Kraft lauds big brands

14 February 2011

NORTHFIELD, Illinois: Kraft, the US food group, believes effective marketing and a diverse brand portfolio enhances its retailer relationships.

The company enjoyed a 5.7% increase in organic revenue during the last quarter, as its "power brands" - including Kenco and Trident - surged by 8%.

It reported these gains despite raising prices on a majority of products in Europe and the US, due to higher input costs, a difficult decision given many customers are still seeking to save money.

"I do think it's a … weaker consumer environment, particularly, in a number of the developed markets around the world," said Irene Rosenfeld, Kraft's chief executive, on a conference call.

"I feel very good about the strength of our brands and our ability to deliver value even in the face of a challenging economic environment."

While the Illinois-based firm has passed on rising costs to shoppers at least in part, it is also running several initiatives to assist buyers.

"We're not blindly pricing. We are certainly looking to bridge the price value impact of the pricing actions that we're taking," said Rosenfeld.

"We've got some innovative ideas like a fresh stack packaging format for Ritz, and Premium, for example, that allows us to sell fresher but smaller packages to help the out of pocket. We've gone some family sizes of Oreos and Chips Ahoy."

"So we're taking a number of actions in that business, as well as across the portfolio to help bridge the challenging price value environment."

Further schemes have incorporated the Huddle to Fight Hunger programme, where the company donates five meals to Feeding America when customers print a $5 (€3.50; £3.10) voucher and buy five dairy products.

"That really allowed us to get strong merchandising support and offer consumer value for a very important cause," said Rosenfeld.

Most leading retailers have focused on discounting and promotions as a means of stimulating footfall, and understandably resist attempts to raise prices.

"Retailers are no happier about driving costs than we are. But I think … [there is an] opportunity for us, because we have a broad portfolio. We have very, very strong iconic brands for the consumer," Rosenfeld said.

Kraft's long-standing commitment to advertising, combined with an extensive stable that has been bolstered by the recent acquisition of Cadbury, also yields numerous benefits.

"Certainly, the … investments that we've made in our brand franchises put us in a much, much stronger position. And it really makes our brands traffic builders for most of our retail partners," asserted Rosenfeld.

"As we look at category after category, and the impact our categories have on driving traffic … in all of our markets around the world, I think it gives us a very strong position to have a conversation."

"It gives us the opportunity to have discussions with them about snacking solutions, about meal solutions, about the Huddle to Fight Hunger programme and those sorts of things, and I feel very good about continuing to leverage capabilities in the US."

Another key aspect of Kraft's approach is Wall-to-Wall, where individual sales reps take responsibility for its entire range of goods in specific stores.

"Our sales capabilities like wall-to-wall, which enable us then to merchandise a number of those products in stores. So I think we are bringing to our retailers preferred consumer brands," said Rosenfeld.

Data sourced from Seeking Alpha; additional content by Warc staff