Kraft Foods Reports Increased Earnings And Potential Growth
Kraft Foods must be doing something right. Even in a soft economy, they reported revenue yields higher than expectations. They're also poised for future growth.
Kraft announced in August that it would split its business into two publicly traded companies. One will focus on its international snack brands like Trident gum and Cadbury chocolates while the other will concentrate on its North American grocery business that includes Maxwell House coffee and Oscar Mayer meats.
The snack side will be the larger, high-growth business with a heavy emphasis on emerging markets. The grocery business, which will still be one of the largest food and beverage companies in North America after the split, will rely on the strength of its well-known brands for slower, steady gains that more likely to deliver dividends for shareholders.
Experts in the food industry say that competitors could stand to learn a lot by following Kraft's lead.
While the food industry is facing many challenges these days, including higher costs for ingredients and soft consumer spending, Kraft has managed to maintain its profitability. The company has relied on the popularity of its core brands while raising prices and acquiring other critical companies, like Cadbury PLC, to help beat analysts' expectations for the past few quarters