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    Kraft to Divest More Brands as Altria Prepares Spinoff

    Labels have sales of $1.7 billion.

    Kraft Foods Inc. is halfway through divesting brands that account for about $1.7 billion of annual sales, as the food maker prepares for an expected spinoff by Altria Group Inc., Kraft Chief Executive Roger Deromedi said last week, just days before he was replaced as CEO by Irene Rosenfeld.

    "We have to be strong in the categories that we compete in, with very strong leadership brands, and that's been the focus strategically," Deromedi said at a food conference in France, as reported by Bloomberg News.

    Kraft plans to sell brands representing 5 percent of Northfield, Ill.-based Kraft's revenue, which climbed 6 percent in 2005, to $34.1 billion.

    Sold so far: Milk-Bone dog snacks, Life Savers and Altoids mints. Spending has increased in Kraft's coffee, cheese, cookie and cracker brands.

    Kraft's first-quarter revenue rose less than 1 percent, to $8.12 billion, as sales in Europe slid 9.1 percent amid stiffer competition from retailers' own brands.

    Investors are concerned about the pace of the spinoff, which hinges on Altria, also the parent of cigarette maker Philip Morris USA, winning class-action tobacco lawsuits.

    Altria executives have made their intentions to spin off Kraft very clear, Dermodi said, but "the timing of any spinoff won't be rushed and is dependent on the tobacco litigation. What's the timing on that? I won't profess to make a guess. We have a game plan and are ready for a spinoff if and when Altria decides to do it."

    Deromedi announced his intentions to step down as chief executive on June 26, saying he wants to "pursue other interests." Deromedi's departure was "mutually agreed," according to a statement released by Kraft.

    Rosenfeld, his replacement, was most recently chairman and chief executive of Frito-Lay, a division of PepsiCo. Prior to joining Frito-Lay in 2004, Rosenfeld spent more than 20 years with Kraft and General Foods. She held a number of key management positions in the United States, Canada and Mexico, culminating in her appointment as President of Kraft's North American business. Among her accomplishments at Kraft, Rosenfeld led the integration of the $19-billion Nabisco acquisition, as well as the restructuring and turnaround of a number of key businesses.

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