BOB MOON: Kraft Foods is the latest U.S. company to announce it is splitting into two separate firms. In the past month, oil giant ConocoPhillips, cereal maker Ralcorp, and others have all said they’ve become too big for their own good — and that a corporate divorce will increase profits. Kraft’s plan will allow the new companies to focus on two different markets.
Marketplace’s Gregory Warner reports.
GREGORY WARNER: raft Foods has amassed one of the largest food empires in the country. Oscar Meyer is Kraft. Kool Aid is Kraft. Jell-O is Kraft. And Kraft now thinks that it can get more value by splitting the company into two. One company will market snacks: like Oreos, Cadbury chocolates, and Trident gum. The other will market the stuff you eat when you’re sitting down for a meal: like miracle-whip, stove-top stuffing, and Kraft cheese.
Harry Balzer is a food analyst with NPD Group.
HARRY BALZER: The snack market is a different category, than the main meal market. The snack market can be an in home and away from home market while the grocery is mainly an in-home business!
And the snack business is more international. A year and a half ago Kraft bought Cadbury in the U.K. giving it access not only to Europe but to Turkey and Mexico. According to a company statement, the new $32 billion snacks business will make three-quarters of its sales overseas. With a special focus on something called “instant consumption channels.” That’s industry jargon for gas stations, convenience stores, and kiosks.
I’m Gregory Warner, for Marketplace.
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