All That Glitters Ain’t Marmite

Last week, Kraft Heinz made an unsolicited bid of $143bn for Unilever.  According to an “insider”, as reported by The Sunday Times, is was “entirely unexpected” and “a horrific waste of time”.  A lot of the sentiment was along the lines of “all that glitters ain’t gold” and that “we stand for more than simply making quick money”.

The aforementioned insider echoed early comments when they (again, according to The Sunday Times) ridiculed Kraft Heinz’s ability to do anything but strip costs.  A “senior source working on working on Unilever’s defence” was quoted as saying, “We invest in brands to generate growth.  They strip out costs and let the brand decline.”

It’s a common theme of a lot of the reporting of the now failed transaction over the weekend.  3G, the company that backs Kraft Heinz, are believed to use a book entitled “Double Your Profits In Six Months Or Less“, and the book provides instructions on how to cut costs, step by step.  Precedent has shown that one of the main ways to cut those costs is through job losses.

As a Unite member said referencing Kraft’s purchase of Cadbury’s a few years ago, it is nearly as if we need a rule to protect companies from such an advance.  This could be done by adding value to the brand and employees rather just a financial valuation of the company.

I realise that to someone more educated in such matters that I that this will probably be an obvious question and point for me to be making that will have been asked many times in the past, but stay with me.

However, let’s note that Carlos Brito, the boss of another 3G backed company Anheuser-Busch InBev, reportedly received a payout of $289m in 2014 for hitting his targets.  That was a bonus and, just in case you think that’s a typo, let me put it in words – two hundred and eighty nine million dollars above his regular salary in one year.

Remembering that all businesses exist to make money to some extent, at what point can a business justify cutting the jobs of admin staff and lower level management while paying top executives $289m in bonuses?  At what stage do these companies face a social responsibility to stop making obscene amounts of money for the already wealthy while taking jobs off the people who need them more?

It’s an interesting thought that Unilever didn’t fancy the deal both financially and in terms of working practices.  If this sort of practice starts to be well known and maybe starts affecting customer behaviour, no amount of cost cutting will be able to provide the bottom line required.  This should surely be enough to demonstrate that being the best company isn’t just about about how much profit you make, but how you do it.

All that glitters
Is not gold.
So don’t believe everything
You’ve been told.
And take a chance on being strong
‘Cause they’ll destroy you
If you’re wrong.
Only lovers act this way…
You see.
Only lovers are so free.
All your friends
Are here tonight;
Never ones to miss a fight.
They are repulsed for what you’ve done…
‘Brings in the darkness
When they’ve gone.
I will die here,
Next to you.
I would make your dreams come true…
There’s so much,
I had to say…
I got lost,
Along the way.
All that glitters
Is not gold.
So don’t believe everything
You’ve been told.

All That Glitters by OMD

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