Opportunities abound for top Kraft brands in Europe

by Eric Schroeder
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BOSTON — While news of its proposed acquisition of London-based Cadbury P.L.C. has garnered much of the attention this week, executives at Kraft Foods Inc. on Sept. 9 spoke in detail about some of the other opportunities available to the Northfield, Ill.-based company, including the potential of the company’s portfolio in Europe.

In a presentation at the Barclays Capital Back-to-School Conference in Boston, Mike Clarke, executive vice-president of Kraft and president of Kraft Foods Europe, said Kraft is poised to build on its position as the fourth largest food company in Europe. He spoke at length on the company’s strategy of disproportionately investing its resources, people and marketing dollars into priority brands.

"Disproportionately investing our resources and our funds behind these key brands is what’s going to drive 100% of our revenue growth over the next three years, and we’re actually seeing that happen already," Mr. Clarke said.

Specifically, he mentioned chocolate, biscuits, coffee and cream cheese as areas of the portfolio Kraft has focused on in Europe.

In chocolate, he mentioned the success of Milka, one of Kraft’s premium brands in Europe.

"The team has done a phenomenal job in broadening the pack offering on this proposition, including innovation like resealable packs on tablets," Mr. Clarke said. He added that Kraft believes the Milka brand has an opportunity to grow at an accelerated basis from its strongholds in Germany, Austria and France.

Opportunities in biscuits, meanwhile, stem from integration and leveraging the Kraft infrastructure to accelerate growth in white space markets, or underdeveloped markets.

"Eighty per cent of our growth in our biscuit business over the next three years will come from white space opportunities," Mr. Clarke said. "This is significant. We have the infrastructure to accelerate this."

He mentioned Oreo’s introduction into the United Kingdom as an example of a profitable proposition that the company hopes to duplicate with other biscuit brands.

In the company’s European coffee business, Mr. Clarke made special mention of Carte Noire, which is Kraft’s premium coffee proposition in France.

"We’ve been able to maintain this premium proposition during the recession and grow it significantly as a result of the continued investment that we have put into this brand, to maintain its premiumness and also its modern appeal," he said. "We’ve also taken this brand from a traditional roast and ground proposition and broadened it into other profitable segments like soluable (instant) and also on demand with Tassimo, another huge success for us in Europe."

Finally, Mr. Clarke shared an update on investment made in the packaging of its Philadelphia cream cheese product, including the introduction of a new oval shape with illuminated graphics that are centered on a brightened logo.

"We launched this new package recently this year and in every market that we launched in, we have seen a step change in our share in value terms, and in just about every market, post the launch, we’ve seen double-digit revenue growth on this proposition," he said. "Obviously, I can’t wait to expand this proposition as quickly as possible into more territories in Europe because of the margin gain."

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