From: Alex Ruh
Subject: Business Report
Date: November 3, 2010
Kraft Foods Global Corporate Headquarters is located in Northfield Illinois [ (Kraft Foods Inc. (KFT)) ]. It is one of the top competitors in the food industry with over 97,000 employees.
Kraft Food Inc. is a company composed of many different brands of food. Amongst some of these brands are the first of those products. J.L. Kraft was the first to create cheese, C.W. Postum who founded the Postum Cereal Company, and Oscar Mayer who began the meat business. In 1995 Kraft General Foods changed to Kraft Foods Inc. It already has 70 different brands and continues to grow [ (Kraft Foods Inc. (KFT)) ].
Products/Success during the Recession:
Kraft Food products include everything from cheese and cookies to coffee and gum. The company has a wide variety of different brands that include Maxwell House, Trident, Lunchables, Oreo, Newtons, and Oscar Mayer, just to name a few [ (Kraft Foods Products ) ]. The company competes in the food market and because of its various brands, it has a lot of competitors. Some of Kraft’s biggest competitors include, Nestle, Unilever, Frito-Lay North America, Cargill, Incorporated, and Tyson Foods Inc [ (Kraft Foods Inc. (KFT)) ].
Despite the competition, Kraft Foods was one of the top three food companies during the recession. Research shows that all food and beverage manufactures no matter their size faced difficulties during the recession. In order “to remain competitive” during this time companies had to make cut costs, become more sustainable, and conserve materials. The top three companies today are Nestlé, PepsiCo, and Kraft. Kraft is competing hard for the second spot and it is predicted that it will move up in the list with the “acquisition of Cadbury.” Attaining Cadbury will create a “global powerhouse in snacks, confectionery and quick meals,” resulting in a $50 billion company operating in 160 countries [ (Rowan) ].
Although Kraft Foods did well during the recession, it had to change its marketing strategy. Kraft brought back the Kool-Aid mascot to be used in a new campaign that shows the Kool-Aid triumphantly beating a bottle of soda in a race. The company also felt that it could down on ad spending because they could find good deals with media firms that were also struggling from the recession [ (Wong) ].
FIGURE 1 FIGURE 2
Looking at figure 1, revenues increased from 2006 up to 2008 and then dropped slightly in 2009. To be exact, revenue decreased 3.7% from 41.9 billion to 40.4 billion. This decrease in revenue may be linked to the recession and would explain why the revenue trend didn’t continue to increase. The Earnings per share (EPS) has increased over the past three years. From 2007 to 2008, the EPS increased from $1.71 to $1.92, and from 2008 to 2009 it increased from $1.92 to $2.04. The steady increase is promising for future stockholders and investors who will be looking for stock that they can sell at a higher price.
Environmental issues are a major part of Kraft Foods Inc. The earth is the biggest contributor to the company and therefore they treat it with respect. In order to do this, the company has broken up their mission into 5 goals. These goals include: reducing plant energy usage by 25%, reducing water consumption by 15%, reducing plant energy-related carbon dioxide emissions by 25%, eliminating 150 million pounds of packaging material, and reducing plant waste by 15% [ (Kraft Foods Inc. (KFT)) ].
Reducing energy usage: Kraft has begun reducing energy in several different countries. In Banbury, England and Hemelingen, Germany, coffee plants use coffee grounds in order to create energy for the plants. This system increases energy efficiency by 28% and decreases the amount of coffee waste that is being sent to landfills. In Richmond, Virginia, the bakery is “reclaiming” heat