Kraft invests in Bournville, defends global split

By Ben Bouckley

- Last updated on GMT

Related tags: Kraft foods, Investment

Kraft invests in Bournville, defends global split
Kraft has confirmed that it has chosen Cadbury’s site in Bournville as the site of a new chocolate centre to “drive new product development and new technologies” for chocolate brands.

54 new jobs will be created at Bournville as a result, while a research site dedicated to coffee at Reading will also benefit from Kraft’s UK investment drive.

The company expects its research and design teams in the UK to grow from almost 100 to around 650 employees by the end of this year.

Irene Rosenfeld, Kraft chief executive, said the company had now exceeded its commitments to maintain Cadbury research and development sites in the UK after its takeover in early 2010.

Bold new approach

During a webcast hosted by Barclays Capital yesterday, Rosenfeld also outlined “key drivers and benefits”​ behind Kraft’s decision to separate its ‘global snacks’ arm (which includes Cadbury) from US grocery by the end of next year.

Kraft had been successful in repositioning its business to “deliver sustainable top-tier growth by reinvigorating our iconic brands, transforming our portfolio and strengthening our presence in fast-growing developing markets,” ​Rosenfeld said.

She added: “But taking our performance to the next level requires a bold new approach: creating two great companies that can optimize value by focusing on their unique drivers of success.”

Global snacks would post sales of around $32bn (€22.74bn), Rosenfeld said (US Grocery $16bn or €11.37bn) and would have one of the “most desirable exposures to emerging markets”​ among highly capitalised consumer packaged goods firms.

Specifically, it would derive around 42% of sales from developing markets 36% from Western Europe and 22% from the US, she added.

Billion dollar brands

Kraft would derive around 75% of total revenues from snacks, Rosenfeld said, with Cadbury one of eight “billion dollar”​ brands alongside Jacobs, LU, Milka, Nabisco, Oreo, Tang and Trident.

The snacks business also comprises six brands with revenues of more than $500m (€355.3), and nearly 40 more brands with over $100m (€71m) in sales.

Rosenfeld said: “Global Snacks will focus on industry-leading growth by extending its global product platforms, taking advantage of its significant scale in emerging markets, expanding in instant consumption channels and aggressively entering white-space markets.”

The business would also boost sales margins by reducing costs via volume growth and improved product mix, as well as increased investment in sales, distribution and manufacturing, she added.

Related topics: Manufacturers, Kraft Foods

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