Kraft Foods Inc. (KRFT), a long-time worldwide leader in the food and beverage industry, has completed the previously announced spin-off of its North American grocery business, Kraft Foods Group, Inc. and is now operating as two companies – Kraft Foods Group and Mondelez International Inc., an international snacks business.
According to Kraft management, the spin-off will let the two companies develop their own culture, operating model, organizational structure and financial strategies customized to their unique businesses, markets and select opportunities.
Additionally, it will let each company enhance its shareholder returns. The international segment of Kraft, which is primarily allocated to Mondelez, is anticipated to grow at exponential rates. However, while the decision to prioritize overseas growth should prove lucrative for the new spin-off, Kraft will have its share of work to do in the US to generate enhanced sales of its remaining brands.
Optimism remains high between both entities, and in a statement to the press, Irene Rosenfeld, the Kraft CEO who will now run Mondelez, said: “New Entries generated approximately 9% of revenue last year, and Kraft Foods is well positioned to go off on its own.”
Two Companies with Distinct Product Lines
Both Kraft Foods Group and Mondelez have very diverse lines of products. Mondelez will include the Cadbury, Jacobs, LU, Milka, Nabisco, Oreo, Tang and Trident brands.
Meanwhile, the now leaner Kraft Foods Group will include in its portfolio such brands as Maxwell House, Oscar Mayer, Planters, Velveeta, Miracle Whip and JELL-O.
Kraft Foods Group CEO Tony Vernon says: “Today is the beginning of a great new company, a totally new Kraft, one with the spirit of a startup and the soul of a powerhouse. We are proud of our rich history and deeply passionate about Kraft's future."
Key Statistics - World Food Retail Industry (source: MarketLine)
- Between 2007 and 2011, the global food retail market realized a compound annual growth rate (CAGR) of 6% with revenue reaching $5.3 trillion in 2011.
- Going forward, the growth of the global food retail market is expected to decelerate to a CAGR of 5.5% from 2011 through 2016. The result is an anticipated market value of $7 trillion by 2016 year-end.
- The most successful segments in the global food retail market in 2011 were found the hypermarket, supermarket, and discounters with combined total revenue hitting $2.5 trillion, which represents over 46% of overall market value.