When I saw how Kraft is buying Cadbury’s I thought it was a bad deal. Not because of the financials but because of what Kraft is doing. I decided to take a good look at their product portfolio and I gasped.
Kraft is a company that is going to get walloped by the governments. Kraft bought Cadburys to get into foods that people will buy no matter what. Yet what Kraft is missing is that we are about to get hit with a food tax. Obesity is a major problem. People in the developed world are too fat! There is no and’s if’s or but’s about it.
To give you an idea, look at what Romania is about to do.
The Romanian Health Ministry has outlined plans to levy an extra charge on fatty, salty and sugary foods; a move that will tackle two problems simultaneously — the poor quality of its citizens’ diets and a plunging public-sector budget as a result of the recession.
Attila Cseke, the Health Minister, announced that he was setting up a nutrition commission aimed at raising £860 million from the planned tax on fast food — an extra source of revenue that would be very welcome in Bucharest. The Government’s austerity budget this week outlined a freeze in public sector pay and a cut of 100,000 jobs.
Think hard about this people. Governments are looking, scraping for money. They can’t tax more so they need new sources. Smoking is not working out because people are smoking less. Gasoline is also not working out because people (at least outside the US) are buying more fuel efficient vehicles.
The only thing left IS a food tax. Thus looking at Kraft’s portfolio I as a CEO or top level manager would be getting very very nervous. Will it change the habits of people? Absolutely! Just look at drinking, and smoking. People’s habits have dramatically changed in the past forty years. And it will happen with food as well. This pressure will not only come from the government, but doctors, and health providers.
So when Warren gripped about Kraft selling a good pizza outfit to make the sweets deal work I would completely agree with him. Because it is a whole lot easier making a healthy pizza than healthy sweets, since they are not healthy in the first place.