Blog: Dean BestKraft under the spotlight - again

Dean Best | 16 August 2007

Talk that Kraft Foods is looking to offload some of its businesses just won’t go away.

Last month, it was Kraft’s cheese business under the spotlight; now, it’s the US group’s cereals arm.

As you’d expect, Kraft has remained tight-lipped on the latest speculation.

However, the possible sale of Kraft’s cereals business – home to brands including Shredded Wheat – was first signalled on these pages a few weeks back when an analyst in the US said the company could offload businesses that lag behind their rivals in certain sectors.

What is certain is that all this speculation on Kraft’s future structure has come after activist investor Nelson Peltz bought a small stake in the company. Industry watchers have argued that Peltz’s investment could spark the disposal of some of its operations.

What’s more likely, however, is that rising raw material costs could prompt Kraft to sell off some of its operations to boost margins – leaving the company with a set of stronger businesses with which to drive value.

Kraft boss Irene Rosenfeld has been quoted as saying that there is a “perfect storm” in global dairy markets as milk prices rise.

Could a sale or two be the perfect way to shield the company from the fall-out?


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