Kraft’s Sweet Tooth

4 minute read
Barbara Kiviat

Kraft Foods’ hostile bid for British confectioner Cadbury has been making headlines since last fall. But the maker of Jell-O, Maxwell House and Miracle Whip, based in Northfield, Ill., offers a broader story too: what people around the world are eating. TIME’s Barbara Kiviat spoke with CEO Irene Rosenfeld.

Can you see economic recovery based on the sorts of foods people are buying?
We have a number of products that offer very good value — brands like Macaroni and Cheese, Oscar Mayer cold cuts and powdered drinks like Kool-Aid. Those were very good products in the throes of the recession, and we’re continuing to see growth.

So people aren’t trading up?
Not yet. We’re continuing to see tremendous value consciousness on the part of most consumers around the world.

How does the recovery vary?
We are seeing signs of stability in the U.S. We’ve seen a nice rebound in many of our markets in the Asia-Pacific region and in Latin America, with the exception of Venezuela. The challenges continue to be in Western Europe, particularly France and Spain, and in Eastern Europe, particularly countries like Poland and Russia, where we see softness in GDP and very high levels of unemployment.

So why did you buy Cadbury?
Both gum and chocolate tend to have faster growth rates. The second benefit is that it greatly expands our geographic footprint, particularly in developing markets. This gives us a much stronger presence in markets like Mexico and a footprint in markets like India, which allows us to have an infrastructure through which we can put a number of our other snacking products. Thirdly, where Kraft is very strong in traditional grocery channels, Cadbury is very strong in impulse channels like convenience stores.

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People ranging from Warren Buffett to British parliamentarians have knocked the Cadbury sale. How do you deal with that?
It’s not a very comfortable position to be in the public spotlight, but most important, one has to decide what’s right for the company. We laid out what we thought we could do to help accelerate growth, and one of those things was the acquisition of Cadbury.

What do you see America eating more of?
We’re seeing the greatest growth in our snacking, confectionery and quick-meal products. Cookies, crackers, brands like Oreo continue to grow at a double-digit rate. I think that’s indicative of the fact that people continue to be on the go and are looking for quick treats. Also, better-for-you kinds of products. We increasingly find that the lower-sugar, lower-fat versions of our products are experiencing very attractive growth rates.

How much responsibility do companies like yours bear for America’s obesity epidemic?
Childhood obesity is a serious problem, but it is a very complex issue. Our role is to help the consumer make informed choices. We launched a 25%-reduced-sugar Capri Sun this past year. We continue to make sure our lower-fat salad dressings and cheeses taste terrific so that consumers feel good eating those products. We recently announced a 10% reduction in salt across our North American portfolio over the next two years. At the same time, we have technologies that can add whole grain to a number of our products without compromising taste.

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How do you know what people will want to buy next?
One of the best ways is by studying restaurant menus. That’s typically a leading indicator of what consumers are eating. If you go on our website, you’ll find recipes for restaurant-inspired meals. For example, we have a whole program around using Philadelphia cream cheese to make Alfredo and other white sauces, since that’s a growing trend in the restaurant world.

In the age of and the iPad, where do you spend your advertising dollars?
We spend a lot of time talking about who the target is for a particular product and what their lifestyle looks like. For products where we think we have more teenaged audiences, we are much more focused on digital media. We’ve made some significant investments in aggregate in our advertising spending over the past couple of years, at a time when many peer companies were reducing their investment. We recognized that the recession was not going to last forever, and this was an opportunity for strong companies to get stronger.

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