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The path to success in emerging markets is rarely smooth and, in India, Hershey has decided change is needed five years after entering the country.
On Friday (7 September), the US confectionery giant announced an agreement to buy out its partner in India, the local conglomerate Godrej Industries. The loss-making Godrej Hershey venture, formed in 2007, has found the going tough in an Indian confectionery market dominated by the likes of Kraft Foods' Cadbury and with companies like Ferrero and Perfetti van Melle also carving out their own significant positions.
Speculation had swirled around the future of Godrej Hershey for months. Reports in India at times said the companies had decided to end the venture, then that there was private-equity interest in Hershey's 51% stake and then that the company would sell up and go it alone. Hershey kept its cards close to its chest, saying only it remained interested in the Indian market.
It was only last month that a definitive sign that the venture's days could be numbered emerged when Godrej admitted it was reviewing what to do with its interest in the venture. Fast-forward to Friday and a deal was announced, with Hershey to buy out Godrej and set up Hershey India. Hershey president and CEO J.P. Bilbrey said the company was "excited" about its opportunities in the country. However, despite the growth of the Indian confectionery sector, Hershey faces a tough task in a market with some well-entrenched competitors.
Through Cadbury, Kraft Foods is the market leader in India and the country is sure to be central to the growth of Mondelez International, the US company's global snacks business set to officially get up and running in just three weeks.
Kraft's split in two will formally happen on 1 October and, last week at an investor conference in the US, the group outlined to analysts the priorities of the two companies - Mondelez and the US-focused grocery firm Kraft Foods Group.
Kraft CEO Irene Rosenfeld said the company had already identified three sets of growth markets for Mondelez, which will own brands like Cadbury, Oreo biscuits and Trident gum. Rosenfeld said the three clusters are expected to drive the majority of Mondelez's growth. In Europe, where Kraft admitted conditions were tougher, Mondelez will look to innovation and its "power brands" like Cadbury.
The priorities for the second, US-focused grocery business - Kraft Foods Group - include being a "more nimble, less layered organisation" and "turbo-charging" its brands, Tony Vernon, the future CEO of the company, said.
This week, just-food will provide an in-depth look at the two new companies, including key brands, categories and markets, as well as how the strategies of the new businesses have been received by Wall Street.
And in the days ahead, we are also looking to hear more from you. Next month, just-food will be at the SIAL exhibition in Paris, the huge, biennial trade show that attracts exhibitors and visitors from around the world.
Ahead of the event, we are running a daily diary of what exhibitors plan to showcase at the event. Our diary gives exhibitors the chance to publicise the new products and services they will launch or highlight at SIAL - and also gives visitors the chance to note the particular products they want to check out (and, perhaps, give their feet a rest from pounding the vast halls of the Parc de Villepinte this year). So, exhibitors, send through your product news to email@example.com.
And just-food is also in the process of surveying its readers around the world on all aspects of the site. Now is your chance to let us know what you think of our service (good or bad). So, if you have a gripe, want to see more of a certain topic covered, or, hopefully, want to give us the thumbs-up, fill in our survey here.
Until next time...