How odd - I'm sure I didn't register with the Kansas City Star, but the Google News reference did say registration was required. OK, here 'tis. I've also been thinking about how else Kraft might make $$. I sure wish someone would package frozen spaghetti squash (if that's even possible), but that probably wouldn't be Kraft.
Kraft goes on a diet
In search of higher profits, food maker looks to healthier products
By DAVE CARPENTER
The Associated Press
NORTHFIELD, Ill. — These are the times that try cookie makers' sales.
A diet heavy on Oreos, macaroni and cheese, Oscar Mayer hot dogs and Philadelphia Cream Cheese, washed down by Maxwell House coffee and Kool-Aid, has fattened the bottom line for years at Kraft Foods Inc.
But an eating revolution that has Americans seeking out healthier food, or at least trying to consume less, has forced Kraft to rethink the way it markets its products and begin reshuffling its lineup.
Growing obesity, the popularity of low-carbohydrate diets and worries about potentially artery-clogging trans fats all have combined to hurt sales.
Add in soaring commodity costs for milk, cheese, cocoa and coffee and a few other headaches and the result is four straight quarters of profit declines and sluggish revenue and sales volume.
So when the company greeted analysts and reporters for a daylong presentation at its headquarters north of Chicago recently, the guests got a serving of rare corporate candor from Kraft along with a peek at new items. Chief executive Roger Deromedi admitted the company has been “hammered” lately in four businesses — cereal, cookies, frozen pizza and candy — because of competitors' products and the effect of low-carb diets that forgo sweets and starchy foods.
But Deromedi said that Kraft's restructuring plan “remains on track” and will start showing better results by year's end.
Kraft's push for healthier or diet-oriented food began last year when it moved to reduce the fat content in 200 products in North America, cap portions for single-serve packaged snacks, quit marketing snacks at school and encourage healthier lifestyles.
Now the campaign is becoming more evident on U.S. supermarket shelves.
Kraft's cookies and crackers division over the summer began offering 100-calorie packages of reformulated, “thin crisp” versions of Oreos, Chips Ahoy and Kraft Cheese Nips, along with Wheat Thins “minis.” Reduced-carb cookies come out this month as part of the company's new CarbWell line.
Making a bigger play in the healthy drinks market, the company is going nationwide with Fruit 2-O zero-calorie flavored water.
Meeting consumer demand for more convenient foods remains a priority, too, as reflected in the introduction of DiGiorno microwaveable rising-crust pizza.
But, Kraft also is cutting 6,000 jobs and closing as many as 20 plants this year in a $1.2 billion overhaul to reduce operating costs, putting the savings into marketing. It plans to trim its vast portfolio of products. It is selling more snacks in China and other developing markets. And it is trying to be more price competitive.
Analysts generally endorse Kraft's health-oriented actions, although they question its slow move to low-carb products.
Tim Ramey of D.A. Davidson and Co., though, sees little evidence that Kraft's struggles have bottomed out. He said that devoting its extra money to short-term marketing spending shows the company is “still in denial of its operating reality.”
Morningstar analyst Mark Hugh Sam said Kraft needs a bit more time to cure itself after facing up to the fact it had lost its industry lead in innovation, technology, talent and timing.
“It's very difficult to turn around a $31 billion company with so many products, but they're trying,” he said.
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