Kraft-ing a Growth Strategy

Discussion
May 31, 2002
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According to a piece in today’s Wall Street Journal, big U.S. food companies have recently been posting annual volume gains of about one percent. Kraft’s volume, however, is growing at roughly twice that. A big part of the company’s success has come from brand extensions such as Jell-O X-Treme fruit gel cups and Mini Oreos.

The company’s performance curve is largely affected by sales of its cheese product brands. Kraft controls roughly 40% of the U.S. cheese market. Of some concern, however, is that the company’s cheese sales began to flatten out last year after consistent annual growth in the five percent range since the early 1990s.

Competitve products, largely specialty cheeses, are thought to be nibbling at Kraft’s share. American tastes are changing as evidenced by the sale of cheeses such as Brie and Asiago in warehouse clubs and supercenters.

Americans consume an average of 30.5 pounds of cheese per person each year. That is more than double the average consumer ate in 1975.

Moderator Comment: How does Kraft Foods rate as a
trade partner?

The company has consistently earned outstanding marks
in surveys of retailers done over the years by Cannondale Associates and others.
Privately, some say that the Kraft Delivers program (KraftDelivers.com) has
often been more sizzle than steak. Can both viewpoints have merit or are the
critics suffering from huge and highly successful company envy? [George
Anderson – Moderator
]

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