Judging by today’s headlines, Kraft’s $19.44 billion purchase of U.K.-based Cadbury Plc. is not going down well with most market insiders: Warren Buffett went on CNBC and said he “felt poorer” (after Kraft upped the ante by almost $3 billion) andÃ‚Â MarketWatch’s Simon Constable warns, “Kraft is going to get indigestion from gobbling Cadbury.”
While the deal may present major challenges in terms of leverage and global integration, at least it makes sense in one of the 155 countries where Kraft Foods operates: Argentina. MartÃƒÂn Bidegaray at ClarÃƒÂn offers a good analysis and ranking of both Kraft and Cadbury’s offerings in the local market and finds two very complementary brand portfolios.
Kraft has candies, chocolates and crackers like Terrabusi, Pepitos, Milka, Variedad, Melba and Tita, while Cadbury is Argentina’s King of Chicles with brands like Bubbaloo and Beldent. And just as the acquistion will put Kraft/Cadbury that much closer to global market leader Nestle, so too in Argentina will the new duo be better positioned to take on local market leader, Arcor, which dominates several of the local candy/cookie/cracker segments and generates annual revenues in excess of $2.2 billion.