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April 28, 2005

USA: Kraft looking to acquire ‘healthy brands’

Kraft Foods is “actively looking”' to acquire healthy food and drink brands to tap the growing number of consumers concerned about their weight, according to an interview with chief executive Roger Deromedi reported by Bloomberg.

Kraft Foods is “actively looking”’ to acquire healthy food and drink brands to tap the growing number of consumers concerned about their weight, according to an interview with chief executive Roger Deromedi reported by Bloomberg.

The company will probably market the brands under its new South Beach Diet product line, Deromedi said. “You’ll see more products being introduced under the South Beach Diet range through acquisitions and internal development,” he said.

Kraft, the biggest U.S. food company, is focusing on products such as Oreo Thin Crisps and Tang juice drink as more consumers seek out foods low in saturated fats and sugar. The company’s sales have risen an average 3.8% a year the past five years while those of rival Kellogg Co. have gained an 6.7% as Kraft has been slower to introduce lower-calorie snacks, Bloomberg said.

Deromedi said he doesn’t plan to sell Kraft’s Post cereals and Oscar Mayer meats businesses because they represent opportunities for growth. The New York Post reported last year that the company was considering selling the brands.

Deromedi has grouped the Post cereals business with Kraft’s cookies division to produce a broader snack business, enabling the company to compete more effectively on a global level, he said.

“With the cereals and biscuit businesses, there is a lot of overlap in technologies and new-product offerings that we can leverage together,” he said. “With our cereal business, we have a lot of knowledge about dietary fiber which we can now apply to our biscuit business, creating products such as grain and breakfast bars. The same is true for Oscar Meyer, which is grouped into convenient meals business and is doing well.”

“We’re looking to sell those brands which we don’t have sustainable competitive advantage in,” he said. The sales will be those that represent less than a mid-single-digit percentage of the company’s total revenue, he said.

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