Interested in linking to "Ooey, gooey mess "?
You may use the Headline, Deck, Byline and URL of this article on your Web site. To link to this article, select and copy the HTML code below and paste it on your own Web site.
The cookie crumbles?
Through no fault of Kraft's own, "issues of protein-based diets, trans fats and so forth have probably put a crimp in the growth of many company categories," says Eric Katzman, analyst with Deutsche Bank Securities. Whatever the reason "shareholders don't care," he continues. "Kraft spent the capital, and [now it has to] lead the category and convince consumers that eating cookies is OK."
Just a few weeks before its earnings meltdown, Kraft sought to do just that, unveiling a sweeping anti-obesity initiative that includes smaller portion sizes for snacks and kids' Lunchables meals and increased emphasis on lower-fat, lower-calorie products.
The initiatives were well received by consumers, according to an online poll by PlanetFeedback.com. Some 47 percent of respondents indicated that "Kraft is taking a major step and should be applauded." By comparison, only 4 percent believe "Kraft needs to do more."
The problem is that getting consumers to eat less isn't necessarily a growth strategy, and leading analysts wonder if Kraft can both combat obesity and hit its 2 to 3 percent volume-growth targets. "It's hard for a lot of people in the United States to eat 3 percent more," Prudential Securities analyst John McMillin noted on the conference call. "You're going to try to grow your volume 2 to 3 percent domestically it's almost gotta make us fat."
"I think you need to think about share of stomach," said Kraft CEO Betsy Holden, who noted that despite its size, Kraft accounts for less than 5 percent of U.S. packaged food sales. "So there's a significant opportunity for us to improve share of stomach. And people clearly need to eat, and we provide a lot of products that provide very good nutrition, [just as] we provide a lot of products that provide alternatives, whether it's sugar-free, reduced fat, et cetera."
Whether it attempts to trim fat or fatten its wallet, one thing is certain: Kraft has its work cut out for it.
FoodProcessing.com is the go-to information source for the food and beverage industry. We offer processing best practices as well as new products, equipment and ingredients for food and beverage processors.