What is Cadbury playing at? The UK-based confectionery group has been through a painful restructuring, cutting hundreds of jobs, abandoning its expensive central London headquarters and freezing the salaries of 150 senior managers.
Last month, it announced the result: a 30 per cent increase in underlying 2008 pre-tax profits and improved profit margins. Having done all that, it raised its costs. That is the effect of its announcement last week that all cocoa in Cadbury's Dairy Milk, the UK's best-selling chocolate bar, and in Cadbury's drinking chocolate will come from Fairtrade producers.
Under the Fairtrade network, suppliers receive a minimum price and a premium on top of that. As a result, many items with the Fairtrade mark are premium products – someone has to pay for those higher producer prices, and it is usually consumers.