If you cannot stand the heat, get out of the Kraft kitchen. That sums up the steadfast stance of Irene Rosenfeld, CEO of Kraft Foods Inc., in the face of a firestorm about her controversial $19-billion (U.S.) takeover of British confectionery giant Cadbury PLC. Ms. Rosenfeld, 57, has weathered criticism from the British public for taking out a national icon, and from major shareholder Warren Buffett, who called the takeover dumb and sold off almost a quarter of his Kraft holdings. In Toronto last week for a speech, Ms. Rosenfeld is a study in leadership under fire.


Q.What is the Cadbury takeover all about?

A. It is very simply about growth, putting a larger proportion of our portfolio in growing categories like chocolate, gum and candy. It means a broader geographic footprint, especially in developing markets. It is about access to growing distribution channels immediate-consumption channels like gas and convenience marts that complement the strong grocery presence in Canada and elsewhere.


Q. Have you taken lessons from this bruising experience?

A. For starters, there have been no surprises. The integration is progressing extremely well. The underlying health of the business is good. I have been very pleased to have been able to attract the large majority of Cadburys top managers. Their top 12 line and category managers are now in key positions in the combined company. About a third of our top 50 managers are from Cadbury.


Q. Will we see rationalization in the Canadian operations of the combined companies?

A. You will see some. Obviously when you put two companies together there is some redundancy. But we are now looking at a much larger chocolate category, a new gum-and-candy category, and at sales coverage of many more outlets than before. In many cases in Canada, you will see the opportunity to use this as a growth platform.


Q. Can you put a number on the job losses in Canada?

A. We do not have any numbers that we have put out there. We have identified $675-million in cost synergies globally from three different buckets: operational synergies in areas like manufacturing, distribution and supply chain; general and administrative redundancies in areas like head offices and regional offices; and marketing and selling synergies, particularly the opportunity to buy media at lower rates.


Q. In the heat of the takeover fight, you said you would retain a British plant that Cadbury had marked for closing. Now you have reversed that stand?
Should you have done more due diligence before committing?

A. I did not make a commitment. Because this was a hostile takeover, we did not have access to Cadburys books. So what I stated at the time was that we believed that we would be able to keep open the Somerdale [Southwest England] facility that had been tagged for closure by Cadbury. As it turns out, there were a number of circumstances that we could not have known that made our ability to act on that belief impossible. We certainly acted in good faith. We had a very strong belief given the size of the combined businesses that we would have need for the Somerdale facility in our network. It just turned out things were too far progressed in the closure of that facility for us to reverse it.


Q. Should you have done more to bring along major shareholders, including Warren Buffett?

A. I was very pleased with the immediate reaction to the strategic rationale of this acquisition. Within hours after we first announced our proposal in early September [2009], the market had essentially bought into the rationale. As you can imagine, though, the biggest issue our shareholder had with our proposal was the amount of stock we are using as consideration. The shareholders could not be privy at that time to our bidding strategy. Short of understanding exactly how we intended to proceed through the bidding process, there really is not much one could have done publicly without bringing them in as insiders.


Q. Safe to say, you and Mr. Buffett are having an interesting dialogue.

A. Safe to say, as we continue to deliver against the aggressive targets we have laid out, I am quite confident Mr. Buffett and our other shareholders will be very pleased.


Q. Do you still expect to get his signature note of congratulations within five years, instead of the alternative note of condolences?

A. Iam looking for it.


Q. What would have happened to Kraft had you not done this?

A. Plan B was business as usual. We had been actively engaged in stepping up the performance of our business, and in the last couple of years, we have made excellent progress. In base Kraft, we had increased our growth rate; we grew profit at a double-digit rate; we significantly improved margin performance; and stepped up cash-flow generation. If we had not made the Cadbury acquisition, we would have continued on the path that we had laid out.


Q. And that would have been fine?

A. It would have been fine but the growth targets laid out for base Kraft were, top-line, about 4 per cent and earnings per share in the 7-to 9-per-cent range. As a result of adding Cadbury with faster-growing categories, a broader developing-market footprint, and incremental distribution channels, plus some of the synergies, the benefit is stepped-up growth to 5 per cent top-line, and 9- to 11-per-cent bottom-line.


Q. You once said Move quickly even if it makes you uncomfortable. In hindsight, you will always wish you had moved faster.” Is that still a credo?

A. It is always tempting to say, Lets study this further, lets think about it some more. But one of the biggest challenges in integrating an acquisition is uncertainty. Certainly, there is concern among employees in what will happen to them personally.

A. So one of the important things we did in this and other acquisitions was to let employees understand very quickly what the timetable would be. That goes a long way toward settling people down so they have some sense of what will happen.

A. Speed is one of the most important principles. Obviously it has to be thoughtful speed. We had done a lot of homework in preparation for this acquisition but it was really important that we move quickly. We made some very clear commitments about what would happen 45 days after the final offer, what would happen 90 days after, and what employees could expect for the balance of the year.


Q. Do you worry about the world economy in this new phase of uncertainty?

A. It is an important factor, no question, particularly as we have expanded our global presence. But one of the benefits of operating in 160 countries is that we have a fairly broad portfolio of currencies and market conditions at play and that helps buffer us a little bit from some issues in a particular market. And much of our portfolio provides good value to consumers, particularly in the Canada portfolio. One of the greatest boons has been the decline in eating away from home as a part of the economic crisis.


Q. Does the acquisition take you into stronger markets?

A.One of the key planks in our strategic rationale was the broader presence in developing markets where we are typically seeing strong GDP growth and double-digit revenue growth. That will continue to be a boon to the business. Even in some markets like China, whose growth rate has slowed, it is still in excess of what we see in the developed markets.


Q. As a former Kraft Canada president, did this country play a part in your career?

A.It was one of the most significant roles, in the opportunity to manage the entire business in a different culture, and a terrific opportunity to learn how to be a coach to my team as opposed to the manager of my team.There is a lot to learn here because we can operate more quickly and things are much more contained. It is a fabulous opportunity to test out ideas and bring them to other markets around the world.


Q. Is your PhD an advantage in your role?

A.It is much harder to blow smoke in my face. It is important because I have such extensive background in consumer insight and statistics. That has been a real help as a leader of a consumer products company.


Q. Does your $26-million compensation last year mean female executives have finally made it?

A. I do not think it means anything other than we have a performance-based compensation system and our company has performed well over the last couple of years.


Q. What do you lose sleep over?

A. The world economy is at the top of my list. That is certainly not in our control and we will do everything possible to mitigate the impact in local markets.


Q. Do you actually lose sleep?

A. I spend about 24 hours a day thinking about Kraft Foods.