Kraft’s plan to split into two business units makes strategic sense, says analyst

- Last updated on GMT

Mac & Cheese will be part of Kraft's new Meals & Desserts division, which will also include Cool Whip, Jet Puffed marshmallows, JELL-O, Shake 'N Bake, Stove Top stuffing mix and Velveeta dinners
Mac & Cheese will be part of Kraft's new Meals & Desserts division, which will also include Cool Whip, Jet Puffed marshmallows, JELL-O, Shake 'N Bake, Stove Top stuffing mix and Velveeta dinners

Related tags: Kraft foods group, Kraft foods

Kraft’s plan to split itself into two standalone business units will help the market see more clearly how its brands are performing and provide greater focus on key categories, says one analyst.

Morningstar analyst Erin Lash was speaking to FoodNavigator-USA on Friday after Kraft Foods Group boss Tony Vernon unveiled plans to create two new, standalone business units: Meals and Desserts​, and Enhancers and Snack Nuts​, which will report their financial results separately.

The move - effective from July 1st​, will help provide “greater focus on brand-building while reducing the complexity of managing a portfolio with many distinct brands and product categories​” - said Vernon.

A greater focus on brand-building while reducing complexity  

Jell-o-Kraft
Jell-o will be part of the new meals & desserts business unit led by Michael Osanloo

He added: "Since we launched the new Kraft, we've focused heavily on turbocharging our iconic brands​. And we've made a lot of progress thanks to great marketing and innovation.

“With the creation of our two newest business units and great leaders in place, we're taking an important step to strengthen our focus on some of the most beloved brands in North America."

Kraft will begin reporting the financial results of two business units as separate segments at the end of its third fiscal quarter 2013.    

Move will offer market greater insight into how brands are performing

Commenting on the move, Lash said: “I think there is the potential for greater brand focus in the line of marketing, product innovation, shelf placement among others.

“In addition, I think it would likely offer the market more insights with regards to how the firm’s portfolio is performing.”

She added: “This could help the company work with retailers to leverage innovative ideas that work across a category.”

Meals & Desserts

jet-puffed-marshmallows-Kraft

The Meals & Desserts division - which will be led by Michael Osanloo (currently president of Kraft's grocery business unit) - will include Cool Whip toppings, Jet Puffed marshmallows, JELL-O, Kraft Mac & Cheese, Shake 'N Bake coatings, Stove Top stuffing mix and Velveeta dinners and meal kits.

Enhancers & Snack Nuts

Planters-KRAFT

The Enhancers & Snack Nuts division - which will be led by Jane Hilk (currently senior VP of marketing for Oscar Mayer) - will include A.1. steak sauce, Grey Poupon  mustards, Kraft and Bulls-Eye BBQ sauces, Kraft and Good Seasons dressings, Kraft and Miracle Whip dressings and Planters nuts, trail mixes and peanut butters.

The leaders of the new business units will report directly to Tony Vernon.

"These businesses have many of Kraft's most well-known and celebrated brands​," said Vernon. 

"I'm excited to have two of our most seasoned and strategic leaders bringing their considerable talents to these brand franchises.”

Related news

Follow us

Products

View more

Webinars