Although Kraft Foods sold the nation's largest frozen pizza business to fund its Cadbury purchase earlier this year, the company considers refrigerated and frozen products important to the company's portfolio.
Kraft, Northfield, Ill., presented its new global growth strategy at a recent New York City meeting of analysts and investors. Officials reviewed the company's "power" brands, global categories and regional business units and they detailed plans by which Kraft Foods intends to deliver organic revenue growth of 5 percent or more, margins in the mid- to high-teens and earnings per share (EPS) growth of 9 to 11 percent.
Officials said that with the acquisition of Cadbury, Kraft became the undisputed world leader in snacks, a high-growth, high-margin category that now accounts for more than half of the company's total revenue. Complementing the company's snacks portfolio are well-loved iconic regional and local brands in the beverage, grocery, cheese and convenient meals categories. Officials said roughly 80 percent of these "heritage" brands hold No. 1 or No. 2 positions in their respective categories and are household names among consumers who tend to be extremely brand-loyal. They also carry high margins and generate strong cash flow.
Kraft Foods said it will continue to invest in marketing and innovation for the larger regional "power brands," including Oscar Mayer meats, Jacobs coffee and Tang powdered beverages. At the same time, the company said it will cultivate local brands, such as A-1 steak sauce in North America, Dairylea cheese in the U.K. and Vegemite spreads in Australia, through flexible business models and nimble marketing.
Sara Lee Corp., Downers Grove, Ill., said it hosted its annual “Meet the Management” analyst meeting in New York. Marcel Smits, interim chairman and chief executive officer, and other members of senior management provided an overview of fiscal 2010 results and discussed long-term strategies and growth opportunities.
Smits said Sara Lee has delivered value to its shareholders over the last few years and is building a foundation for the future through strategic investments, such as increased innovation and geographic expansion.
Looking forward, Smits discussed that fiscal 2011 should be another year of growth. In addition, in fiscal 2012, the elimination of more than half of the fiscal 2011 Household and Body Care-related stranded overhead, a decline in amortization of $35 million and further share repurchases will lead to an anticipated positive earnings per share impact of $.15 to $.20. Smits also said Sara Lee Corp. has bought back $360 million of shares of common stock in the first quarter of fiscal 2011.
Monty Pooley, president, North American Retail, outlined the strategies that officials credit for a 34-percent increase in adjusted operating segment income in fiscal 2010. These include:
Focusing on building the best brands – such as Ball Park, Hillshire Farm, Jimmy Dean and Sara Lee – which has led to strong and growing No. 1 and No. 2 positions in most key categories.
Increased focus on wellness and nutrition – such as offering products with lower sodium, fat and calories.
Multi-cultural marketing – The segment is focusing on marketing to Hispanic and African-American audiences.
Tom Hayes, chief supply chain officer, North American Retail and Foodservice, provided an update on the company’s supply chain and its business benefits. Hayes noted that the company’s "state-of-the-art" meat processing plant in Kansas City, Kan., is on schedule to start shipping products in early 2011.
Refrigerated, frozen important to Kraft, Sara Lee
September 16, 2010