Deborah Cadbury - Chocolate Wars - From Cadbury to Kraft - 200 years of Sweet Success and Bitter Rivalry

While it is easy to dismiss such values as antiquated, Quaker capitalism proved extraordinarily successful, and generated a staggering amount of worldly wealth. In the early nineteenth century, around 4,000 Quaker families in Britain ran seventy-four banks and over two hundred companies. As they came to grips with making money, these austere men of God also helped to shape the course of the Industrial Revolution, and the commercial world today.

The chocolate factories of George and Richard Cadbury and Joseph Rowntree inspired men in America such as Milton Hershey, the ‘King of Caramel’, who took philanthropy to a new, all-American scale with the creation of the utopian town of Hershey in the cornfields of Pennsylvania. But the chocolate wars that followed the growth of global trade, and the emergence in the twentieth century of international rivals – such as Frank and Forrest Mars – unshackled by religious conviction, gradually eroded the values that had shaped Quaker capitalism. Some Quaker firms did not survive the struggle, and those that did had little choice but to abandon their Puritan roots. In the process, ownership of the businesses passed from private Quaker dynasties to public shareholders. Little by little, the results of the transition from Quaker capitalism to shareholder capitalism began to take shape in the form of the huge confectionery conglomerates that straddle the corporate world.

Today the world’s two largest food giants – the Swiss Nestlé and America’s Kraft – operate around the globe, feeding humanity’s sweet tooth. Nestlé, with five hundred factories worldwide, sells a billion products every day, giving annual sales of £72 billion. Kraft operates 168 factories, and has annual sales of £26 billion. While these two behemoths are locked in a race to maintain market share in the developed world, they are also selling their Western confections and other processed foods to emerging markets in the developing world. Somewhere along the way the four-hundred-year-old English Puritanical ideal of self-denial and the Quaker vision of creating wholesome nourishment for a hungry and impoverished workforce have disappeared. Also vanished are a myriad of independent chocolate confectionery firms. In Britain alone, Mackintosh of Halifax and Rowntree of York are now owned by Nestlé, while Terry of York, Fry of Bristol and Cadbury have become a division of Kraft.

The origins of this book lie in my search to explore how this happened. I wanted to unearth the true story of the original Quaker chocolate pioneers and the religious beliefs that shaped their business decisions, and to see how their values differ from those of today’s company leaders. At first sight it can appear that globalisation has been profitable for all. It is hard to dispute economists’ claims that the process has lifted billions of people across the world out of the poverty that was on the doorstep of the cocoa magnates of the nineteenth century. But that has also come at a significant cost.

My last visit to Bournville, on a bitterly cold January day in 2010, formed a stark contrast to the peaceful charm of my earlier visits. Outside the factory, staff members with banners were protesting against Kraft’s recently announced takeover of Cadbury. ‘Kraft go to hell,’ said one. In a symbolic gesture, another protester set fire to a huge Kraft Toblerone bar. Unite, Britain’s biggest trade union, had warned that thousands of jobs could be eliminated under Kraft. ‘Our members feel very angry and very betrayed,’ said Jennie Formby, Unite’s national officer for food and drink industries. Kraft was borrowing £7 billion to fund the takeover, and many feared that Cadbury could become ‘nothing more than a workhorse used to pay off this debt’, its assets stripped and jobs lost. For the Quaker pioneers, the workforce and the local community were key stakeholders in the business, and they aimed to enhance their lives. Now, with their future uncertain, there was a mood of alienation and powerlessness amongst the staff outside Bournville that day.

Quite apart from the effects on employees and communities, there are additional concerns raised by the Kraft takeover of Cadbury that bring the contrast between Quaker business values and shareholder capitalism sharply into focus. For the nineteenth-century Quaker, ownership of a business came with a deep sense of responsibility and accountability to all stakeholders involved. In today’s system of shareholder capitalism the shareholder is divorced from the responsibilities of business ownership.

The spirit of a business – so crucial to the motivation of its staff – is hard to define or measure. It is not to be found in the buildings or the balance sheet, but it is reflected in the myriad of different decisions taken by those at the helm of the business. The Quaker pioneers believed that ‘your own soul lived or perished according to its use of the gift of life’. For them, spiritual wealth rather than the accumulation of possessions was the ‘enlarging force’ that informed business decisions. But gone now, lost in another century, is that omnipotent all-seeing eye in the boardroom, reminding those Quaker patriarchs of the fleeting nature of their power. And what is there to replace it?

The story of the Quaker chocolate pioneers and their rivals is, in a way, a parable of our times, highlighting a bigger transformation in our society. By examining the ‘chocolate wars’ that have shaped the world of confectionery, I hope to shed light on a process of change that affects us all.

Part One

Chapter 1

A Nation of Shopkeepers

In the mid-nineteenth century, Birmingham was growing fast, devouring the surrounding villages, woods and fields. The unstoppable engine of the Industrial Revolution had turned this once modest market town into a great sprawling metropolis in the heart of the Midlands. Country-dwellers hungry for work drove the population from 11,000 in 1720 to more than 200,000 by 1850. In the city they found towering chimneys that turned the skies thunder grey, and taskmasters unbending in their demands. Machines never stopped issuing the unspoken command: more toil to feed the looms, to fire the furnaces and to drive the relentless wheels of commerce and industry far beyond English shores.

Birmingham was renowned across the country for innovation and invention. According to the reporter Walter White, writing about a visit to the city in Chambers’s Edinburgh Journal in October 1852, ‘To walk from factory to factory, workshop to workshop and view the extraordinary mechanical contrivances and ingenious adaptations of means to ends produces an impress upon the mind of no common character.’ The town was a beacon of industrial might and muscle. This was where fire forged iron and coke, metal and clay to make miracles.

Birmingham’s foggy streets resounded with hammers and anvils fashioning bronze and iron into buttons, guns, coins, jewellery, buckles and a host of other Victorian artefacts. Walter White marvelled at the ‘huge smoky toyshop’ and the ‘eager spirit of application manifested by the busy population’. But he was evidently less taken with the sprawling town itself, which he considered ‘very ill arranged and ugly’, and dismissed as ‘a spectacle of dismal streets’.

At the heart of these dismal streets, opposite today’s smartly paved Centenary Square, was a road called Bridge Street, which in 1861 was the site of a Victorian novelty: a cocoa works. Approached down a dirt road, past busy stables, coach houses and factories, it was surprisingly well hidden. But wafting through the grimy back-streets was a powerful aroma, redolent of rich living. Guided by this heady perfume the visitor was drawn past the blackened exterior, through a narrow archway into a courtyard with an entrance leading off to the heart of the chocolate factory. It was to this modest retreat that two young Cadbury brothers hurried one day early in 1861.