Kraft Foods said yesterday (5 May) that it is facing significant challenges in its gum business, particularly in the US, where product launches have failed to live up to expectations. 

“Gum continues to be a challenge,” Kraft CEO Irene Rosenfeld conceded during a conference call with analysts following the release of Kraft’s first-quarter results.

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In particular, Rosenfeld said that Kraft is facing two short-term issues in gum: a difficult global macroeconomic environment and a poor performance in the US.

On a global level, Rosenfeld said the company was beginning to witness “macroeconomic recovery in a number of markets around the world” and emphasised that markets such as Russia, Turkey and Japan were witnessing good growth.

“I think we’re beginning to see and I feel the category will come back over time,” she suggested.

However, in the US she said that the business “is not performing as well as we’d like” as innovations have failed to “live up to our expectations”.

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“We launched Trident Vitality. It’s been a solid single, but Trident Layers last year was a home run. So it’s a little bit below our expectations, but it’s up against a tough comp.”

Nevertheless, Rosenfeld struck an upbeat note on the category’s outlook for the remainder of the year. “Gum continues to be a bit of a challenge, particularly in the US, but I am confident that it will recover as the year progresses.”

Rosenfeld insisted that its chocolate business was “on track” and hailed the “transformational” impact that the integration of Cadbury’s other businesses have had on the group.

“There’s no question that Cadbury has transformed the business as we hoped it would in terms of portfolio, distribution capabilities and geographic footprint. And it’s certainly playing out in our results,” she argued.

Kraft management highlighted the success it has had in rolling out Kraft brands in emerging markets using Cadbury’s distribution channels. During the quarter, the company launched Oreo cookies in India where Kraft has been able to leverage its “extensive sales footprint”.

“In March, we launched the world’s favourite cookie through our chocolate sales network. Oreo is off to a very good start. In less than a month, we’ve reached more than 300,000 sales outlets across the country. In fact, Oreo’s performance is on fire across developing markets. In the first quarter, sales of Oreo were up 56%,” Rosenfeld said.

While Kraft did not provide details on the performance of former Cadbury businesses, Rosenfeld said Cadbury was “exceeding” Kraft’s financial expectations and would be EPS accreditive this year.