Cadbury

January 2010: Kraft is negotiating a take-over of Cadbury.

Brands do not find places on financial statements, which is a real irony! Some of the best listings on every stock market are of companies whose most valuable assets are their brands. Cadbury is such a company, and the corporate name is the most valuable of all! However, the company has made a series of judicious acquisitions over the years. Here is a stock market member that gets you far more than nominal value when you buy and hold its shares!

Trident, Halls, Dr. Pepper, Seven Up, Schweppes, and Hawaiian Punch are just a few of the major names in the business which Cadbury owns. A key value driver is that the company’s brands have immense potentials in all countries, ranging from the most developed ones, to the emerging leaders of tomorrow. The company’s distribution networks are well equipped to service global demand, and unification of country markets suits the branding competencies of the company, at least for conventional segments.

It is rare for brands to be cash cows and have future growth avenues at the same time. Cadbury has this immense profit potential, for each of its key brands balances short-term revenue objectives with significant strategic advantages for markets of the future. The company has a broad basket of products with appeal for many demographic and economic clusters.

Some questions remain for the most exacting of stock market analysts. It is possible to question the strategic procurement plans of Cadbury, for it is dangerously dependant on farm products, the supply of which fluctuates on world markets. The situation could aggravate with new entrants in this profitable field. However, one has to concede that shelf availability has never suffered until now; perhaps the company does have some inter-locked contracts in place, which are not known in the stock market domain.

Cadbury is yet to demonstrate street fighting and cultural sensitivity to succeed in markets such as China. The company’s best shares are in structured markets with white Caucasians as prime customers. Will Cadbury make the transition to the markets of the future? The stock market reporting system does not provide sound evidence one way or the other!