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| Kraft wants a bigger slice of our pie |
| Viveat Susan Pinto & Arijit Barman / Mumbai Nov 23, 2011, 00:14 IST |
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Aims to be among top 5 players in the Indian food mkt; biscuits, chocolates key drivers.
 Crafting winning strategies across the globe is second nature to Irene Rosenfeld, Kraft Foods’s global chairperson, also America’s most high-profile woman CEO. So even if India remains relatively small amongst other strategic markets like Brazil, Russia and China, Rosenfeld has set the agenda on her first official trip since the $50-billion foods behemoth took over Cadbury’s in early 2010. Kraft sees India as a major part of its growth in emerging markets. It is firming plans to become one of the top five food companies in the country in an effort to offset sluggish growth in the developed markets.
It has started taking a bigger bite of the market share. "In India, in particular, we have witnessed exceptional growth (in sales). Year-to-date, we are up almost 40 per cent in this country," she said. This growth comes after 2010, which had a 25 per cent growth.
Much of these sales are coming from its flagship legacy brands such as Cadbury Dairy Milk, which grew 39 per cent in sales in 2010 and 40 per cent between January and September this year. “The growth rates we have seen have been well in excess of what Cadbury (alone) had been generating primarily because we have chosen to invest in a lot of critical areas," she added.
The twin effort of improving sales and bottom line has ensured that Kraft can increase its investment in India in the areas of advertising & promotion, sales and capex by 70 per cent since the Cadbury acquisition, Rosenfeld said, without giving an absolute investment number for the year-ago period.
Riding on a revenue of around Rs 2,500 crore from India in 2010, she is confident that Kraft’s own power , Oreo and Tang, will re-energise the growth in the coming quarters. Beverages, too, are clearly becoming a strategic bet with Bournvita getting a refurbished look. This is part of Kraft’s strategy of investing across 10 key geographies, in five categories – biscuits, chocolates, powdered beverages, coffee and gums and candies — through 10 brands.
For India, the aggression will be to push its snacks portfolio, which dovetails with emerging markets thesis, rather than dairy. "Cheese is definitely not the white space we see in India," she said.
Currently, Kraft is present in four out of its five key categories barring coffee.
“Over time, we will get more brands...But there is so much untapped opportunity for our base businesses, we will look to focus on that first," Rosenfeld said.
For Kraft, India is a global hub for talent, innovation and engineering. Many Indian honchos have been cherry-picked for other markets in the last 18 months. There are plans to export Indian vizicoolers or low-cost mini cooling devices to other key markets like Indonesia and Brazil. The information technology platform, too, may get a bigger global play.
The integration of Cadbury and Kraft is expected to generate cost savings of $750 million by the end of this year, and also revenue synergies of a billion dollars which the company “is just beginning to feel.” “The strategy would be to take brands from each other's portfolios and push it cleverly through the legacy system," she said.
Kraft’s $19.7-billion buy of Cadbury has been a bet for the future. It no longer sees itself as an American company, but a "global snacking powerhouse”. Today, that snacking portfolio is a $32-billion business, while the grocery segment that Kraft has been traditionally known for, mainly in North America, is $16 billion in size.
Kraft Foods — cobbled over the last century from bits of Philip Morris, RJR Nabisco and General Foods — has used acquisitions as a template for growth, picking brands and businesses from Groupe Danone, United Biscuits and finally the British chocolatier. For India, Rosenfeld is not averse to future buyouts although she ruled out potential partnerships in the near future.
Rosenfeld: Feisty fighter in boardroom
When earlier this month British daily Financial Times profiled Irene Rosenfeld in their ‘Women on The Top’ series, this is what an angry reader wrote-in: “Sir, you made the big mistake of suggesting that Irene Rosenfeld, chairman and chief executive of Kraft Foods, is a top woman in business. May I remind you that this lady broke the promise she made during the hostile takeover of Cadbury of keeping a plant in Bristol open and has ever since refused to attend meetings to explain her actions in the UK House of Commons...”
Kraft’s hostile takeover of Cadbury, a UK based chocolate maker, is one of the biggest controversies in Rosenfeld’s career, otherwise considered spectacular. The takeover, though, added to Kraft’s heft and showed that she had an aggressive growth strategy for her company.
Because of this and other decisions, many consider Rosenfeld a natural born fighter. She has weathered the wrath of billionaire investor Warren Buffet – whom she has subsequently won over – and the outpouring of British nationalism after the Cadbury takeover.
“Those actions have put Kraft on a new trajectory," she succinctly puts it. With 30 years in the food and beverage business, she recently edged out PepsiCo’s poster girl Indra Nooyi as the most powerful businesswoman in the US. She is in the middle of yet another audacious move, demerging Kraft into two.
Rosenfeld, 58, on her first trip to India as Kraft’s chief executive, has engaged with employees over working meals, taken field trips, interacted with “model customers” and engaged with trade partners such as Kishore Biyani, chief executive of the Future Group. She also took time out to meet “good friend” Ratan Tata. "I am excited about the prospects that India presents," she said.
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