Blog: Kraft, PepsiCo reveal concerns over North American trading
Dean Best | 8 September 2011
There were some illuminating - if downbeat - comments from two of the most senior industry executives in the US yesterday on trading conditions in North America.
At an analyst conference in Boston, Kraft chairman and CEO Irene Rosenfeld and PepsiCo CFO Hugh Johnston expressed concern over the current economic environment on the continent.
Rosenfeld said the US food industry was witnessing a "new normal" of stagnant growth, which she said had reached 0.3% - down from 5% in 2007.
Last month, Kraft announced plans to split in two, a move that surprised industry watchers.
However, Rosenfeld yesterday pointed to the tough economic environment and said the decision to divide Kraft in two was vital to allow the company to adapt to the "new reality" in the market.
The split will lead to the creation of a global snacks maker and a North American grocery business, which, she said, would be able to operate more effectively in an industry where growth had fallen.
Later, PepsiCo's Johnston told analysts that a period of "stagflation" was hurting consumer goods companies. Developed markets, he said, have shown "little growth" and stagflation had made passing on increases in commodity costs "a tricky balancing act".
Johnston did try to strike a note of optimism and said trading would "not remain challenging forever". "The consumer," he insisted, "will recover".
However, for many in the industry, there is huge uncertainty when the point will be.
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