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Big Brands > Kraft Foods

Power brands and BRIC countries drive growth for Kraft in 2011

By Oliver Nieburg , 21-Feb-2012
Last updated on 28-Feb-2012 at 01:03 GMT

Kraft Foods has posted growth in its 2011 results driven by strong performance for its power brands and BRIC and European markets.

Full year sales were up 10.5% to $54.3bn while profits stood at $19bn, up 6.2% on last year.

For the final quarter (Q4) sales were up 6.6% to $14.6bn and profits also up 2% to $1.5bn.

Power brands

The company’s 10 power brands, which include Cadbury and Oreo, experienced 8% growth in 2011.

Kraft CEO Irene Rosenfeld said this growth was “fuelled by chocolate” through Cadbury, which had 30% sales gains, with the Indian market a highlight.

The company’s Club Social and Tuc brands were also up 35%.

However the strongest performer was Oreo. Sales for this business were up 50% during the year and have increased 500% since 2006.

“There is no such thing as a mature brand,” said Tony Vernon.

BRIC

The company’s performance in developing markets was particularly strong.

Sales in BRIC countries were up 19%, with 15% gains in Brazil to $2bn and a 30% growth in China to $800m.

Biscuits experienced double digit growth in development markets. China and Russia led the way with 40% improved biscuit sales.

Global chocolate was up 6%, led by advances in Brazil and India.

Though the company saw strong gum performance in Brazil, Kraft’s gum and candy segment was down overall for the year.

Kraft said its focus on power brands and developing markets would continue following its split into a Global Snacks arm and North American Grocery company.

Rosenfeld said the developing markets will account for 44% of the firm’s Global Snacks business, with BRIC countries the focus.

Europe

The European market delivered growth for the eight consecutive quarter in spite of volatile economic conditions.

Kraft’s 15 European power brands grew 7% in 2011, while it’s chocobakery platform, including Milka and Cote D’or brands, gained 30% in sales.

The company said it would continue to invest in power brands in Europe though brands like Oreo, Tassimo and BelVita.

North America

Power brand performance in North America was not as strong as in other regions. However, products outside the core brands helped profits increase by 3.6%

Growth was stunted by high input costs, which hit margins in this region.

The company said it would conduct “product pruning” in this region, mainly in the food service segment.

For 2012, Kraft forecasts growth of 5% for its entire business.

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