Saturday, April 3, 2010

The Best Expansion Plan for Kraft Foods

Dear shareholders and employees of Kraft Foods,

My name is Dolly Chia and I am the President of the Marketing Department. The purpose of this post is to inform all of you why acquiring Cadbury is the best strategic move for our company. Kraft Foods is the second biggest food company in the world with annual revenue of USD$42 billion. After thorough planning and research, my department has proposed for the company’s expansion in the chocolate industry.

Most people find chocolate irresistible, thus our company should expand in this market. By acquiring Cadbury, our company is able to gain more market share in the Global Cocoa, Chocolate and Sugar Confectionery Manufacturing industry.

The industry has a low market concentration, with 4 leading companies (including Kraft) accounting for about 36% of the market share in 2009. This further increased to 40.3% in 2010 due to aggressive acquisitions by leading companies. Kraft Foods should also use the same strategy to increase our market share. Our company will be the biggest in the Global Cocoa, Chocolate and Sugar Confectionery Manufacturing industry and own 14% of total market share if we acquire Cadbury.

Our chocolate products, which currently compete with other products in the industry are Côte d'Or, Alpen Gold, Milka, and Toblerone. Our research has indicated that there is more room for more products in the market. Chocolate is the most popular snack that is loved across different cultures and in terms of marketing, little advertisement is needed for consumers to buy chocolate.

Our company can target health-conscious consumers, children and adults by increasing awareness for the health benefits of moderate chocolate consumption. Chocolate is a known natural aphrodisiac, which causes the release of endorphins into the bloodstream, causing pleasure. Chocolate is also highly versatile, it can be drank or eaten in its pure form. With the many forms of chocolate and the joy it brings to consumers, it is definitely a product that is underdeveloped in our company.

Acquiring Cadbury would be an ideal addition to the robust brands we currently carry and maintain our status as one of the biggest company in the food manufacturing industry.

In the next post, I will be analyzing Cadbury’s market status as a chocolate manufacturer and why acquiring it would advance our company to newer heights.

Yours truly,

Dolly Chia

VP of Marketing

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