Irene Rosenfeld has nabbed the headlines but if Kraft buys Cadbury, it’ll be Nick Bunker running the show here. Liz Hamson asks Kraft’s UK boss if he relishes the prospect
Throughout Kraft’s dogged pursuit of Cadbury, the focus has been on the battle of wits between Irene Rosenfeld and Todd Stitzer. But if Kraft does pull off the deal, it won’t be Rosenfeld running Cadbury on a day-to-day basis. It’ll be Nick Bunker.
Not that the hitherto low-key Brit in charge of Kraft’s UK and Ireland business is keen to dwell on the point in his first major interview since becoming MD in April 2008. Indeed, he’s extremely guarded about the subject unsurprisingly given the interview’s timing just days before Cadbury’s second rejection of Kraft’s “derisory” offer and the latter’s final pitch. “I’m sure you’ll understand why I won’t speculate on this type of thing,” he says apologetically. “There are others closer to the deal than me.”
It’s hard to believe the man who claims to have chocolate in his blood (he joined Mars as a graduate trainee then moved on to Terry’s) is involved only “time to time” in the deal. But whether he’s understating his involvement or not, he’s clearly been tasked with one deal-related job: talking up the “slow growth” conglomerate’s UK achievements and reinforcing the point that with or without Cadbury, Kraft is in a good place. “We’ve just finished two years of really good growth and whatever happens next, Kraft in the UK has been a great British success story,” he says.
Bunker, who grew up down the road from the Kraft HO in Cheltenham, doesn’t say as much but evidently feels the portrait of a plucky British stalwart at the mercy of a marauding multinational is over-simplistic and admits he has been “perplexed” by some criticism levelled at Kraft. It, too, has a strong British heritage, he points out.
“We’ve been in Britain for 85 years, we have roots here, tradition here, 1,500 very dedicated employees here,” he says. “The UK is a very important part of Kraft’s business and we’ve continued to invest in the UK. The 7% Nielsen reports well, the numbers I look at are even better.”
How much better, Bunker won’t say. He does, however, reel off impressive category growth figures. “In our two big categories, coffee and cheese, we’ve outperformed the market so we’ve grown share,” he says, pronouncing ‘categories’ with a ‘d’ instead of a ‘t’ (the upshot of 13 years on the road). “Our coffee business grew 14% last year compared with the category’s 10%. In cheese, we grew 8% compared with 6%.”
Driving this growth is a strong NPD and marketing pipeline and “great brands and great people”, says Bunker. Aptly for someone described by one source as “straightforward and good on detail”, he also stresses the importance of getting the basics right and being consumer led. “There’s a really good example here, which is to do with sustainabilty,” he says. “You know what, people vote with their wallets, and last year we launched all the mainstream Kenco variants with 75% Rainforest Alliance certified beans. This year we will go to 100% and we’ve just launched this refill pack which is 97% less packaging. Our business has grown 17% in that time with Kenco.”
Such figures are all the more impressive in a downturn. dairy in particular has had a challenging time. Yet Kraft’s Philadelphia business has grown 13% and Dairylea is up 3.7% excluding Lunchables, which Kraft doesn’t classify as a cheese brand.
NPD has been key. Earlier in the year, Kraft launched Dairylea Dunkers with Ritz. “They’re two very well-known brands with lots of equity and became our second-bestselling SKU almost overnight,” says Bunker. He is keen to exploit further cross-category synergies. “The combination of biscuits and chocolate, of cheese and biscuits there are innumerable combinations.”
Dairylea and Philadelphia will also benefit from new ad campaigns, Philadelphia’s continuing in the same vein as last autumn’s Simple Food Made Delicious.
One of the most exciting categories as far as Bunker is concerned, however, is biscuits. Kraft took back the rights for Ritz and Oreo from United Biscuits in 2006 and bought Danone’s global biscuit business in 2007. “Since then, we’ve broken into the top 10,” he says. “We’re by miles the fastest-growing company in the category, growing at 14% compared with the category’s 6%. We’ve had some great success both with Oreo and now with Mikado.”
Mikado was one of The Grocer’s top launches in the Top Products survey, having achieved sales of £6.8m since its February launch. Bunker attributes its success to a clear USP. “With Mikado there was an opportunity to breathe life into the category and give consumers something different to their day-to-day biscuit,” he says.
Kraft is hoping to break new ground again with Belvita Breakfast, an innovative slow energy-release biscuit that launches this week. At the moment, however, it’s not biscuits people are talking about. It’s chocolate. Kraft’s chocolate business in the UK is small a distant number four which must make the prospect of overseeing Cadbury a tantalising prospect.
Not that Bunker is about to deviate from the script. “We’ve been very clear from the outset that the proposed combination of Kraft and Cadbury can provide tremendous opportunities for both,” he says. “The proposal is about growth and investment and when it comes to UK jobs, we’ve said publicly we will invest in Bourneville. We’ve also said we would hopefully be in a position to keep the Somerdale facility open.”
Despite his reticence, it is evident from his allusion to Milka, which was only available in two countries when Kraft bought it in 1990 and is now a $1.6bn brand sold in 22, that he sees parallels with Cadbury.
Whatever happens, Kraft is in a winning position, he insists. “Last year we invested through the recession, which at the time seemed brave but was clearly the right thing to do. I can’t see us changing our strategy as we come out of recession.”
Of course, it may have to if it buys Cadbury. As The Grocer went to press, Kraft was still the frontrunner but the deal was in the balance. It has “a reasonable chance of catching Cadbury” if it raises the cash component and the overall price to nearer 800p, believes Shore Capital’s Clive Black. A lack of interest from other parties has helped. “Cadbury’s rhetoric is that it wants to stay independent but without a bid its board will be under pressure,” he says. “Kraft’s hand has improved in the last week.”
Bunker’s fortunes may have too.