Poland awaits new owner for its favourite chocolate confectionery maker

22 April 2010

Wojciech Jagnieza

Background

The much publicised takeover battle between Kraft Foods and Cadbury has its Polish dimension too. The European Commission has cleared the proposed acquisition of Cadbury PLC by Kraft Foods Inc. by way of a public offer, but its decision is conditional upon the divestment of Cadbury’s Polish and Romanian chocolate confectionary businesses.

The Commission identified competition concerns within the chocolate confectionery markets in Poland and Romania, where the combined market share of Kraft and Cadbury is particularly high and their brands are competing closely, in particular in the markets for chocolate tablets.

To remedy these concerns, Kraft is committed to divesting Cadbury's Polish confectionery business marketed under the Wedel brand and Cadbury's domestic chocolate confectionery business in Romania.

Wedel

Wedel is Poland's oldest chocolate brand and one of the oldest Polish brands still existing on the market. Established by Karol Ernest Wedel in 1851 and developed by his son Emil Wedel (the famous trade mark E. Wedel carried his initials). After World War II, the communist government nationalised and renamed the brand to “22 lipca”; however the well known trade mark still remained present on wrappers. When a free market economy was restored in Poland in 1989, Wedel was one of the first companies to be privatised – sold to PepsiCo. In 1999 Wedel became part of the Cadbury corporation – the oldest chocolate producer in the UK.

For over 150 years it has been associated with quality chocolate, and the experience has brought wide recognition and a loyal following both in Poland and abroad.

Wedel is a leading Polish brand. Market and consumer surveys confirm its strong position as number one chocolate brand in Poland.

The deal

Wedel, with its brand, is said to be worth EUR 150-200 million. Among potential investors in the Polish confectionary sector Jutrzenka and Wawel have been mentioned; however their potential might be insufficient. Some experts indicate Maspex Wadowice as a potential purchaser due to its strong position in the sector and promising growth statistics.

Others believe that only foreign sector investors such as Hershey Co., Nestle or Ferrero could afford this acquisition. Private equity funds have also been suggested.

The market

Wedel is worth fighting for. It has an exceptionally strong reputation in the PLN 6.8 billion Polish confectionary market. The acquisition of Wedel could be a good start for Hershey Co. in Poland, where it is yet to establish a presence.