Kraft to stay focused on India market

Kraft Foods will stay focused on the identified core categories within the snacking business in India, the company's global Chairman and CEO, Ms Irene Rosenfeld, told reporters here today.

The US-headquartered FMCG major announced recently the intent to divide into two publicly-traded companies. The move is likely to be completed by end 2012. Kraft Foods will house the $ 16 billion North American grocery business. The $32 billion global snacks business will be a separate entity, and a hunt is on for a name for this company.

“We will be the dominant global player in biscuits, chocolate and gum and candy; supplemented in some select markets by Tang (and coffee in others). This will be the pre-eminent player in snacking worldwide, with leading share in our core categories,” said Ms Rosenfeld, clarifying that the division would not have any impact on the company's operations in India.

For the snacking company, 85 per cent of revenues would come from these categories, she added.

Buoyed by increased investments — of up to 70 per cent — since the takeover of Cadbury (in February 2010) delivering an unprecedented 40 per cent growth, the company will continue to invest in India, she added.

“Since we acquired the Cadbury India business, we have increased investment in a number of key areas by almost 70 per cent — areas like R&D, advertising, capex, point of buying and merchandising. This will be a market that we continue to invest in aggressively, to get the growth that we expect,” she added.

Since its India entry, Kraft has introduced Oreo (biscuits) and Tang (powdered drinks) through Cadbury Kraft. While the new brands have done well, the bulk of the growth came from Cadbury Dairy Milk which registered 39 per cent growth in 2010 and 40 per cent growth between January and September 2011, said Mr Sanjay Khosla, EVP, Kraft Foods and President (Developing Markets).

Emerging markets

Ms Rosenfeld noted that India, China, Russia, Brazil and Indonesia would be among key markets for the snacks company that would be born of Kraft Foods.

“In developed markets, we are certainly experiencing what we call the ‘new normal'. Categories that were growing at five per cent are now moderating considerably. We certainly are seeing less of that phenomenon in developing markets,” said Ms Rosenfeld.

Developing markets represent about 42 per cent of the global snacking company revenues, she added.

On the integration of Cadbury with Kraft, Ms Rosenfeld noted that it was ‘more than meeting expectations' on a global basis.

“We had suggested cost savings of $750 million, and we should achieve 70 per cent of that by the end of 2011. We had suggested about a billion dollars of revenue synergies, and we are just beginning to experience those benefits,” she surmised.

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