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4-Traders Homepage  >  Equities  >  Nyse  >  Kraft Foods Inc    KFT

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Kraft Foods Inc : OREO Enters 100th Year Crossing the $2 Billion Mark; Plans to Reach $1 Billion in Developing Markets in 2012

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05/04/2012 | 03:42pm CEST

NORTHFIELD, Ill. - (May 3, 2012) - On March 6, OREO celebrated a century of unleashing the kid inside us all.  But turning 100 has not slowed down this global brand, which grew nearly 25 percent in 2011 alone.  And that momentum continued into the first quarter of 2012, with OREO growing double digits in North America and nearly 40 percent in Europe and Developing Markets.

"The twist, lick and dunk of an OREO brings people together with a universal ritual cherished in more than 100 countries where OREO is sold," said Irene Rosenfeld, Chairman and CEO.  "We're delighted to bring the joy of the world's top-selling cookie to more people than ever.  In fact, OREO has had average growth of more than 17 percent annually since 2006.  It surpassed $2 billion in annual revenues in 2011 - doubling sales over just five years ago."

A Billion-Dollar Success in Developing Markets
For its first seven decades, OREO was primarily a North American brand, with limited expansion into Developing Markets.  And while the brand grew double digits in developed regions like North America and Europe in 2011, Developing Markets is now the brand's leading growth engine.  Today, OREO is sold in about 85 Developing Markets from China and India to Argentina and Mexico.  Over the past five years, OREO has grown nearly 37 percent on average annually in Developing Markets, including gains of 50 percent in 2011.  The brand is on track to reach $1 billion in annual revenues in Developing Markets this year.

"OREO is one of 10 power brands in Developing Markets where we put disproportionate focus and resource," said Sanjay Khosla, President, Developing Markets. "After its first 95 years, OREO had less than $200 million in annual revenues in Developing Markets.  And by the end of 2012, we plan to make OREO a billion-dollar Developing Markets success - nearly five times the net revenues of just five years ago."

Three key strategies helped transform OREO from an American favorite to a truly global icon.

A Global Cookie with a Local Twist
The original OREO cookie has not changed much since its introduction -- two round chocolate cookie wafers joined by sweet vanilla crème filling.  It remains the top-selling variety of OREO cookies worldwide.

But using a "glocal" approach that combined the best of global with the best of local, OREO tapped into local market insights to grow sales incrementally with innovative local flavors, forms and limited edition seasonal items.  Today OREO comes in a variety of local flavors in markets around the world, such as OREO green tea ice cream in China or OREO Duo in Argentina with banana and dulce de leche crème.  OREO also is enjoyed in fun shapes and forms such as Triple Double OREO in the U.S., OREO Wafer Rolls in China and the OREO Trio in Mexico.  In the U.S, OREO delights kids of all ages with seasonal items, including those celebrating Halloween, spring and American football.

Universal Message Speaks Locally
Over the years, the makers of OREO learned that the iconic "twist, lick, dunk" ritual was adored around the world and that slowed-down, carefree family moments were increasingly rare and cherished by moms everywhere.  With these global insights, the brand launched the first "moments" television advertising campaign in 1989 that captured the unique connections shared over OREO and milk. But for many years, the campaign in other markets consisted of U.S. ads that were quickly treated with a local voiceover or reshot with local talent.  Beginning in 2008, the brand introduced ads that told culturally relevant, local stories, all the while keeping the global "twist, lick, dunk" framework at the forefront.

In 2009, the brand's global appeal was taken to Facebook.  Originally an English language community, OREO soon created a truly global community reaching fans from over 200 countries in 10 different languages.  OREO then began customizing its messaging to reach consumers in their local language about OREO news in their local markets.  As a result, OREO is among the top five most popular brands on the social media site, captivating a Facebook community of over 25 million fans.

Adding Stamps to its Passport
Kraft Foods, the world's largest biscuit baker, accelerated OREO growth with several acquisitions that increased the brand's global footprint across Europe, Latin America and Asia.  In 2006, the company acquired the Spanish and Portuguese operations of United Biscuits while regaining rights to all Nabisco trademarks, including OREO, in the European Union, Eastern Europe, the Middle East and Africa.  In 2007, Kraft Foods acquired Danone's global biscuit business, giving OREO a bigger footprint and enhanced biscuit capabilities in critical emerging markets such as China, Russia, Poland, Indonesia and Malaysia. Finally, the acquisition of Cadbury in 2010 increased the brand's global scale and distribution and enabled the launch of OREO in India.

###


Contact:
Lisa Gibbons
(847) 646-4538
news@kraftfoods.com

ABOUT KRAFT FOODS
Kraft Foods Inc. (NYSE: KFT) is a global snacks powerhouse with an unrivaled portfolio of brands people love. Proudly marketing delicious biscuits, confectionery, beverages, cheese, grocery products and convenient meals in approximately 170 countries, Kraft Foods had 2011 revenue of $54.4 billion. Twelve of the company's iconic brands - Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Tang and Trident - generate revenue of more than $1 billion annually. On Aug. 4, 2011, Kraft Foods announced plans to divide and create two independent public companies: a high-growth global snacks business and a high-margin North American grocery business. The transaction is expected to be completed before the end of 2012. A leader in innovation, marketing, health & wellness and sustainability, Kraft Foods is a member of the Dow Jones Industrial Average, Standard & Poor's 500, Dow Jones Sustainability Index and Ethibel Sustainability Index. Visit kraftfoodscompany.com and facebook.com/kraftfoodscorporate.

FORWARD-LOOKING STATEMENTS
This press release contains a number of forward-looking statements.  Words, and variations of words such as "plans" and similar expressions are intended to identify our forward-looking statements, including but not limited to, that OREO is on track to reach $1 billion in annual revenues in Developing Markets.  These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those indicated in our forward-looking statements.  Such factors include, but are not limited to, continued volatility of input costs, pricing actions, continued weakness in economic conditions, risks related to operating in emerging markets and tax law changes.  Please also see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.  Kraft Foods disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.

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Financials ($)
Sales 2016 26 312 M
EBIT 2016 4 115 M
Net income 2016 2 608 M
Debt 2016 15 276 M
Yield 2016 1,57%
P/E ratio 2016 30,11
P/E ratio 2017 21,65
EV / Sales 2016 3,18x
EV / Sales 2017 3,11x
Capitalization 68 288 M
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Consensus 
Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 49,0 $
Spread / Average Target 12%
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Managers
NameTitle
Irene B. Rosenfeld Chairman & Chief Executive Officer
Brian T. Gladden Chief Financial Officer & Executive Vice President
Robin S. Hargrove Executive VP-Research, Development & Quality
Mark D. Ketchum Lead Independent Director
Lois D. Juliber Independent Director
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KRAFT FOODS INC68 288
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