Kraft Foods Inc. (KFT) is putting in more money into its most profitable operation, Cadbury Kraft India. Kraft Foods has decided to increase its investments in Cadbury India by more than half. The company is now eyeing an annual sales growth of 30% for chocolates.
Kraft Foods has keen interest in the growing Indian market, which has significant opportunities in a number of key and yet-to-be-exploited categories. The Indian arm, which has 2,700 employees, is one of Kraft's top 10 priority markets among the 170 countries in which the company operates.
Kraft acquired Cadbury in January 2010 as part of a $19.7 billion deal designed to exploit “synergies” between the two companies’ portfolios and global strengths. The Cadbury acquisition added popular brands such as Dairy Milk and Bournvita to Kraft's Indian portfolio, thus boosting its growth trajectory in one of the fastest growing economies of the world.
Oreo biscuits and fruit-flavored drink Tango are the ones from Kraft’s stable that are marketed and sold by the company in India.
In the first full quarter after the acquisition, Kraft reported that Cadbury accounted for 90% of the gains made by the company.
Since Kraft Foods acquired Cadbury India's operations,Kraft Foods has increased its investment in India in the areas of advertising & promotion, sales, and capex by over 70%.
Developing Markets delivered double-digits revenue and operating income growth, reflecting the continued benefits of focusing on Power Brands, core categories and key markets.
The company reported third quarter 2011 operating EPS of 58 cents per share, surpassing the Zacks Consensus Estimate of 56 cents by 3.6%. It also went up 23.4% from 47 cents reported in the prior-year quarter.
Krafts plans to split itself into two independent public companies. It will split into a high-growth global snacks business with estimated revenues of approximately $32 billion, and a high-margin North American grocery business with estimated revenue of approximately $16 billion.
Global snacks will consist of the current units of Kraft Foods’ Europe and Developing Markets and the North American snacks and confectionery businesses. The North American grocery business would consist of the current U.S. Beverages, Cheese, Convenient Meals and Grocery segments and the non-snack categories in Canada and Food Service.
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