Five categories, ten brands and ten markets: Kraft’s blueprint for the future
Kraft Foods Inc., one of the world’s leading food manufacturers, has announced optimistic progress in the middle of their three-year turnaround plan. At the Lehman Brothers Back-to-School Consumer Conference yesterday, the company outlined their plan to focus their attention on five categories, 10 brands and 10 markets.
“At the midpoint of our three-year turnaround, we’re successfully rebuilding our brands through investments in quality, innovation and marketing across our global portfolio,” reports Irene Rosenfeld, Chairman and Chief Executive Officer of Kraft. “We’ve rejuvenated some of our biggest businesses and created new incremental platforms that we can leverage across brands and categories. As a result, our brands are more relevant to consumers, who are seeking value during tough times. Rebuilding our brands combined with improved execution at retail have been key to driving solid volume and mix growth despite significant cost-driven price increases.”
Sanjay Khosla, Kraft Foods Executive Vice President and President of Kraft International, outlined the pillars of the company’s international growth strategy, including greater focus on core categories, brands and geographies. “Instead of planting Kraft flags all over the world and trying to be all things to all people, we are now focusing where we can win,” he said.
The five categories of primary focus and their associated brands are: biscuits (Oreo and Tuc/Club Social Crackers), chocolate (Milka, Cote d’Or, Toblerone and Lacta), powdered beverages (Tang), coffee (Jacobs and Carte Noire) and cream cheese (Philadelphia).
Kraft has reduced their focus to ten primary markets outside the US of which four, China, Russia, Brazil and Southeast Asia, are considered the growth engines, with the other six, Germany, France, United Kingdom, Italy, Spain and Australia, considered scale markets.
“All of this adds up to a powerful growth engine for Kraft,” Mr Khosla added. “Early results show our strategy is working, as we have significantly accelerated both top- and bottom-line growth. In addition, we have improved the depth of our international management team, so I believe the best is yet to come.”
Tim McLevish, Executive Vice President and Chief Financial Officer, concluded with an update on Kraft’s financial turnaround – which has been based around price increases and supply chain improvements to counter rising input costs. “Our underlying premise is that we will use a combination of price increases and supply chain productivity improvements to cover input cost inflation while our volume growth and product mix gains will leverage our overhead costs and increase operating margins,” he said.