Kraft plans roadmap for success

By Catherine Boal

- Last updated on GMT

Related tags Revenue Investment Kraft

US snack giant Kraft has announced new initiatives which, it
claims, will enable the company to hit long-term targets and
reverse its recent revenue downturn.

Last month the snack maker posted a 3 per cent drop in net revenue for the fourth quarter while full year figures in September reflected a year of restructuring which incurred substantial costs in an effort to streamline the business and close up to 40 plants by 2008. In 2006, the company's impairment, exit and implementation costs amounted to $243m (€192m) – a huge jump from the $55m (€43.5m) costs incurred in the same period for the previous year. With the burden of increased costs reflecting badly on the company's overall margins, Kraft said this week it would implement several new measures to ensure growth in three stages. CEO Irene Rosenfeld said: "This is a pivotal time in Kraft's history, and while there are things we have to fix, our organisation is energised about pursuing a number of trajectory-changing initiatives. I am confident that our new strategies will return Kraft to predictable and consistent growth." ​ The strategies are: rewiring the organisation for growth, reframing categories to increase relevance to the consumer base, exploiting sales capabilities and driving down costs while maintaining high quality. The group expects these to be achieved through top line organic growth of between 3 and 4 per cent as well as re-investing growth and savings back into the new initiatives. A $300 (€229.2m) to $400 million (€305.6m) sum has been earmarked for investment into quality, marketing, capability-building and R&D. The company expects the rejuvenation of business structure and impetus to swell revenue by 3 to 4 per cent organically and predict that operating income will exceed revenue growth. Once back on track, Kraft said it would invest growth back into the business to meet its long-term goal of 8 to 9 per cent of net revenue.

Related topics Markets Kraft Foods

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