Giant sweet offer involves NZ

Fairfax

SWEET TOOTH: A woman eyes blocks of Cadbury chocolates. Coriolis Research retail analyst Tim Morris says chocolate is the only drug that is addictive only for women.

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Global food giant Kraft is trying to gobble up chocolate company Cadbury in a $24.6 billion deal.

This includes Cadbury's New Zealand business selling local favourites such as Minties, Pineapple Lumps and Moro bars.

The Kiwiana sweet brands are expected to continue, even if Kraft buys Cadbury, although unions hold some fears for Cadbury's 880 staff in New Zealand, with a factory in Dunedin.

Council of Trade Unions economist Bill Rosenberg said it was always a concern in international "rationalisations" that production could be shifted overseas, although a food sector analyst doubts job losses would occur in New Zealand.

The factory employs about 500 permanent staff and 100 seasonal workers. It laid off about 75 staff in the past year, with about the same number to go by the end of this year. A $51 million investment in the Dunedin factory, announced by Cadbury last year, secured the future of the plant under its present owners.

Cadbury's roots in Dunedin date back to the 1880s and it is now one of the two dominant chocolate and sweet companies in New Zealand, with annual sales of $283m. The other player is Mars/Masterfoods.

Cadbury is a much-loved brand in its home country, but internationally there had been so many food company takeovers that a food analyst in New Zealand doubted a US takeover would turn off British or New Zealand customers.

Kraft brands include Vegemite and Toblerone chocolate, but its sales are relatively small here at just $21m.

(Kraft used to make another New Zealand favourite Chesdale cheese but that is now owned by Goodman Fielder.)

Internationally Kraft is keen on the lucrative chocolate business.

Coriolis Research retail analyst Tim Morris said the global food industry was in "terminal consolidation", because it was hard to expand otherwise.

"Chocolate is an area that is very attractive, because it is much more resistant to [competition from] store brands," he said.

A small range of brand products seem to hold out against store brands, from razors, to shampoos, sweets and chocolate.

"Chocolate is the only drug that is only addictive for women," he said. "They are significant consumers of chocolate, the bigger blocks [especially]."

The business was also attractive because chocolates and sweets were often sold in other ways outside supermarkets, such as in corner shops or from vending machines, so suppliers did not depend only on the big supermarket chains.