Cheese group deserves a good grilling

IT IS hardly surprising that the Business Select Committee in Parliament wishes to question managers of US food group Kraft, previously best known in the UK for processed cheese, about its takeover of chocolate maker Cadbury.

IT IS hardly surprising that the Business Select Committee in Parliament wishes to question managers of US food group Kraft, previously best known in the UK for processed cheese, about its takeover of chocolate maker Cadbury.

The acquisition of such an iconic British firm by a foreign owner is controversial in itself, even without Kraft's U-turn in confirming Cadbury's plans to close its Somerdale plant, near Bristol, which it had previously indicated it planned to retain if its bid succeeded.

Whether Kraft agrees to submit to a grilling by MPs is another matter (it cannot be compelled to appear) but it would be well advised to do so because the issue is unlikely to go away.

And, given the level of controversy already occasioned by the deal, Kraft would also do well to consider any future changes at Cadbury very carefully.

The Cadbury brand has already faced challenges in recent years, with the decision to close Somerdale, first announced in 2007, coming little more than a year after the company was forced to recall more than one million chocolate bars as the result of a salmonella alert.

With the company no longer strictly qualifying for the nation's affections as “British”, any further brand-value issues could cause lasting damage.

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However, it has to be acknowledged that, as the new owner of Cadbury, Kraft is entitled to manufacture its products wherever it wishes.

Similarly, one has to accept that it was genuinely Kraft's intention when it launched its takeover bid for Cadbury last year to retain the Somerdale plant, and not an entirely cynical ploy as the Unite union has suggested.

However, there is a legitimate question to be asked, by the union and, if they get the chance, by MPs too, over why Kraft repeated this intention just a week before clinching the takeover, only to reverse the decision so soon afterwards.

Kraft's explanation is that it did not realise how far advanced Cadbury's plans to transfer production to Poland were.

However, even in the context of a takeover offer valuing Cadbury at more than �11billion, the UK firm's �100million spend on new facilities in Poland still represents a substantial sum.

It is one thing for Kraft not to have been aware of the advanced state of the transfer plans when it first launched its takeover offer, but quite another that it was still unaware a week before completing the deal.

That it genuinely did not know can hardly be in doubt; the group would simply not have set itself up for such criticism deliberately.

But Unite, MPs and, indeed, Kraft shareholders, are entitled to ask whether Kraft ought to have known, before raising and then dashing the hopes of the Somerdale workers in the space of little more than a week.