Kraft in Rehab, Holden to Helm Global Expansion

09 January 2004

Kraft Foods, the globe's second largest food company (after Switzerland's Nestlé) is to embark on a major reorganisation in the wake of slowing growth and a fall in earnings.

The move also reflects increased competition from the private-label sector and several new product disappointments.

The first hint of an upheaval came last month when the food giant abandoned its joint-chief executive structure, consolidating the role with incumbent Roger Deromedi while apparently sidelining former co-ceo, the high profile Betsy Holden.

Holden, however, remained on the company's board and twenty-three days later (Thursday) it was announced she will take the marketing helm of good ship Kraft with orders to steer it to the waters of sustained global growth.

Yesterday's moves are designed to assuage the fears of investors and analysts that Kraft is in slow decline. Certainly, the markets have not been happy with the co-chief executive structure adopted when parent company Altria (née Philip Morris) floated 16% of the company in 2001.

And there has been increasing criticism at the group's over-reliance on North American sales. Outside the US and Canada, revenues amounted to $8.2 billion in last year, just one-quarter of total sales. As the company's first president of global marketing and category development, Holden is charged with redressing this imbalance.

Deromedi has called an analysts' meeting for January 27 at which he will outline Kraft's future plans. These are expected to include possible restructuring charges and cost savings plus, many analysts hope, a cutback in what they see as over-ambitious growth targets.

Summarised the newly solus ceo: "The most important opportunities and pressing challenges that we face today . . . demand that we become a more unified, global company."

Data sourced from: Financial Times; additional content by WARC staff