Kraft Foods plans to split into two companies
2011-08-05 15:27:26
Kraft Foods Inc. said Thursday that it plans to split into two publicly traded companies, with one concentrating on its snack business such as Oreo cookies and Trident gum while the other focuses on the North American grocery business, which includes Kraft cheese and Maxwell House coffee.
Kraft, one of the largest employers in the Richmond area, operates a plant in eastern Henrico County that makes snack foods. The plant has supplied the Eastern Seaboard with Oreos, Ritz crackers, Chips Ahoy, Premium saltines, Nilla Wafers and Wheat Thins since the 1970s.
"There are no immediate changes to operations in Richmond, and Kraft Foods is operating business as usual," John Simley, a spokesman for Kraft, said in an email response to questions yesterday.
"We are still in the early stages of this process and we are working to develop detailed plans for each business," he said. "This work will likely take at least 12 months, with a target of year-end 2012 for the launch of the new companies."
The local plant employed about 570 people at the start of this year.
The move to split the company comes as more companies, including Wal-Mart Stores Inc., Target Corp. and various dollar stores, are increasing their grocery sections to capitalize on consumers' one-stop shopping needs.
"We have successfully built two strong portfolios. As a result, we are now in a position to seize the opportunity to create two great companies," Kraft Chairman and Chief Executive Officer Irene Rosenfeld said in a conference call with analysts.
Kraft steadily has built up its snacks business over the years, helped in part by the acquisitions of the LU biscuit brand from Danone and Cadbury PLC.
The Northfield, Ill.-based food maker said that the snacks company would include the current Kraft Foods Europe and developing markets units and the North American snacks and confectionery businesses. The non-snacks component of the business would include mostly powdered beverages and coffee.
The snacks business is estimated to have revenue of about $32 billion.
The grocery business, with estimated revenue of about $16 billion, would contain the current U.S. beverages, cheese, convenience meals and grocery segments and non-snack categories in Canada and food service. Its brands also would include Jell-O desserts.