Kraft Foods Case Analysis

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Register to read the introduction… In certain categories they are leaders in their industry and have grown rapidly in recent years. They face stiff competition from other players in the industry however, and it is recommended that they slow their aggressive growth strategy in the short term to focus on reducing costs to improve current margins.

Introduction
Kraft Food Inc. is an American confectionery, food and beverage conglomerate, established by J. L. Kraft in 1903. Since its conception, Kraft has grown into a worldwide company offering its brands in over 170 countries. Despite its rapid expansion, Kraft has stayed true to their roots with more than 40 of their brands being over a century old. Today they are headquartered in Northfield, Illinois, and have European headquarters in Switzerland. With a turnover of $49.2 billion in 2010, Kraft is the number one food company in the US and number two worldwide behind Nestlé.

The portfolio of brands for Kraft Food Inc. includes Kraft, the world´s largest-selling cheese brand, cookie and cracker producer Nabisco, and milk-dunking favourite Oreo. In August 2011 the company announced plans to split into a North American grocery business and a faster growing global snacks company. Exhibit 1 shows a selection of Kraft’s portfolio of
…show more content…
It also shows how much value they add to their raw materials. Keeping CGS to a minimal level will aid in achieving higher profits per sale. As we saw in the fundamental analysis, there was huge revenue growth between 2009 and 2010 though this growth cannot be seen in the GPM. This means that while revenue is growing, Kraft is not becoming more efficient in maintaining production costs. We can also see that from 2008 to 2009, sales revenue decreased 4.29% and CGS decreased 8.63%, which suggests that both sales and production costs were lower. However, CGS decreased at a higher per cent, which allowed GPM to rise. This decrease could be due to the sale of Post cereals during 2008 resulting in less production and sales. In 2008 we still see an increase of sales, this could be due to the fact that Kraft’s affordable, lower margin products were popular during the recession. However, the overall GPM decreased. This is because the increase in CGS was higher than the increase of

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