Cadbury pledge drive: sweet as?

There can be little doubt the innovative pledge drive to publicly own a slice of Dunedin's Cadbury factory has captured the hearts and minds of locals - as well as chocolate lovers from further afield.

The factory ownership drive is the brainchild of first-term Dunedin city councillor Jim O'Malley, although he launched the plan in a personal capacity. More than $5million has been pledged, a week and a-half since the initiative was launched. Its runaway success has encouraged the council to back the project, and it is now suggesting it could offer support in the way of land and building ownership or rates relief.

Dr O'Malley hopes to raise $20million to keep the factory open on a portion of the site, retaining some jobs and some level of confectionery production - including under Cadbury brands - in Dunedin.

Cadbury's offshore owner Mondelez announced in February it was closing the factory, citing the cost of production and distance from major markets. A subsequent disclosure that the parent company took $130million from the New Zealand side of its business did little to engender favour.

A total of 350 workers are set to lose their jobs, and a proud history of chocolate production in the city - dating back to 1868 - will come to an end. It is also a further blow to the manufacturing sector in the city.

The Cadbury factory is clearly more than just a business to Dunedinites; it has become symbolic. Is the city being too sentimental, though, or can this emotion be harnessed successfully?

Dr O'Malley has thought outside the square, which should be applauded, yet there are risks involved.

Is Dr O'Malley's business model viable in the highly competitive fast-moving consumer goods market? Will consumers want to remain loyal to a company that has - to all intents and purposes - abandoned them? If it comes down to wallets, can a smaller operator keep product prices competitive?

While it is admirable to try to retain certain manufacturing skills - and with them a small number of jobs (25 initially), is that the best way forward in a rapidly changing, high-tech world? Could investment in new skills and training and ventures pay better long-term dividends?

Should the council be involved in any capacity, and risk using ratepayers' money to support the initiative? Could another venture on the prime site bring greater benefits?

The elephant in the room remains Mondelez. It may well desire another chocolate-maker to continue manufacturing some of its signature products under licence - while also bearing the financial risk - but what happens if Dunedin Manufacturing Holdings wants to branch out into wider production, which is what Dr O'Malley plans. Is a major competitor really going to sit back and watch?

Mondelez still holds the cards. There are other bidders to make the third party confectionery. It is unclear whether it is also interested in using the site for manufacturing, and it is unclear whether more parties are interested in the site for other purposes.

The more interest, the more money a sale could generate, but the harder that could be for Dr O'Malley in a short time frame. One point in his favour is the benefit for Mondelez of retaining some chocolate manufacturing alongside its Cadbury World visitor attraction, which it is retaining.

Dr O'Malley is now looking at formal capital raising, including crowdfunding and financial support from larger investors. We wish this success, and hope the many questions can be answered positively. With much to consider and hands not yet played, the next weeks will certainly be intriguing.

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