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August 4, 2011

GLOBAL: Kraft split to create global snacks business

Kraft Foods is to split into two companies, a move that will create a global snacks maker that would sell brands including Oreo biscuits and Cadbury chocolate.

By Dean Best

Kraft Foods is to split into two companies, a move that will create a global snacks maker that would sell brands including Oreo biscuits and Cadbury chocolate.

The US food giant today (4 August) announced plans to create two listed companies – a North American grocery business and an international snacks firm.

Kraft plans to spin off the North American company to its shareholders and said it believes the two business will be in place by the end of 2012.

Chairman and CEO Irene Rosenfeld said Kraft had, through recent acquisitions including the 2010 takeover of Cadbury, built “two strong, but distinct portfolios”.

Rosenfeld said: “Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realise their full potential.

“The next phase of our development recognises the distinct priorities within our portfolio. The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins, and the clear ability to generate significant cash flow.”

Kraft said the snacks business would consist of its units in Europe and in developing markets, as well as its snacks and confectionery divisions in North America.

The company, which would also sell brands including Trident gum, Jacobs coffee and Tang powdered drinks, would have annual sales of around US$32bn, with 75% of sales coming from outside the US.

The new North American grocery business would make brands including Philadelphia cheese, Capri Sun beverages and Jell-O desserts and generate revenues of $16bn.

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