PORTLAND, Ore. — Kraft Foods Inc. said Thursday that it plans to split into two publicly traded companies, with one focusing on its international snack brands, such as Trident gum and Cadbury chocolates, and the other on its North American grocery business, which includes Maxwell House coffee and Oscar Mayer meats.
Kraft is the latest in a string of U.S. companies, including rival Sara Lee Corp., to separate its business to cater to different niche markets. As companies increasingly look for ways to drive growth during a difficult economic environment, there’s been a major shift from thinking bigger is always better to sharpening strategy on smaller businesses that focus on a group of brands.
“In general, it mirrors what we have seen from other consumer brands,” said Morningstar analyst Erin Lash. “In terms of what it means for the industry, we have seen some businesses over the past several years, particularly food companies, become more focused brands.”
The move surprised industry watchers because Kraft, the nation’s largest foodmaker, had long touted its scale and reach as its strength. Kraft officials said Thursday that after several years of acquisitions, sales and other changes, it became clear the company had built two “strong, but distinct, portfolios” and the next step is to recognize the separate priorities for each.
“Simply put, we have now reached a stage in our development with a global snacks and grocery businesses in North America in which each benefit from standing on their own and focusing on their unique drivers of success,” Kraft chief executive Irene Rosenfeld told investors Thursday during a conference call.
