Kraft creating ‘renaissance in food and beverage’

by Eric Schroeder
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NORTHFIELD, ILL. — Kraft Foods Group Inc. is looking to take “the road less traveled” as it creates a “renaissance in North American food and beverages,” said Tony Vernon, chief executive officer, in announcing the company’s third-quarter results, and first financials as an independent company.

Mr. Vernon expressed his belief that Kraft has laid a solid foundation for the future of its $19 billion business in the face of an economic environment that has not improved. That has created a “burning platform” for Kraft, its customers and the industry at large, he said. The challenge, though, is to consistently grow volume, a goal Mr. Vernon said Kraft hopes to achieve by raising advertising levels to competitive benchmarks, driving innovation, and establishing good, better, best offerings in key categories.

“More specifically, our coffee business needs to improve its cost structure and to participate in all of its key segments,” he said. “Jell-O must be revitalized and we must do it in the face of yogurt’s explosive growth. And Planters needs significantly more work to reestablish category leadership and profitable growth. And that’s just to name a few of our bigger projects.”

To achieve those goals, Mr. Vernon said Kraft will need to become the low cost producer on many of its leadership brands. To date, the company is “only in the early innings of capturing the upside of our cost curve,” he noted.

“We have much work ahead to make cash king in the new Kraft,” Mr. Vernon explained. “So we are building new muscles in integrated business planning, net productivity and disciplined cash management. You know, we have made this complicated in the past. It really is about simplification in the new Kraft. We are out to create a robust, repeatable business system where all of our employees are aligned to drive steady, consistent shareholder return.”

For the quarter ended Sept. 30, Kraft Foods Group had earnings of $470 million, equal to 79c per share on the common stock, which compared with earnings of $417 million, or 70c per share, during the same quarter of the previous year. Revenue for the quarter was $4,606 million, up 3% from $4,474 million during the same quarter of the previous year.

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