Kraft expects US$1 billion sales boost from Cadbury

Posted by Nicole Eckersley on 16th September 2010

Kraft foods logoUS food giant Kraft Foods expects the acquisition of UK confectioner Cadbury to raise its revenue by US$1 billion by 2013.

Ahead of a meeting with analysts yesterday, Kraft said that the acquisition of Cadbury had made it “the undisputed world leader in snacks”, a category that now accounts for more than half of its revenue.

The acquisition of Cadbury is also expected to generate $750 million in cost synergies by 2013, Kraft said.

Kraft also spoke of “additional savings” from procurement, manufacturing and logistics, which will drive productivity gains in excess of 4% of cost of goods sold.

Kraft also announced plans to continue to cultivate local brands, including Vegemite, through “flexible business models and nimble marketing”.

“Today’s Kraft Foods is a global snacks powerhouse with an unrivaled portfolio of leading regional and local brands,” said Irene Rosenfeld, Chairman and CEO. “This unique and complementary combination, together with our significant presence in high-growth developing markets, will deliver consistent growth in the top tier of our peer group.

The company, meanwhile, set a target for revenue growth in developing markets over the next three years. A quarter of Kraft’s sales are made in emerging markets and the company wants to increase this to a third by 2013.

“This combination of factors gives us great confidence that our company will generate organic revenue growth of 5% or more, margins in the mid- to high-teens and EPS growth of 9 to 11%,” said CFO Tim McLevish. “Delivering on these commitments will make Kraft Foods a sustainable top-tier performer in the global food industry.”