Check out the possible bidding war brewing for British confectioner Cadbury.

U.S. chocolate maker Hershey and Italy’s privately owned Ferrero both said separately they were evaluating their options over a possible bid for Cadbury, the world’s No. 2 confectioner, but analysts still see hostile bidder Kraft’s $16.2 billion offer as the front runner.

Reuters and other media have reported Hershey, known for its namesake chocolates and Reese’s peanut butter cups, and Ferrero were discussing a joint bid and the UK Takeover panel asked the companies to clarify their intentions. They gave no hint whether they may be working together on a joint bid.

Analysts are skeptical, however, as Hershey is smaller than Cadbury, has high debts and is controlled by a charitable trust, while the secretive Ferrero, famed for its Nutella chocolate spread and Ferrero Rocher chocolates,  has made few acquisitions. Most analysts and investors expect Kraft to raise its bid.

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(Reuters photo)

Check out Kraft’s cash hoard.

Kraft had almost $3 billion of cash on its books at the end of the third quarter, roughly four times what it had a year ago.

The world’s second-largest food maker might have disappointed
analysts with its third quarter sales and a profit outlook that implied a weaker-than-expected fourth quarter.  But when it comes to its battle to win Cadbury, at least the company is generating cash – expenses cuts helped Kraft generate $2.7 billion in cash in the first 9 months of 2009.

Also, Reuters Loan Pricing Corp reported on Tuesday that Kraft has arranged $9 billion in financing for a bid.

Sources have told Reuters that Kraft is not likely to raise its initial bid for Cadbury if it makes a formal offer by the Nov. 9 deadline. But analysts do think that shifting the offer to more cash and less Kraft stock — which is down 3 percent on Wednesday after the company posted lackluster third-quarter sales — could be a step in the right direction.

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Talking shop with Isaac Mizrahi (WWD)

(Reuters photo)

Check out who’s in charge at Aeropostale. 
 
No, seriously, who is in charge?
 
The company announced today that Julian Geiger was leaving the teen apparel retailer. (The press release was apparently written under the auspices of the Lawyers Full Employment Act.)
 
But instead of appointing one leader, Aeropostale went with co-CEOs. President and Chief Merchandising Officer Mindy Meads and Chief Operating Officer Thomas Johnson were named to share the top spot.
 
The news release does not detail how Meads and Johnson will divide the CEO duties.
 
What we do know is that the history of corporate America is punctuated with co-CEO arrangements that have gone awry.
 
When Kraft was spun out from Altria in 2001, Roger Deromedi and Betsy Holden were named co-CEOs. The relationship ended with Holden being demoted in late 2003, and eventually leaving the company. Kraft continued to struggle with lackluster innovation and seemingly ever-present restructuring, and Deromedi was out by 2006.
 
John Reed and Sanford Weill ran Citigroup together for a while before falling out. Reed even left the corporate world for a time.
 
A deep executive bench is always a plus, but in the end, one person at the top seems to be the final answer.
 
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(Photo/Reuters)

Check out Kraft slashing its supplier base.
 
Yes, Kraft is doing more than just trying to buy Cadbury.  The company is still operating its business and part of that is the process of looking to improve its margins.
 
Kraft told Reuters it plans to cut its supplier base to less than half of its 70,000 companies.
 
“We’re essentially taking a white sheet of paper and saying ‘what is the right number of suppliers to support this particular category, who are they, what is the capability we need for now and in the future, and does the current supplier base have that,’ ” Julia Brown, senior vice president of procurement at Kraft, said.
 
Suppliers have been under pressure in recent years as companies look to work with fewer vendors that operate more as partners.
 
The recovery is actually expected to make things worse for some suppliers as they find out they cannot get financing to ramp up operations as their customers start looking to buy from them again.
 
The winners will likely find even more business as they work closer with companies.
 
For the loser, it could be “supply-side wreckonomics.”
 
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(Reuters photo)

Check out efforts by Kraft to gobble up confectionary giant Cadbury.

Kraft offered $16.7 billion for the world’s No. 2 candy and chocolate maker on Monday. Cadbury shares soared after it rejected the initial bid as investors bet Kraft or another company will sweeten the offer.

Analysts said Cadbury has few options but to look for a higher bid or more cash after the Kraft offer.  Investors like the logic of the combination and few, if any, counterbids are seen likely to emerge. 

Shares in Kraft, the maker of Oreo cookies and Ritz crackers, tumbled on Tuesday as investors expect the company’s earnings to be hurt in the near term if a deal goes through.

Meanwhile, Kraft’s offer could start a new round of food industry consolidation, analysts and deal advisors said.

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(Reuters photo)

Ahead of the recession, dollar stores thought it would be a good idea to try to lure shoppers into their stores more frequently by stocking an increased selection of food. Many of them began installing refrigerated coolers in their stores so they could sell things like eggs, milk and dairy.

More recently Family Dollar added 200 more food products — including a bigger selection of pasta and Kraft salad dressings — to its shelves.

As the economic downturn persists, that decision to focus on food appears to be paying off as more shoppers seek low prices on food.

With many consumers losing jobs or seeing their hours cut to part time, shoppers also have more time and greater incentive to compare prices and scour a variety of stores for deals.

The average household made 13 trips to a dollar store in 2008, up from an average of 11 in 2001, the Nielsen Co said. But the average household made 59 trips to supermarkets in 2008 — 13 fewer visits than in 2001.

Shopper Juan Bugueno told Reuters that he shops the Albertsons, Ralphs and Whole Foods grocery stores in his Venice, California, neighborhood — but prefers the dollar store for staples like vegetables and eggs.

“It’s cheap and it’s good,” he said as he purchased bagged spinach and garlic at a busy 99 Cents Only Store.

So, where are you shopping for your groceries these days? Are you venturing into dollar stores instead of heading to the supermarket?

Check out the latest earnings reports, which give a hint of hope that things could be looking up, if it weren’t for that pesky stronger U.S. dollar.
 
Avon’s revenue fell 13 percent to $2.18 billion as the stronger U.S. dollar decreased the value of overseas sales by 16 percentage points. On a local currency basis, sales rose 3 percent. 
 
“Foreign exchange significantly pressured first-quarter profit, as expected,” Avon Chief Executive Andrea Jung said in a statement. “We are taking aggressive action to lessen the foreign-exchange impact … the benefits of which should be stronger in the second half of 2009.”
 
Kraft Foods posted a higher-than-expected first-quarter profit helped by price increases and cost-cutting.  While profit rose, the maker of Oreo cookies said sales fell 6.5 percent to $9.4 billion, hurt in part by — you guessed it — the stronger dollar, which lessens the dollar-value of sales made overseas. Organic revenue, or sales excluding currency fluctuations, acquisitions and divestitures, rose 2.3 percent. 
    
Over at MillerCoors, the combined U.S. operations of SABMiller Plc and Molson Coors Brewing Co, net sales rose 3.8 percent to $1.72 billion. Sales from wholesalers to retailers, a good gauge of consumer demand, rose 0.4 percent.  Molson Coors said its overall profit rose, as increased prices and cost cuts helped offset steeper commodity costs, lower sales volume and, of course — the stronger U.S. dollar. 

One company that couldn’t put any blame on forex is CVS Caremark, which operates solely in the United States.  Even if people are cutting back, net revenue still jumped 9.7 percent, to $23.4 billion. CVS profit was better than expected. 

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(Reuters photo)

Just how “wonderful” consumers think your brand is can help your stock price, especially in a recession, according to a study by market research agencies Kadence, Brand Care and So What Research.

The study looked at consumer perceptions of 650 leading U.S. brands and found there is a link between the affection consumers hold for a brand — or the “wonderfulness” of the brand – and its stock performance.  

According to the study, the ten most wonderful brands in the eyes of U.S. consumers are (in descending order) Hershey’s, Google, Sony, Kraft, Crayola, Kellogg’s, Scotch Tape, Wii, Rolls Royce and Johnson & Johnson.

The ten least wonderful brands are (from bottom up) National Enquirer, AIG, Botox, Kia, alli, Hummer, O The Oprah Magazine, Dress Barn, ChemLawn and Direct Buy.

In terms of value, brands that were seen as offering the best ratio of wonderfulness to cost were Wal-Mart, Google, Amazon, Hershey’s, Target, Cheerios, Campbell, PBS, Yahoo and eBay.

Brands that were seen as offering the worst ratio of wonderfulness to cost were Hummer, Botox, Prada, Land Rover, Gucci, AIG, Saks Fifth Avenue, Louis Vuitton, Maserati and Ferrari.

“Detailed analysis of responses shows a strong correlation between the level of consumer affection and stock performance in 2008,” said Owen Jenkins, CEO of Boston-based Kadence Business Research, in a statement. 

“For example, corporations owning brands with a mediocre affection score of 4.5 out of 7 lost nearly 50 percent more stock equity last year than corporations owning brands with an affection score of 5.5.

In other words, a small difference in how much a brand is loved makes a big difference in how it performs on the stock market.”

The study was conducted online among 5,500 educated, affluent consumers aged 18-54 during the pre-holiday shopping period in December of 2008.

(Photos: Reuters)

It turns out that Kraft’s foray into cheese that helps the digestive system was not, well, how should we put this — a binding proposition.

LiveActive cheese, which contains probiotics to help improve regularity, did not do the business the company wanted.

“It turned out to be a disappointment to us,” CEO Irene Rosenfeld said during an interview at the Consumer Analyst Group of New York conference.

The problem was that people in the United States don’t eat enough cheese to reap the benefits of the probiotics.

The company has not discontinued LiveActive cheese, but it will not contribute to Kraft’s business as much as the company thought, Rosenfeld said.

Probiotics will also live on in categories like powdered drinks, she said.

(Photo from Kraft web site)

Check Out Sara Lee and Kraft Foods joining the “stronger dollar” bandwagon.

Both food makers cut their profit forecasts for the current year, citing the pain they expect from the stronger U.S. dollar decreasing the value of sales from international markets.

But currency alone is not to blame for oversease woes.

Sara Lee said it is seeing pressure in certain overseas markets due to worsening economic conditions.

“In our international business we are adjusting our plans and refocusing our resources to help offset significant economic downturns in many of our key markets, most notably Spain, France and the United Kingdom,” sad Brenda Barnes, the company’s chief executive officer.

Meanwhile, Kraft’s CEO said the company is seeing a slowdown in sales growth in the EU and developing markets.

Sara Lee, which makes Jimmy Dean breakfast sausages and its namesake bakery products, and Kraft, which sells Oreo cookies and its namesake cheese, have also faced increased competition from private label manufacturers as shoppers seek to save every dollar they can amid a deepening global recession.

Even though we all must eat, it looks like even food makers are being foiled by the recession.

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(Photo: Reuters)