Irene Rosenfeld’s biggest accomplishment of the past year? “Walking and chewing Trident gum at the same time,” said the chairman and chief executive officer of Kraft Foods.
By “walking” she means maintaining momentum across Kraft’s global businesses and by “chewing Trident” — successfully completing the takeover of Cadbury.
Indeed, it’s been an eventful year for Rosenfeld, who completed her three-year transformation plan to return Kraft to reliable growth and launched a hostile takeover bid for the British candy maker. After months of resistance, Cadbury agreed to a $19.5 billion offer in January, creating the world’s largest candy company with brands like Dairy Milk, Creme Egg and Green & Blacks.
Confectionery and snack segments now make up the bulk of Kraft’s portfolio. More than 70 Kraft brands — including 40 candy brands — have revenues over $100 million.
The majority of Kraft’s business, headquartered in Northfield, Ill., is from outside North America with just over one-quarter (26%) coming from fast-growth markets, up from 20% prior to the acquisition.
“With Cadbury, we now have considerably greater scale in key developing markets such as Brazil, Russia, India, China and Mexico, that will benefit all of our brands,” said Rosenfeld.
Since combining with Cadbury, the CEO has had to adjust Kraft’s overseas focus on 5-10-10 (5 categories, 10 power brands, 10 focus markets). New targets include:
• Chocolate, gum and candy, biscuit, coffee and powdered beverages.
• Cadbury Dairy Milk, Milka, Lacta, Oreo, Jacobs, Tang, Club Social/TUC, Trident, Halls and Biskuat/Tiger.
• Brazil, Australia/New Zealand, Russia, Mexico, China, India, Ukraine, Poland, South Africa and Indonesia.
In the U.S., Kraft brands have benefited from investments to improve product quality.
“Today, about two-thirds of our products are preferred over the competition, vs. only 44% in 2006,” noted Rosenfeld.
Stronger brand equity helped Kraft not only manage higher input costs, but also invest back into products, according to Rosenfeld.
“Differentiating ourselves from the competition enabled us to reestablish our pricing power,” she said.
Despite the improvements, recession-driven consumption trends forced more drastic steps. Over the past several quarters, Kraft has discontinued less profitable product lines.
“While this reduced near-term volume, it was the right long-term decision and enables us to grow from a much stronger base,” said Rosenfeld. “In contrast to many of our peers, we delivered sequential improvement in volume/mix in every quarter in 2009.”
One of the casualties was Kraft’s North American frozen pizza business which it sold to Nestlé for $3.7 billion as part of a plan to fund the cash portion of its offer to Cadbury.
Value products were also key during the past year as Kraft put its marketing muscle behind low-cost meals like its Kraft Macaroni & Cheese, which offers three servings for about $1. The company increased its advertising and consumer communications as a percentage of net revenue to 7.2%, up from 6.7% in 2008, according to Rosenfeld.
Perhaps funds will be used to publicize salt reductions across its portfolio. Over the next two years, Kraft will cut 750 million teaspoons from its products.