Kraft Foods Inc. said it plans to split into two publicly traded companies, with one focusing on its international snack brands like Trident gum and Oreo cookies and the other on its North American groceries business that includes Maxwell House coffee and Oscar Mayer meats. The surprise news, announced today, sent shares of the nation’s largest food maker soaring in pre-market trading. The move by the food giant to split a high-growth international business from its domestic grocery brands highlights the increasing focus by U.S. companies on growth in emerging markets.
“Simply put, we have now reached a stage in our development with a global snacks and grocery businesses in North America in which each benefits from standing on their own and focusing on their unique drivers of success,” says Irene Rosenfeld, chairman and CEO. Kraft says the deal would allow both companies to focus better on their priorities. The grocery business will cater to traditional domestic retailers with products such as Kraft Cheese and Maxwell House coffee and has estimated revenue of $16 billion. The grocery business would still be one of the largest food and beverage companies in North America, and the company says it would build on its leading market positions with some of the world’s most well-known grocery foods, such as Kraft macaroni and cheese, Oscar Mayer meats and Jell-O desserts. Kraft’s snack business, twice the size with revenue of $32 billion, will emphasize international growth—particularly in attractive emerging markets—with products such as Tang, Cadbury chocolate and Trident gum, which are typically sold at quick-stop retailers.
