Kraft Foods chairman and CEO Irene Rosenfeld today (9 September) insisted the US food giant does not need to offload assets amid speculation over how the company would fund a second, higher bid for Cadbury.
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Some industry watchers have suggested that Kraft, the owner of brands including Oscar Mayer meats and Philadelphia cheese, may have to sell some non-snacks brands to bankroll another offer for Cadbury, which turned down a bid on Monday (7 September).
However, speaking to analysts today, Rosenfeld said that, although Kraft would continue to monitor its portfolio, asset sales were not necessary.
“We’ve done a great deal of strategic thinking about the portfolio [and] we do not need to make any portfolio moves for financial reasons,” Rosenfeld said.
Addressing the Barclays Capital Back-to-School Consumer Conference in the US, Rosenfeld reiterated her belief that an acquisition of Cadbury would benefit both businesses. Just two days after the Cadbury board rejected Kraft’s initial offer, Rosenfeld also repeated her desire to carry out the transaction on a “friendly basis”.
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By GlobalData“We believe Cadbury has few catalysts for value creation as a stand-alone entity in an increasingly competitive market. We have strong stand-alone, operational momentum. The time is right for this combination to happen,” Rosenfeld said.
She cited the geographic fit between Kraft and Cadbury’s businesses as a factor that could drive the combined company forward, arguing the UK confectioner could benefit from the US group’s scale in China, Russia and Brazil. Kraft, she added, could benefit from Cadbury’s larger presence in India and Mexico.
Kraft’s international business continues to be a key focus for the company’s management, which also today outlined how the group could boost margins in Europe, where its operating income lags its peers.
Savings would come from procurement, manufacturing and distribution, while Michael Clarke, president of Kraft Foods Europe, said the Milka chocolate maker would also look to focus on ten core brands on the continent, including Oreo cookies and Philadelphia.
“The way we are developing the profitability of our European business is to get the team to focus on the core brands. People are spreading themselves too thin,” Clarke said. “The pruning process we have started in Europe will continue. Smaller brands will tail off.”
