kraft

The Andrew Davidson interview: Irene Rosenfeld

So, Irene Rosenfeld, how was the takeover of Cadbury for you? The boss of Kraft pulls one of her trademark frowns, head down, eyebrows furrowed, focusing with palpable intensity. “Well, we understood Cadbury was a British icon — that was one of the reasons we were interested in it — we value its heritage, and the passion for the brand. It matches the passion Americans have for Kraft brands . . .”

Rosenfeld, 56, short and angular, worries away at questions like a sparrow with a worm. I can sense a “but” is coming.

“. . . but the way the media gets into the debate, well, it’s unique to this market.”

Then she gives a low, knowing laugh. Rosenfeld is one of the most powerful businesswomen in the world and famed for many things — impatience, intensity, her vast pay and perks package — but dry understatement is not one of them.

Yet here she is in London, fresh out of meetings with Cadbury staff about their future, determined to show her real self to a new audience, and happy at last to discuss what happened during the long takeover battle.

Well, happy up to a point. She makes it plain she doesn’t like giving interviews — we had noticed — and finds the process worse than awkward. “This is very painful for me,” she says bluntly, staring down at the voice recorder on the table. Even the gold frog brooch on her trouser-suit jacket looks like it’s trying to escape.

But she knows she has to account for what happened, and while she is clearly presenting a composed front, moments of candour flash through. She said precious little during her five-month pursuit of Cadbury. Some think she missed a trick, not explaining sooner how Kraft might offer new opportunities for Cadbury’s staff, besides the rationalisation and unemployment predicted for many.

Last week Kraft’s takeover of Cadbury was finally confirmed as Rosenfeld secured agreement from shareholders for her offer of 850p a share. Now she can tell us: why did she stay so aloof? “I said what I wanted to say — no more,” she retorts defensively.

Anyone would think she didn’t love us. “Nyah, you were still loved,” she suddenly jokes, her accent reverting to her New York Jewish roots. “I just felt comfortable that when the press met me, they would understand who the real person was.”

And so the ice is broken. Our meeting, wedged into a director’s office at Cadbury’s management base in Uxbridge, west London, seems almost surreally uncomplicated. Rosenfeld bustles round the room offering tea or coffee. In the open-plan world outside our box, executives stare into screens as if this was just another day.

Only in the foyer downstairs might you get a whiff that something was up. Some wag has laid out copies of that day’s Wall Street Journal by the visitor sofas. Its front-page picture is of Cadbury’s monkey-suited protesters at parliament on Tuesday. “British workers don’t want any monkey business from new owner” reads the headline. Welcome to Uxbridge, Irene.

She shrugs it off. These are sensitive times and she is treading carefully, but firmly. As we speak, the press releases announcing the instant departure of Cadbury’s chairman, chief executive and financial director are running on the newswires.

Yet she ducks any questions about how the rest of the workforce will be rationalised. Kraft, now the world’s No 2 food company — only Nestlé is bigger — is targeting “synergies” of $1.3 billion (£831m) from swallowing Cadbury. That has to involve redundancies. Rosenfeld doesn’t blink. She tells me what she told Lord Mandelson the night before.

“I can make no promises on jobs because of the nature of the process here. We have not had an opportunity to access their books and understand what their assumptions are. But this acquisition is about growth. The combined company has greater potential together than apart. We’ll just need three to six months to do proper analyses.”

So did she spend £11.7 billion on Cadbury without a detailed plan of what comes next? I doubt it, but generalities are safer.

She was spelling out the same message in her “town hall” meetings with Cadbury staff that day: her vision for the combined company, the chance to mix Cadbury and Kraft brands through each others’ distribution networks, the idea of Cadbury “reclaiming its position as the world’s biggest and best confectionery company”.

Or at least being part of it. But don’t even suggest that Rosenfeld is going to diminish it. “Cadbury is an icon,” she reiterates. “We are not going to get rid of it. It generates enormous recognition and love and loyalty. I believe it’s a very important asset in the acquisition.”

And its Bournville base? “I understand it is the heart and soul of the company. I have every desire of wanting to continue to make investments in the site ... and I look forward to visiting and seeing what’s under way.”

She chooses her words cautiously. She is more direct when she rebuts criticisms of her bid campaign. Just a fortnight ago, Cadbury chairman Roger Carr said she probably could have bought the company for less if her team had read shareholder intentions better, and if she hadn’t been rattled by politicians’ involvement. Warren Buffett, Kraft’s biggest investor, also told the press he thought she had overpaid.

She disagrees, but she does admit she was thrown by the very public discussion of the bid price. “You would not see the American press having as significant an impact on investor sentiment as you do here. Nor would you find the pricing conversation in the media in any other market in the world.”

Surely that occurred because initially she didn’t offer enough? “So they say.” And she laughs nervously. “But we feel we waged a good campaign,” she continues. “We were anxious to stay on the high ground throughout and I am proud we accomplished that.”

Meaning others didn’t? Her brow furrows again. “There was a little bit more mud-slinging coming from the other side, but I’m grateful that, at the end, this was a recommended transaction. It’s so important for employees we got that.”

As for Buffett’s criticism — and any discussion she may have had with him since then — she won’t comment beyond saying she expects all her shareholders to be pleased with the financial results of the acquisition.

And she wasn’t rattled by the involvement of politicians. She rolls her eyes. “I hadn’t even met Lord Mandelson until last night, so that’s a bit of an overstatement.”

Did she think we were hypocrites for waving the Union Jack when Cadbury had bought so much overseas, and been deserted by so many of Britain’s own institutional investors? She shoots me a look and then shouts “Yes”. This time the laugh is loud and full.

If she has been bruised by the bidding process, she doesn’t show it. She is sharp and flinty, yet never cold. That’s how some on Cadbury’s board found her in the takeover talks, but it is more likely the face she put on for negotiations. Her British advisers describe her as decisive, bright and always friendly over the period. She keeps a part of herself very private, however.

Rosenfeld is the first to admit she cultivates a tough carapace — it goes with the huge pressure she is under to grow Kraft, an underperforming giant with some tetchy shareholders, and the expectation generated by her $17m (£11m) salary and share-option package. It’s also part of forging ahead as a woman in a man’s world.

Indeed, she is happy to divert the conversation to how girls are socialised into gender stereotypes, and how she encourages her own daughters to toughen up. Others say her expertise is not just number-crunching, it’s people.

She has worked in consumer-facing industries all her life, starting in advertising, then spending two decades at Kraft, before leaving to head Frito-Lay. She returned to Kraft as chief executive in 2006. Her old boss, Jim Kilts, says her single greatest talent is “consumer empathy” — she is brilliant at anticipating trends and has been involved in reviving a cluster of great brands.

“Irene is forceful and analytical,” says Kilts, “but she is also warm, and she understands what people want.” That, he contends, can only help Cadbury in a world where growth for food companies is going to be ever harder to find.

The rise of Rosenfeld is still unusual in a big business landscape that has too few women bosses. She credits her father, an accountant and a keen sportsman, with giving her a competitive edge. “He had no sons, just me and my younger sister. So I was his surrogate playmate,” she laughs.

And she was always different. “People ask my mum now: ‘Did you know all this would happen with Irene?’ and she always says ‘Yes’. Apparently I approached everything with intensity from an early age. I was intense even when I took naps at nursery school ... and most of my friends were boys. I learnt how to play with them and I guess that continues to this day.”

Born Irene Blecker in Brooklyn, and later brought up in Westbury on Long Island, Rosenfeld had what she calls “an idyllic, suburban upbringing”. Her father’s parents were Romanian, her mother’s grandparents German.

She was brought up in the Jewish faith but dispels reports that she is religious to the point of keeping a kosher kitchen. “Actually, I don’t, that’s somewhat overstated, but religion is important to our family.” She excelled at sports and read psychology at university. She started her business career at Dancer Fitzgerald, a New York advertising agency later bought by Saatchi & Saatchi, because her core interest was people, she says.

“I’ve always been fascinated with how people think. I can spend hours at airports looking at people, thinking about who they are and what motivates them — it’s been a fascination of mine since high school.”

Rosenfeld jumped to a client, General Foods, when she decided “the action was on the other side of the fence”. She rose to become the company’s first female general manager and later made a conscious decision to push herself forward. Men tended to ignore women as contenders, she found.

“I remember in one of my first management roles, I had a young guy working for me and at bonus time he came in and put his own evaluation of himself down on my desk. It never occurred to me to do anything like that, but it was a stroke of genius. It allowed him to position what he had done. I learnt a very valuable lesson from that. It’s something about the way girls are socialised.”

General Foods was bought by Philip Morris, the tobacco group, in 1985. Philip Morris bought cheesemaker Kraft in 1989 and merged the two. Rosenfeld moved from New York to Kraft’s Chicago base. The story of Kraft since then has been dominated by its slow extraction from tobacco ownership, only completed four years ago.

“There are some real similarities in Kraft’s spin-off from tobacco and the Cadbury beverage demerger,” says Rosenfeld. “Both companies emerged from that focused on what they were doing well and improving performance.”

By then Rosenfeld had married, had two daughters and then lost her husband to illness. It is something she doesn’t talk about now, though she keeps the name of her first husband, and it must have made a huge impact on her resolve and motivation. She remarried, and credits her second husband, a financial consultant, with being key to her success.

“He made a critical decision almost 20 years ago to leave a large company and be self-employed because we were moving a lot and it was challenging. He has been terrifically supportive.”

At times, though, she says it was a struggle to be a mother and an executive, despite the obvious overlaps. “Being a parent taught me a lot about being a better manager — parenting is one of the best management-training programmes there is. But, yes, my family does tease me sometimes that our dinner conversations can become like goal-setting programmes.”

She made her name reviving brands such as Kool-Aid, the soft-drink concentrate, and spotting acquisitions such as the distribution deal for Capri Sun, a sweetened fruit juice. So no qualms about selling sugary products to children?

“We’re very proud of our social responsibility as marketers. We have strict policies on advertising to children and we don’t market products we don’t feel good about,” she replies coolly. Her instincts are always to make products healthier, she adds.

She rose to run Kraft in Canada and North America before leaving in 2004 — a decision many read as being motivated by her unhappiness with Kraft’s owner, Altria (renamed from Philip Morris). She confirms as much now: “Food and tobacco have different characteristics, and over time the food business was not able to make the investments that were needed.”

She took a year off to consider her options. “It was the first time in 22 years I had ever stepped back and thought about what I wanted to do.” Sitting round doing nothing was not an option. She jumped into Frito-Lay, and revived the brand with a new line of healthier, low-calorie snacks. Then two years later she jumped back to Kraft, which was in crisis after losing two co-chief executives.

Despite her reputation as a cost-cutter, Rosenfeld says her priorities are quite the reverse. “I came back to Kraft after gaining assurances from the board that it would make the investments that were necessary. I came back because it was being spun off from Altria.”

And her focus is growth. Kraft already has a clutch of $1 billion-revenue brands, including Philadelphia, Maxwell House, Nabisco, Oreo and Jacobs. “There had been years and years of cost-cutting at Kraft. Some had cut into the bone ... so one of the first messages I delivered was, ‘Let’s get growing again, and we’re going to make the investment necessary to do that’.”

By just buying others? Kraft has been on the acquisition trail since Rosenfeld rejoined, buying Danone’s biscuit business Lu in 2007. “No, we grew organically. I laid out a three-year plan and began executing it in 2007. We’ve invested more than $400m to restore the lustre of our iconic brands and the great news is that, because they are such strong brands, they have responded immediately.”

And anyone who thinks she is going to asset-strip Cadbury doesn’t understand what this is about, she says. Look at how Kraft has invested in Milka and Toblerone, two European businesses it picked up decades ago. Look also at how owning Cadbury makes Kraft the biggest confectioner in the world, with a footprint in developing markets such as India where it was weak.

Nor will Rosenfeld rest until Kraft is bigger still, says one adviser. “Irene is relentless. She is also highly demanding — I have the scars on my back to prove it,” he jokes. “But she’s determined to do the right thing, even if it’s difficult.”

Hence her determination to face down Buffett’s criticism. The same adviser suggests that Cadbury staff can take heart from that. Rosenfeld has a lot to prove now. One of the reasons she bought Cadbury is that she genuinely respected many of its managers, and wants to use them. And Cadbury employees might even find Rosenfeld, one of the most admired businesswomen around, a more inspirational leader than many they have had before. But that is speculation. The proof will be in what happens next. Kraft now carries heavy debts and is eyeball to eyeball with Nestlé. Some expect a bitter fight.

Rosenfeld waves that away. “We are focused on snacks and confectionery. Nestlé is choosing other categories to focus on, and the market share of the two companies reflects that. Their chocolate business has been losing share around the world.”

Ouch. Will we see much of her in Britain? She will be back in a fortnight, she says, and expects to be here “for a few days” every year. It doesn’t sound like a lot, but in reality Rosenfeld travels the world constantly. Having bought Cadbury, she has a bit more of the world to cover.

For now, though, she has another staff meeting to address before flying back to Chicago. She already has her speech printed out in big type on A4 sheets, and needs to get on. Outside the room, Todd Stitzer, Cadbury’s outgoing chief executive, is waiting morosely, his pinstripe suit buttoned up like a flak jacket. He avoids my eye as Rosenfeld waves me off and turns to greet him. And so the new regime starts.