The Kraft, Mondelez Dilemma: Which Brands to Trim, Which Brands to Boost?


One of the main reasons for Kraft to split into its new Kraft Foods and Mondelez International units was to free the latter to pursue the beckoning opportunities in the global snacking business without being tied down to the slower-growth, mature North American groceries business, which now alone comprises Kraft Foods.

But in the early going, at least, both newly independent entities are pursuing something of the same strategy to tap into their separate growth opportunities: paring back non-performing, small or relatively insignificant brands, and applying innovation resources and expansion ambitions to brands that have a chance to make the most of them.

Mondelez, for example, already has said that it may divest some products as it seeks to streamline its range. The company will pursue a “simplification agenda,” Tom Cofer, head of Europe for Mondelez, confirmed to Bloomberg.[more]

But not to be outdone, Kraft Foods also is planning “product pruning.” Kraft hasn’t indicated what products and brands it will trim, but analysts have speculated that Oscar Mayer, Gevalia coffee, Jell-O and Planters comprise a list of “power” and “jewel” brands of the type that Kraft has said is safe from disposition. On the other hand, Breakstone sour cream, Grey Poupon mustards and A-1 steak sauces could be targets for divestiture, according to analyst Erin Lash of Morningstar.

Kraft Foods’ board of directors, meanwhile, just approved a $650 million “restructuring, related implentation and spinoff transition program,” the company reported in an SEC filing, which includes severance, asset disposal and professional service fees.

As for growth: So far, Mondelez has indicated that it will be creating new synergies among the many powerhouse brands in its stable, such as Oreo, including some with recently acquired brands such as Cadbury. That’s one way it plans to supercharge growth especially in emerging markets including the Middle East, even as it trims in more mature markets, such as Canada.

So, for instance, Mondelez is leveraging a “nervous” (as the Guardian puts it) Cadbury’s long presence in India to help growth of its Oreo brand, in part by packaging Oreos in that market in Cadbury’s signature purple packaging rather than the red and white of Oreo’s Nabisco brand. And Mondelez also is pushing a new Philadelphia cream cheese made with Cadbury’s Milka chocolate across Europe.

Mondelez also is trying to goose growth with marketing innovations such as its use of a new digital-advertising diagnostics tool provided by Ipsos ASI and by its plans to crowdsource some marketing tactics in Europe for Twist gum with Millennials as it rolls out the brand continent-wide next year.

Significant growth is what Mondelez, and Kraft Foods, need — otherwise, what was the split for?