Will the planned buyout of Cadbury have any lessons for Social Enterprise?

I know it’s a bid odd to be talking about a major PLC on the BSSEC blog but when you look back at the origins of Cadbury and its early development there are a great deal of similarities with modern day Social Enterprise: the community theme, the environment and the social aims for the workforce and families.

It could be argued that as Cadburys has got bigger and more commercial it has moved away from some of their original values, but maybe the recent decision to buy organic chocolate Green and Blacks and the swap to use Fair-trade ingredients for Dairy Milk showed a return to them?

However, the recent news that Kraft is to purchase Cadbury is maybe not such good news. As the price of the shares go up the temptation to sell (or sell-out) increases – ultimately only the share holders win. What happens next will probably be a cycle of decline as Kraft seeks to get an ever increasingly profitable return on the investment made.

Over the next few years we may well be seeing the end of any further fair-trade development and an end of the not so profitable ranges; break ups will be on the cards, as will redundancies and closures – all for the sake of more profit for Kraft (or whichever company eventually buys Cadburys). A move so far away from Cadburys beginnings and so far away from Social Enterprise.

So what’s the lesson for Social Enterprise? Get your legal structure right? Don’t get too big? Maybe there’s nothing at all…it’s just a very sad day for Birmingham and the region. Of course, there’s always a silver lining as today may well be the time to start a Social Enterprise manufacturing and selling chocolate!

  1. Alun Severn Reply

    Mark,

    When you say —

    “Over the next few years we may well be seeing the end of any further fair-trade development and an end of the not so profitable ranges; break ups will be on the cards, as will redundancies and closures – all for the sake of more profit for Kraft (or whichever company eventually buys Cadburys).”

    — I’m sure this is true, but the picture isn’t always quite that simple. I think the major global brands and international corporates will continue with what has been an increasingly noticeable trend in recent years: buying anything that opens up profitable new markets to them. This may mean buying up ‘green’ brands, ethical brands, fairtrade brands… But equally, it will also means divesting themselves of those brands if they either cease to be profitable (i.e popular in the marketplace) or can raise a greater return by being sold on to another corporate that wants them more badly.

    For corporate businesses that’s the only strategy that makes any sense and I don’t think their current or future interest in either ethical brands or practises fundamentally changes this. They are there to create shareholder value and that means capturing new market share when appropriate, or releasing that market share when doing so commands a greater return…

  2. Mark Ellerby Reply

    Alan,

    Totally agree with everything you are saying.

    It’s somewhat sad though that the larger shareholders, driven by their own self interests, erode the original values that Cadburys was built on.

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