Blog: Dean BestKraft sweetens outlook for Peltz

Dean Best | 3 December 2007

After last week’s good news at Heinz, activist investor Nelson Peltz will also be cheered by the goings-on at another of his investments, Kraft Foods.

Last week, Kraft closed the acquisition of Danone’s biscuits business. The business will give Kraft a much needed presence in Europe and will become its biggest worldwide, accounting for a fifth of its turnover. Meanwhile, reports claimed that, in the wake of the Danone deal, Kraft is looking to build a cookie plant in Russia, a key emerging market for biscuits. Kraft remained tight-lipped over its plans but it is likely to have earmarked Russia as a key growth market and crucial to its plans outside the US.

Russia seems to be high on the list of most of the industry’s leading players at the moment. Last week, Nestlé snapped up Russian confectioner Ruzskaya Confectionery Factory (RKF) in a bid to tap into booming chocolate sales in the country. Chocolate consumption in Russia is forecast to jump by a third over the next four years, a projection that has compelled the likes of Kraft, Mars and Cadbury to spend more money in Russia.

However, smaller players, like Cloetta Fazer, Scandinavia’s largest confectioner, are also eyeing the market with interest. Last week, just-food caught up with Cloetta Fazer boss Jesper Aberg who spoke of the company’s ambitions to move into Russia and its plans to expand outside chocolate, a strategy it again followed on Friday with the acquisition of Finnish gum maker Fennobon.

And with Russia’s retail sector in good health, Tesco boss Sir Terry Leahy has hinted the UK grocer could also look to enter the market. In the next decade, Tesco is aiming to double sales outside in the UK, thereby generating over half its business overseas. The company has been busy getting its US venture Fresh & Easy off to a good start in recent months but its international ambitions will not just be limited to those across the Atlantic.


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