Post on Kraft 24/03/2011
Posted by Jacob Rees-Mogg, MP for North East Somerset, at 14:01, Thu 24 March 2011:
Last week, the Chief Executive of Kraft, Mrs. Irene Rosenfeld, perversely refused to appear before a House of Commons select committee. This was a mistake, partly because it was bad manners but mainly because it showed contempt not for Parliament but for her customers. The British people are major consumers of Kraft’s products, especially now it owns Cadbury’s.
Kraft has made a series of blunders since it began to bid for Cadbury’s. It was condemned by the Takeover Panel for incompetence rather than dishonesty in promising to keep open the Somerdale factory in Keynsham. Now it has reminded everybody of its unpleasant mix of arrogance and idleness. If it were a restaurant you would think it was the sort where the waiters spat in the soup before serving it.
Consumer companies need to make customers love their brands. It is the best asset they have, indeed Kraft declared $13.4 billion (£8.27 billion) of brand assets in 2009. This is done by engaging with communities and their representatives as well as through advertising and the quality of the product. Any company that fails to do this not only lets down its customers but also its shareholders.
It is in this way that capitalism and consumer interests work together. Companies that behave well sell more goods. Kraft ignores this at its peril and Mrs. Rosenfeld has already alienated Warren Buffet, the doyen of the investing community. This is unlikely to do her career much good but perhaps Kraft can redeem itself as it seeks to re-develop its site in Keynsham.