BARRED

How Cadbury lost the right to sell its own chocolate in the US

Obsession
How We Buy
Obsession
How We Buy

Chocolate lovers, or at least a certain British-influenced subset of them, are outraged that The Hershey Co. has forced a ban on US imports of Cadbury’s chocolate manufactured in the UK. The ban doesn’t preclude Americans from getting their hands on other Cadbury chocolate, though—as long as it’s the made-in-the-USA kind.

Of course, none of that is consolation for US shops that cater to loyal fans of the British kind. Those customers tend to consider the American-made version to be grossly inferior.

Indeed, while sharing the exact same brand name, the two versions of Cadbury milk chocolate are distinguishable from one another in taste, with different milk-to-sugar ratios and different emulsifiers. The situation resembles that of Mexican Coca-Cola versus American Coca-Cola: Lots of people prefer the taste of Coke made in Mexico because it contains cane sugar instead of high-fructose corn syrup.

But why should this be so? Why are global food and beverage companies even allowed to market materially different things under the same brand name? In the case of Coke, it’s because the independent bottlers who distribute Coke in local markets have responsibility for sourcing their own water and sweeteners to make the soda. In the case of Cadbury, it’s a bit more complicated.

The enduring appeal of the Cadbury name in Britain—it dates back to the 1820s—belies the brand’s many interruptions and changes in ownership, which left the company carved up in such a way that its operations, products, and brand rights vary on opposite sides of the Atlantic.

In 1988, Cadbury was part of Cadbury Schweppes. That year, Hershey paid $300 million for Cadbury Schweppes’ US candy operations, which included Mounds, Almond Joy, and York Peppermint Patties, in addition to Cadbury products like Dairy Milk and Carmello. Recounting this deal decades later, the Guardian’s Andrew Clark describes it as a “surrender,” during a weak moment for Cadbury Schweppes:

The UK company concluded it could not make headway in a US market dominated by Hershey’s and Mars who, at the time, had a combined share of 70%. … In the eyes of certain industry-watchers, the deal was a pre-emptive move by Cadbury to stave off the prospect of a full takeover bid by Hershey.

Two decades later, the rest of the Cadbury business was acquired outright by Kraft, another US company, putting the British chocolate label completely under American ownership in 2010. (And as the fallout over the recent change to the UK version of the Cadbury Creme Egg recipe shows, its American owner—now Mondelez International, a Kraft spinoff headquartered in a suburb of Chicago—doesn’t feel obligated to stick to tradition.)

Members of Royal Society of Chemistry prepare trays of Britain's Cadbury and U.S. Hershey chocolate bars for a taste challenge by the public at the courtyard of Burlington House in London, Tuesday, April 28, 2009. Londoners and visitors to the capital were invited to taste both brands and to pass judgement, saying which taste they preferred. (AP Photo/Sang Tan)
(AP/Sang Tan)

The legal action by Hershey’s affects imports of several non-Cadbury confections from the UK as well, such as Mars Maltesers (Hershey’s makes a similar product) and Nestlé Toffee Crisps, which have no direct American counterpart but are sold in packaging very similar to Reese’s, another Hershey brand. But Cadbury is the label that consumers are harrumphing about, which is why its complicated history is now up for discussion. As the Guardian observes:

Some close to Cadbury now feel the arrangement was a mistake. Hershey does not reveal its sales under the Cadbury label, but availability of the chocolate is patchy and the giant US firm seems to have done relatively little to build the brand. But however little it may have done, the deal seems sufficient to prevent Cadbury from a competitive re-entry to the US.

Considering Hershey has owned the Cadbury brand in the US since 1988, some might say that stateside importers of the British Cadbury chocolates—and their customers—are lucky to have been able to skirt the legal consequences of the official arrangement for as long as they did. Or as Bill Saporito at Time puts it: “Stop your whining… Cadbury blew it in the U.S. The company lost the right to sell its own chocolate bars, and that’s how the cookie crumbled.”

home our picks popular latest obsessions search