Kraft Joins Move to Consumer Focus

In the US, Kraft Foods Inc. will invest $300-400 million on 'marketing, research and development' this year in a plan to turn around a series of disappointing results. The consumer giant aims to make its product categories 'more relevant to consumers'.

The long-awaited four-part plan, which also includes cost-cutting measures, better exploitation of sales capabilities and 'rewiring' the organization for growth, was announced this week by new Chief Executive Irene Rosenfeld, brought in from PepsiCo last year to lead the turnaround. Parent company Altria Group Inc. plans to spin off its 89% stake in Kraft, the largest North American packaged food company, in little over a month, according to Reuters.

In a statement, Rosenfeld admitted the company had problems but said it should hit its stride by 2009. 'While there are things we have to fix, our organization is energized about pursuing a number of trajectory-changing initiatives'. The firm will increase spending on marketing again in 2008.

Like other food manufacturers, Kraft has reacted to the rise in convenience foods and demand for healthier products by adjusting its focus, and has closed factories, cut jobs and sold off brands. In 2006, net revenue fell 3%and net earnings 19.3%. Rosenfeld says she is 'confident that our new strategies will return Kraft to predictable and consistent growth'.

Other major consumer goods and retail firms have recently made similar commitments to customer focus, including Wal-Mart (www.mrweb.com/drno/news6364.htm ). Clothing retailer Gap took a seeming step in the other direction with the departure of insight-focused CEO Paul Pressler in January (www.mrweb.com/drno/news6357.htm ).

Kraft is online at www.kraft.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.