Farms, Farming and Food

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Dividing Kraft Foods in two

  • August
  • 5

1:16 am food processing

Food giant Kraft Foods has announced that it intends to split the company into two separate listed companies. The current Kraft foods will be comprised of Kraft’s snack business which includes the Oreo, Chips Ahoy, Tang, Trident and Cadbury brands. The other company which will be spun-off will be focused on the North American grocery market and will include Velveeta and Kraft cheese, Oscar Mayer, Philadelphia Cream Cheese,  Jell-O, Miracle Whip, Maxwell House coffee and Capri Sun drinks.

The snacks business would have 2/3 of revenues ($32 billion out of Kraft’s current $48 billion) and is the largest company in the global candy and gum market with a near 15% share. The grocery business would have the other third ($16 billion) of Kraft’s current revenue and has an established well known brands in the North American market.

Why Split?

The two new parts of Kraft currently have different focus, characteristics, opportunity and challenges that this break-up will accentuate.

Kraft’s snack business has a global reach and a particular focus on the opportunity for high growth in developing countries. Meanwhile, the new grocery business is a more mature market and has a tighter geographical focus but due to its maturity has reliable sales and can likely offer an attractive dividend to investors.

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