Coincident with the announcement of its second quarter results, the board of Kraft Foods revealed plans to separate the business into two independent public companies.
The board believes that the global snacks business and the North American grocery business would benefit from being run separately, as they differ in their future strategic priorities, growth profiles and operational focus.
The high growth snacks business is focused on taking advantage of global consumer snacking trends in fast-growing developing markets and in instant consumption channels, while the North American grocery business is investing to grow revenue in traditional grocery channels through product innovation and marketing,.
"As our second quarter results once again show, our businesses are benefiting from a virtuous cycle of growth and investment, which we fully expect will continue," said chairman and CEO Irene Rosenfeld.
"We have built two strong, but distinct, portfolios. Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realize their full potential. The next phase of our development recognizes the distinct priorities within our portfolio.
“The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins, and the clear ability to generate significant cash flow."
Global snacks will consist of the current Kraft Foods Europe and Developing Markets units as well as the North American snacks and confectionery businesses. Key brands would include Oreo and LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee, and Tang powdered beverages.
The North American grocery business would consist of the current US Beverages, Cheese, Convenient Meals and Grocery segments and the non-snack categories in Canada and Food Service. Its portfolio would include many of the most popular food brands on the continent, with leadership positions in virtually every category in which it competes.
Executing the plan will require further work on structure, management, governance, and other matters, which will take approximately 12 or more months, the company said. The current target is to launch the new companies before year-end 2012.
