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Kraft's New Grocery Company Plans Marketing Boost in Search of 'Renaissance'
Mr. Vernon also pledged that the company would become a “lean, horizontal” organization, moving away from a culture at old Kraft that had he characterized as being too reliant on “entitlement.” Part of the reorganization is already underway, including the elimination of 2,000 positions in the past two years, while “layers of management” have been removed, he said. The goal, he said, is to “let our bright, talented people create and innovate without having to look to headquarters for answers and directions at every step.” At company headquarters in suburban Chicago, office walls are being taken down to create a more open environment. “The stately cherry paneling of our previous executive offices will soon be history,” Mr. Vernon said.
Kraft is betting that the split will bring more focus to brands while creating two distinct investment choices for Wall Street. Mondelez is positioned as a high-growth company with penetration in developing markets, such as Brazil and India, while Kraft Foods Group is full of category-dominant meat and cheese brands, which act as cash cows that will generate consistent dividends for investors. When the split is final, Kraft Foods Group will become the fourth-largest food and beverage company in North America, trailing PepsiCo ($36 billion), Nestle ($26 billion and Coca-Cola ($21 billion), according to Kraft.
The trick for Kraft Foods Group will be to differentiate its grocery brands in categories that risk becoming commoditized. Mr. Vernon signaled that marketing will be a key cog in that endeavor. In outlining his priorities, he said that advertising was “dearest to my heart” and suggested that Kraft would spend more to catch up to peers. Kraft Foods Group brand spent 2.9% of its net revenue on advertising in the latest fiscal year, compared to the 4.5% average spent by competitors, including 8.6% by Kellogg Co., 6.4% by Campbell Soup. Co. and 5.5% by General Mills, according to a slide Mr. Vernon showed analysts.
“We can and we must do more to support our brands,” he said
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