Kraft’s $21.1bn bid for Cadbury puts agencies on alert

Kraft Food’s $21.1bn bid for Cadbury has put the companies’ marketing communications agencies on alert, with the deal closely following Mindshare’s retention of Kraft’s media account in Australia, and a review of the Cadbury advertising roster.  

Kraft’s takeover bid, widely expected to be approved by Cadbury investors on February 2, is part of the US-based company’s aggressive strategy to become a leader in the global foods and confectionery sector.

It is also expected to follow the trend among many multinationals, including PepsiCo, Kellogg, Bayer HealthCare, Reckitt Benckiser and Coca-Cola, to review and consolidate its global agency arrangements in a bid to cut costs.

In Australia, Mindshare Melbourne – Kraft’s long-term incumbent – was recently reappointed to its estimated $15m media account. Ad agencies on the account are JWT and Badjar Ogilvy.

Meanwhile, in November Cadbury ended its creative relationship with The Furnace, trimming its roster of ad agencies to Saatchi & Saatchi Sydney, George Patterson Y&R Melbourne and Publicis Mojo. Its media agency Carat was not affected by the review.

John Petropoulos, Mindshare COO, said: “Kraft will be looking at where they will be able to create efficiencies and I’m sure marketing services will be part of that. But I don’t see any of this happening for at least another six months.”

Insiders says Kraft’s incumbents would naturally be in a more confident position than Cadbury’s in the event of a global agency roster review.

Mindshare, Carat and Starcom – which hold the majority of Kraft’s media duties in markets around the world – will be expected to be in the frame if a media review is prompted.

In a statement, Kraft said its offer to Cadbury would provide “potential for meaningful cost savings and revenue synergies”, adding that it would take a “best of both approach” in its marketing.

A Cadbury spokesman in Australia said was is “business as usual” until the February 2 deadline for Cadbury shareholders.

Kraft declined to comment.

Last year, Kraft made an ill-fated attempt to get the public to decide on the new name for its Vegemite spin-off, iSnack 2.0, which it was subsequently forced to rename Cheesybite.

The disastrous campaign made it on Mumbrella’s top ten list of 2009’s Biggest Marketing Disasters.


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