The company said commodity costs were up about $225 million in the quarter, with dairy costs the biggest increase due to the carry-over effect from the record high cheese markets in the second quarter. Energy costs have also eaten into profits.
As a consequence third-quarter net income fell 3.8 per cent to $779 million from $810 million a year ago.
These results re-enforce what a tough year Kraft is having as Americans incresaingly wise-up to the need to start eating a healthier diet - the company's snack range in particular has been stung.
Earlier this month, Kraft promised more nutritional information on selected snack, dairy and beverage products . The company's new labels, to be used on a number of products that contain between two and four servings, will include figures for calories, fat, cholesterol and sodium for the whole contents of the package as well as one serving, something which is missing on many package labels.
Kraft's senior vice president, Lance Friedman, said that the company's new policy embraced FDA labeling guidelines. "With Kraft 'doing the math' for them, people can instantly see just what they'll be consuming if they choose to eat the entire contents of the package," he said.
Friedman also claimed that research shows consumers want the extra information because it "puts the choice of portion size in their hands and gives them the information they need to make sure it's an informed choice".
Furthermore, Kraft spokesperson Kris Charles, said that "in less than one year, the company has reduced the fat content in, and made other changes to, about 200 existing, individual products in North America, which account for about 5 percent of Kraft's annual North American product volume".
Charles said Kraft had reduced calories and saturated fat in its Soft Philadelphia cream cheese spread by 10 percent and 16 percent respectively, whilst Kraft String-Ums are now made with two per cent milk to provide calcium with less fat.
Kraft has said that outside the US, the company will also improve labels on some smaller size packages, including total calorie content and advice on larger packages that the contents should not be consumed all in one go.
The company said that it will continue to work with industry organisations to develop nutrition labels and that it has already made efforts to provide a broad range of portion sizes, including snacks in small packs such as Cracker Barrel Cheese Sticks and Nabisco 100 Calorie Packs.