Kraft to Split in Two

SN STAFF

NORTHFIELD, Ill. - Kraft Foods said Wednesday it plans to spin off its North American grocery business and create two separate companies - one focused on the high-growth snack business and the other on its iconic grocery brands.

Irene Rosenfeld

The surprise move comes 18 months after Kraft acquired Cadbury, bolstering its global snack and candy product lines.

"We have built two strong, but distinct, portfolios. Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realize their full potential," said Irene Rosenfeld, chairman and chief executive officer, in a prepared statement.

The snack business, with annual revenues of about $32 billion, will focus on global consumer snacking trends in developing markets, while the $16 billion grocery business, with such brands as Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese and Maxwell House coffee, will continue to seek growth through innovation and marketing, the company said.

The snack business will include the current Kraft Foods Europe and Developing Markets divisions, as well as the North American snacks and confectionery businesses. Approximately 75% of revenues would be from snacks around the world, and approximately 42% would come from developing markets. The snacks division, which will also include powdered beverages and coffee, would feature key brands such as Oreo, LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee and Tang powdered beverages.

Kraft said it is developing detailed plans to submit for further consideration by its board of directors before final approval. It is seeking to launch the new companies before year-end 2012.