Rosenfeld wakes market with Kraft split plan
Reuters - Aug 8th 2011, 09:27
Kraft Foods Inc (KFT.N: Quote) CEO Irene Rosenfeld ended her victorious five-month battle for British chocolatier Cadbury last year saying she wanted a good night's sleep.
Apparently rested, she woke up the market on Thursday with a predawn announcement that she was splitting Kraft up, separating Cadbury and the rest of the candy, cookie and snacks business from a North American grocery business that includes Kraft cheese and Oscar Mayer lunch meat.
On one hand, the move is typical of Rosenfeld since she took over at Kraft in 2006. On her watch, Kraft made the $18.5 billion Cadbury purchase, acquired Lu biscuits and divested the Post cereal business.
"There seems to always be something going on there," Morningstar analyst Erin Lash said.
But some analysts wonder what exactly is going on.
Rosenfeld is known for standing her ground, including in her bid for Cadbury, when even Kraft's largest shareholder, Warren Buffett, warned against overpaying.
In 2009, when she rolled out new operational guidelines for Kraft, she had sharp plans for what to do with employees who resisted.
"You roll right over them," Rosenfeld said.
Rosenfeld, 58, has sometimes been seen as tough and stubborn, according to Tom Pirko, founder of consulting firm Bevmark LLC, who worked with Cadbury Chief Todd Stitzer when the company, and much of Britain, fiercely opposed the takeover by a foreigner.
But the question now is whether Rosenfeld is rolling back Kraft's ambition by splitting the company up.
"If anything, I would say that the act is reactionary, based upon shareholder pressure, a measure designed to protect each business from the other," Pirko said.
The second-most powerful American businesswoman as ranked by Fortune magazine, Rosenfeld has had to deal with powerful and vocal shareholders, including Buffett and activist investors Nelson Peltz and William Ackman.
Peltz, who once pushed Kraft to add two board members of his choosing, disclosed a 12.2 million share stake in Kraft in June through his firm, Trian Fund Management. That sparked speculation the split was pushed by Peltz.
But Rosenfeld insisted Kraft has mulled a split for years.
"It is not a new consideration. We've been evaluating it for quite some time and, actually, it dates back to the Lu biscuit acquisition," Rosenfeld said in an interview.
A source familiar with the situation confirmed this and said Kraft at the time decided the snacks and sweets business was too small to stand alone.
The Cadbury acquisition boosted the business and eventually led to Kraft revisiting the split.
"As we continue to progress in our strategic thinking for the combined company and looking out to the next couple of years, we determined that this was an idea whose time had come," Rosenfeld said.
Rosenfeld, who listed her childhood ambition as being president of the United States, has charted a steady rise in the food industry since earning a doctoral degree in marketing and statistics from Cornell University, where she played basketball until she broke a leg during her freshman year.
She rose through the ranks at General Foods as that company became part of Philip Morris Cos, which later combined it with another acquisition, Kraft.
Rosenfeld eventually led the integration of Nabisco into the Kraft business and was part of the team that led Kraft's initial public offering from Philip Morris -- now Altria Group Inc (MO.N: Quote) -- in 2001.
After leaving Kraft in 2003, Rosenfeld became head of PepsiCo Inc's
Frito-Lay snacks unit, where she pushed for healthier products.
Meanwhile, Kraft suffered from slow sales growth and a series of restructurings that cut into profits.
In 2006, Rosenfeld went back to Kraft as CEO and became chairman in 2007. She has pushed more money into marketing and product development, which has helped to boost sales and recover some market share.
Rosenfeld knows her reputation depends by how well the split works.
"It will be the legacy of me and my management team,"
Shares in Five Roses owner plummet after dismal trading update
28/01/2019 - 08:56
Fast moving consumer goods group AVI warned shareholders that its interim sales were flat and its headline earnings would decline by up to 7%.
What FMCG companies can learn from the online trading industry
18/12/2018 - 08:09
Fast-Moving Consumer Goods (FMCG) are, by their very nature, products that are designed to be sold quickly at a relatively low cost. Unlike luxury items that often need to sit on the shelf for an extended period of time in order to build up some exclusivity, FMCG products need to be sold as quickly as they’re advertised. With speed being the key ingredient in the FMCG industry, any weak links in the chain can harm a manufacturer's bottom-line.
Listeriosis outbreak haunts Tiger Brands
23/11/2018 - 10:06
The Listeriosis outbreak in South Africa came back to haunt Tiger Brands, with the group reporting a 26 percent decline in headline earnings per share (Heps) to 1 587 cents a share during the year to end September, while revenue fell 9 percent to R15.87.
Black Friday spikes turnover for SMEs
22/11/2018 - 10:50
Even though it is tempting to relegate Black Friday as just another marketing gimmick, the reality is that it signifies the start of a month-long consumer spending frenzy that significantly boosts retail revenues.
#WomensMonth: How do women fare in the South African retail market?
15/08/2018 - 09:06
While we focus on women in South Africa during the month of August and honour our constitution for declaring the 9th of August a public holiday; retailers continue to look closely at the overall economic status of women. How liquid is the average women consumer? What does she buy? Does she have the buying power in a household and what does that household look like?