Kraft Foods is to offer its Bird’s Custard brand for auction, together with a number of other dessert brands, according to the Financial Times. While an ever more sophisticated and global market dictates that Kraft focuses on more international brands, the acquisition of Bird’s custard could well prove to be a useful investment for a smaller company.
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The American food giant Kraft Foods, part of the Altria empire that is better known for its tobacco products, is currently undergoing a major restructuring process. The process will involve the closure or sale of 20 factories globally and the loss of 6,000 Kraft employees.
As part of its new strategy, Kraft is also selling off many of its smaller brands to concentrate on larger, core brands that are present throughout the world, thereby minimising costs in producing and marketing them.
The latest brand to be affected by the company’s plans is the famous British dessert brand Bird’s Custard, which Kraft claims is the UK’s favourite custard brand. Although the brand is profitable, it is not very attractive for a multinational corporation such as Kraft. It may be prominent in the UK, but it is virtually unknown outside the country.
However, the sale of Bird’s Custard offers an opportunity for other companies to acquire a locally powerful brand. Premier Foods for instance bought Ambrosia, another popular dessert brand, from Unilever in 2003, while the cereal Weetabix is also under common ownership with Premier.
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By GlobalDataThe sale highlights two conflicting trends at work in the consumer brand space. Multinational giants such as Kraft and Unilever are increasingly driving the globalisation of food and drink products by promoting umbrella brands that attract consumers across numerous different markets. In contrast, groups such as Premier Foods or Associated British Foods look to assemble a stable of successful, but essentially local products that appeal to consumers’ loyalty to traditional brand names.
Bird’s custard would complement such a portfolio well. It would be little surprise to see a smaller food company or private equity house with a UK focus take on the well-known custard brand.
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