The big interview: Glenn Caton of Mondelez on Brexit and cyber attacks

Sometimes, Glenn Caton’s job is just like going home. Having grown up on a dairy farm in the Yorkshire Dales it’s “fantastic” to visit Cadbury’s UK milk suppliers and “brilliant” to know they’re assured of its patronage, says the Mondelez president for Northern Europe.

Caton’s patriotism (“using so much British milk to make Cadbury’s chocolate is a real source of pleasure and pride for me”) is bang on message as Mondelez celebrates what it calls a “return to Bournville” following the completion of a £75m upgrade of Cadbury’s spiritual home since 1879.

The investment will see some Cadbury Dairy Milk products return to these shores, including Oreo and Tiffin tablets, which had been outsourced to Germany because the latest technology used to stuff biscuits in to chocolate wasn’t available here, says Caton.

“We make pretty much all our Cadbury Dairy Milk, bar the odd bar, in Bournville. The UK’s a critical market for Mondelez, it’s our second biggest after the US. We’re in a really strong position here. We’ve got the number one position in chocolate, sweets and choco-beverages, and we’re number two in biscuits. We employ 4,000 people here, and we’ve got a big business that’s strong and growing.”

In the past five years, Mondelez has invested £200m in its manufacturing capabilities in the UK - much of it in R&D, including a new site in Reading. But Cadbury’s presence in Bournville is “the big investment”. Some of the money has been spent on ramping up production of tubs of Heroes and Roses, and on training staff. The aim is to make the plant more competitive with the continent and increase capacity, says Caton. “We’re upgrading to secure the next generation of manufacturing in Bournville.”

Caton believes the redeveloped site is “now the heart and home of global research and development for all chocolate” dreamed up by Mondelez. Indeed, the number of employees focused on R&D has risen from 25 to 250. But it won’t create new jobs on the factory floor.

In March last year, Channel 4’s Dispatches reported that up to 700 Cadbury jobs had been lost following the takeover by Kraft Foods in 2010 - largely due to the closure of its Somerdale factory in 2011 (although Cadbury had originally announced its intentions to close the factory in 2007).

The number of people at Bournville has fallen, too - albeit through voluntary redundancy. “We’re able to make more product with the workforce we have now. That’s driving competitiveness.”

Caton says “competitiveness”. Mondelez CEO Irene Rosenfeld calls it “excellent cost discipline”. They both meant ‘savings’ in the face of struggling international sales, up 1.3% in the most recent quarter. Mondelez was also rocked by a cyber-attack in June that led to “disruption in our ability to ship and invoice during the last four days of our second quarter”, which will create “incremental one-time costs in both our second and third quarters”.

Pressure

There is also post-Brexit uncertainty to cope with, which, for now at least, is delivering rising input costs and the possibility of further shrinkflation. “The past three years or so, we’ve seen inflation. Where we’ve seen input costs rise we’ve focused efforts on reducing costs so we don’t have to pass them on in full.”

However, there has been plenty of “downsizing” and “minor and selective” price increases - including the infamous ‘toast rack’ Toblerone. The good news for chocoholics is there are no Cadbury plans “for imminent” changes in the near future. The bad news is it “reserves the right” to make them. “All we can do is make fantastic-tasting product at a cost price we think is competitive.”

It’s making them bigger, too. Last year’s launches of the 300g Big Taste and 93g Medley bars did “really well. There’s been massive growth in consumer desire to share at home in front of the TV”.

Alas, classic countlines are on the slide due to “a lot more high street choice” from Starbucks, Costa, Greggs, etc., and the removal of singles from supermarket till points. Might the combination of these pressures mean the commitment to Bournville is short-lived?

Caton retorts that a company doesn’t make a “very substantial” £200m investment lightly or for the short term. “When we say generational, we mean generational. Work on productivity, competitiveness and investment is paying out. The biggest challenge we face is growth for the UK business.”

The latest initiative is Cocoa Life, which will replace Fairtrade starting this year (though the foundation will remain a Cadbury partner, “helping us make sure what we say is what we deliver”), and will benefit an estimated 200,000 farmers within the next three years, mostly in West Africa. Cadbury is going from “a buyer of beans to working with farmers to improve lifestyles and encourage the next generation to take up farming”.

There’s that generational talk again. And all the while, consumers view Cadbury with nostalgia. “It’s one of our greatest strengths,” says Caton. “People care so much about Cadbury. They’re passionate about the brand - and that’s something I love.”