Choc and cheese: Kraft to slice itself in two

The US giant wants to separate its snacks business (chocolate) from its grocery business (cheese, or derivations thereof). It's not likely to go down well over here...

by Emma Haslett
Last Updated: 18 Jul 2013
In this country, US food giant Kraft is synonymous with two things: 1) cheese singles, and 2) last year’s hostile takeover of Cadbury. And now, the company wants to separate the two sides of its business: one business will focus on groceries, with brands like macaroni and cheese, Philadelphia and, of course, those singles, and will be targeted at the North American market, with about $16bn worth of revenues. The other company will be a snacks business, including brands like Oreos, Milka and Cadbury, which has about $32bn worth of revenues – 42% of which comes from emerging markets. Although we’d imagine the Cadbury contingent is shifting uncomfortably in its seat…

CEO Irene Rosenfeld says the divide is the ‘next logical step’ for the company: apparently, each side of the business ‘now differ in their future strategic priorities, growth profiles and operational focus’ (chocolate and cheese, basically). Well, it’s certainly not because Kraft is struggling: today it reported second-quarter profits of $976m, 4% higher than the $939m it made during the same period last year. Revenues were also up, to $13.9bn – that’s a 13% year-on-year rise. Sweet.

Of course, for those at Cadbury, it’ll be the third big shake-up in five years after the takeover, which followed closely behind the demerger of Cadbury and Schweppes in March 2007. And while Rosenfeld insists this will ‘create two great companies’, Cadbury officials could be forgiven for being rather more cautious: during Kraft’s acquisition, it made plenty of promises (such as one to save its Somerville factory), then performed a massive u-turn just days after the deal was complete. And then there’s Rosenfeld’s stubborn refusal to appear before a parliamentary committee looking into the deal, which has got more than a few backs up. So there’s no guarantee about anything.

Still, let’s be positive, here: anything which prevents the ungodly experiments the Sun claimed last month Kraft is doing with Philadephia and Cadbury’s chocolate can’t be a completely terrible idea…

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