitter sweet occasion for the US firm.