Cadbury – Chocolate, Capitalism & Child Slavery

PRINCIPLED CAPITALISM

To me, principled capitalism has the same phoney ring as compassionate conservatism. A system built on endless, unsustainable growth and ever-increasing profits – at the expense of people and planet – strikes me as essentially unfair and unprincipled. The late Milton Friedman, whose ideas wielded considerable influence over UK Prime Minister Margaret Thatcher, once wrote that, “There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits.” Friedman suggested that spending money on such luxuries as corporate social responsibility bordered on the criminal as it could reduce profits to shareholders.

Interestingly, some more moderate capitalists argue against Friedman on the basis that his methods could harm “long term shareholder value” and damage the image of the market. No mention of the exploitation of workers or destruction of the planet. The fact remains that, whether you’re a big shark or a small shark (with a slightly smaller appetite), you’re still a shark. When Cadbury took over Green & Black’s (G&B) in 2005, G&B wasn’t making a loss or making workers redundant. The deal was done simply to allow for efficiencies (loss of jobs), faster growth and larger market share. Now Cadbury, a medium size shark, has been swallowed by a bigger shark.

Its Chairman Roger Carr admitted that he had put shareholders first and job losses were inevitable. “We have done nothing wrong. We have done the role that is required of us. We don’t own the company – the shareholders own the company and the board has a fiduciary duty [to recommend an offer] when appropriate value has been paid.” Carr, of course, is right and merely agreeing with Friedman. It’s the system itself that is wrong and the Cadbury’s directors were simply following the rules of capitalism. The biggest profits to the shareholders and stuff the workers.

Shareholders’ views were summed up by Peter Cumming, head of equities at Standard Life, who said, “Kraft is getting a good deal. It is sad that Cadbury is gone, but business is business.” Its second largest investor, Legal & General, is said to have accepted the bid with reluctance, having been disappointed that Cadbury’s management recommended the offer. But business is business, eh, and we can’t break the golden rule of capitalism……

Cadbury’s Chief Executive Stitzer’s initial outrage was soon calmed by an increased offer and his cut on the deal – estimated to be cash and shares worth about £12m. You can imagine the dialogue between Stitzer and Kraft. “Ooh, you’re so unprincipled! How dare you? Oh, you’re increasing the offer and I get about £12m? Oh, go on then…..”

So the shareholders were happy, the Chief Executive got a nice wedge and it’s reported that a bunch of ‘city advisers’ (and we all know what that means in street language) walked away with about £250m in fees. Meanwhile another factory closes (replaced by one in Poland where it’s cheaper to operate), workers are made redundant and another British brand gets sucked into a faceless multinational. Now that’s what I call principled……..

CADBURY’S – GOOD & BRITISH? NOT ALWAYS…

Cadbury has got a better reputation than many corporations, having a history of treating its workers better than most and for general philanthropy. The firm’s Chief Executive is keen to remind us that, “the Cadbury family were Quakers who started selling drinking chocolate as an alternative to alcohol in 1824. They wanted to be a ‘force for good in a troubled world’ [and] ‘an asset to the neighbourhood’ ….this performance-driven, values-led way of doing business has built a unique corporate brand.”

However, the story isn’t quite so black or white (or, in chocolate terms, plain or milk). In 1909 Cadbury’s sued the London Evening Standard for suggesting that it was “knowingly profiting from the widespread use of slaves on cocoa plantations in the Portuguese colony of Sao Tomé. This was a problem for a brand that was not only famous but was supposed to be an example of the “compassionate capitalism” founded under the Quaker religious tradition. Unfortunately, during the case, Lord Cadbury had to admit that he not only knew slaves were being used but that he actually regarded the practice as essential to the company’s prosperity.

Much has been made of Cadbury being a British company but I met one of its senior managers at a recent seminar and he admitted that over half of the shareholders were based outside the UK (the media subsequently reported this figure as about 40%) and that the company has been moving its production facilities overseas in a bid to cut costs. Even its Chief Executive is a North American who, it was reported in the Guardian, talks about the “mouthfeel” of Cadbury’s products! Colleagues insist that his “blood runs purple” (Cadbury’s corporate colour) but I prefer to think of him as one of those cartoon characters with pound or dollar signs in his eyes.

UNFAIR TRADE

A report in Ethical Consumer (November-December 2009) revealed that more than a third of cocoa traded globally comes from the Côte d’Ivoire (the Ivory Coast, better known for Didier Drogba than cocoa nowadays) and 70% of worldwide cocoa production takes place in West Africa.  A study conducted in 2002 estimated that of about 284,000 children working in the West African cocoa industry, 200,000 were in the Côte d’Ivoire and a “substantial minority” of these children were found to have been trafficked from Mali, Burkina Faso and Togo. This is the reason why organisations like Stop the Traffik campaign against the trade in human lives and why more and more people are turning to fair trade chocolate.

In buying G&B, Cadbury’s acquired Maya Gold, believed to be the first fair trade product in British stores. Cadbury’s has now become the first of the big confectionery companies to receive the fair trade mark in the UK for one of its chocolate bars with the accreditation of Dairy Milk, if only for sales in UK and Ireland. Nestlé has quickly followed suit with fair trade certification of its Kit Kat bar, albeit only the four finger version (does this mean the Swiss giant is giving a coded two finger message to workers on the cocoa plantations?)

The whole fair trade issue has become quite muddied since the mark was awarded to a coffee made by corporate giant Nestlé. Some argued that large multinationals converting even one brand to fair trade was progress. Others felt that huge companies could gain respectability by gaining certification for just one product and continuing to fleece producers from developing countries for all its other products. The same argument applies to Cadbury’s Dairy Milk. Although two of the company’s products – Dairy Milk and subsidiary G&B’s Maya Gold – are fair trade, a huge number aren’t. With Kraft in control, it will be interesting to see how long Dairy Milk remains fair trade.

Johann Hari, writing in the Independent, suggested a controversial alternative to the fair trade mark, which appears only a few products by exception. He feels that the phrase fair trade, “suggests that paying desperately poor people a decent wage is a nice ethical add-on, and a gratifying departure from the norm. In fact, it should be taken for granted – the default position of civilised human beings. If we believed that, the labelling would be reversed: it's all the other food that should be labelled as "Unfair Trade", "Rapacious Trade", or "Let's-Pay-a-Pittance Trade." The terrific comedian Andy Zaltzman suggests a sign that could be on the packets: it is a silhouette of an obese businessman pissing on an African child.”

As yet another year goes by with millions of cheap Easter Eggs fuelling child slavery in the cocoa industry, we long for a time when chocolate is a luxury product once again. Produced fairly, priced appropriately and enjoyed as an occasional treat rather than a snack on the way home from school, pudding in your packed lunch or a cheap anti-depressant on an overcast day. Chocolate, Capitalism and Child Slavery – it’s enough to make any reasonable human being C sick. 

LINKS

Cadbury

Green & Black’s

Stop The Traffik

LINKS TO ARTICLES ON TAKE THE RED PILL

Another One Bites the Dust (Innocent Smoothies)

Easter – Religion, Eggs and Slavery

Just Good Beers

Where’s Your Money Going? Part 1 (Ben & Jerry’s, Body Shop, Green & Black’s, Pret a Manger & Tom’s)

Where’s Your Money Going? Part 2 (Dorset Cereals, PJ Smoothies, Seeds of Change & Tyrrells)