Former Cadbury bosses are "sickened" by Kraft Foods' "astonishing" waste of money and talent after chief executive Irene Rosenfeld's decision to split the business in two.
Speaking exclusively to The Grocer, Mark Reckitt, Cadbury’s former chief strategic officer, said he was astonished and disappointed at the news.
“Strategically, this makes sense as there are two distinct businesses,” he said.
“What’s astonishing is that when Kraft bought Cadbury, this was never on the agenda. We said value comes from focus. Kraft said value came from scale.
“What’s disappointing from a Cadbury point of view is if Kraft had this on the agenda when it acquired Cadbury, it could have retained all that was great about Cadbury, using the Cadbury business model, and using Oreo and the chocolate business in Europe and Latin America to develop category-based growth.
“Kraft’s regional operating model made it much more difficult to mobilise resources for growth.”
Reckitt refuted Kraft’s earlier claim that only the Cadbury plc team was lost in the 18-month restructuring. He cited the exits of execs such as Tony Fernandes, head of supply chain, who moved to Pinnacle; David MacNair, head of science and technology, now at Mars; and marketing director Phil Rumbol, who has since set up his own advertising agency.
“A lot of great people, bound up with running a global business model, were lost – either due to the regional structure of Kraft or because they did not want to move to Zurich or the US, and saw the UK deemphasised.
"Maybe if they had introduced this new structure they could have been kept.”
Also speaking exclusively to The Grocer, Alex Cole, the former head of corporate affairs at Cadbury, added: "How heartbreaking to have taken over a year to get to this. All that time and money integrating two businesses – with the pain and payoffs that entailed – only to now do the same in reverse.
"It makes me sick.”
And speaking to The Daily Telegraph, former Cadbury chairman Roger Carr said: “Kraft paid a good price for Cadbury, but they were never good owners for the business.
“The pure-play model is a move in the right direction and one that I advocated strongly. I am just hopeful they call the confectionery business ‘Cadbury’. After all, that is essentially what it is.”
A former colleague of Irene Rosenfeld at Kraft said the idea of forming a global sweet snacking business was very much in Rosenfeld’s vision before the Cadbury business was acquired, but that the acquisition had ultimately tried to crowbar this into Kraft’s global structure.
“Irene is essentially a Kraft lifer,” the exec said. “When she came back to Kraft, she made it very clear that the idea of forming a global sweet snacking business was compelling from what she had seen at Frito Lay, where she was exposed to much faster growing categories and markets.
“At that time, there were tentative rumours of a split to allow this global snacking company to go forward, but it was tentative. At the same time, there were proposals from Cadbury to do the same in reverse.
“What’s going to be very telling is what role Irene takes herself. The only job she’d want to do is the global snacking business, but I’ve got a feeling she may not get it.”
They exec added: “If she doesn’t take the job it means it has been thrust upon her by activist investors. I also sense, knowing Irene, that she may not want it anyway. She’s power-hungry, she really loves her US kudos; being one of the top three most powerful women in the US, she loves all that.
“If this happens and she runs the international business, she’ll lose that kudos and prestige.”
The former colleague added: “I think it will create a lot of enterprise value but within 18 months, to have reversed its former decision, that looks like a cock-up.”
The angry response comes after Kraft yesterday announced it was splitting in two, forming a global snacks business - with Cadbury at its heart and including the Oreos brand - and a North American grocery business based on brands including Oscar Mayer and Philadelphia.
Kraft unveils dramatic plan to split in two (4 August 2011)