Kraft announces new business strategy

Feb. 21, 2007
Kraft Foods Inc. announced a new business strategy that is said to spur company growth.

Kraft Foods Inc. announced a new business strategy that is said to spur company growth.

Irene Rosenfeld, CEO of Kraft Foods, announced the strategy at the Consumer Analyst Group of New York conference in Scottsdale, Arizona.

According to Kraft, its strategy includes rewiring the organization for growth, reframing Kraft's categories to make them more relevant to consumers, exploiting Kraft's sales capabilities, and driving down costs without compromising quality.

The company says it expects to accomplish these goals in a three-stage process. In 2007, Kraft says it plans to increase its organic line 3% to 4%. Additionally, Kraft plans to invest all of its growth, as well as restructuring savings, back into the first wave of the growth initiatives. This represents $300 million to $400 million investment in quality, marketing, R&D and capability-building.

The company also provided 2007 earnings guidance and its long-term financial outlook.

"By 2009, we'll hit our stride," Rosenfeld said. "We'll fully realize the financial benefits of our investments and deliver our long-term targets of at least 4% organic net revenue growth and 7% to 9% EPS growth."

In 2008, the company expects its operational turnaround to gain momentum. Kraft will again grow revenue 3% to 4% organically, with operating income exceeding revenue growth. The company will invest a portion of its growth back into the business, including further marketing spending, toward a long-term target of 8% to 9% of net revenue.

"This is a pivotal time in Kraft's history, and while there are things we have to fix, our organization is energized about pursuing a number of trajectory-changing initiatives," said Rosenfeld. "I am confident that our new strategies will return Kraft to predictable and consistent growth."

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