History & Origin . . . . . . . . . . . . . . . . . . . 3

Early Evolution . . . . . . . . . . . . . . . . . . . . 4

Global Expansion . . . . . . . . . . . . . . . . . 6

Modern Business . . . . . . . . . . . . . . . . . . 7

Company Structure . . . . . . . . . . . . . . . 9

Recent Efforts . . . . . . . . . . . . . . . . . . . .10

Company DNA . . . . . . . . . . . . . . . . . . 17

Summary . . . . . . . . . . . . . . . . . . . . . . . .18

Social Media Accounts . . . . . . . . . . . .19

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James Lewis Kraft, known as J.L., was an offspring of a Canadian

Mennonite family

He moved to New York State and worked with a cheese company

In 1903, J.L. Kraft rented a horse and wagon, purchased wholesale

cheese and began selling it to small stores in Chicago, Illinois

In 1905, he wrapped the cheeses and branding them ‘Elkhorn’.

The emergence of Kraft’s sterilized cheese became a genuine

paradigm-shifting innovation

JL realized he had one advantage: People liked his cheese.

It then became a big hit when America entered the war in 1917

The army purchased six million cans of Elkhorn to send to troops in

France which created millions of brand advocates

Kraft Cheese was widely advertised in the main magazines of the

day

Kraft was the largest cheese company in the world by 1923 3

The company launched a brand of mayonnaise in 1922 and three

years later acquired a maker of French dressing

Kraft Kitchens was born in 1926.

In 1928, ‘Velveeta’ was the nutritious cheese food that is digestible

as milk itself

Followed by merging with the Phoenix Cheese Company of New

York

In 1901, Phoenix Cheese had been formed with the purpose of

acquiring the world’s first cream cheese

This had been invented accidentally in 1872 by an American

dairyman, William Lawrence: he subsequently called it Philadelphia

In 1943, Kraft was heavily involved in the development of ‘K’

Rations

After the war, Kraft changed its name to Kraft Foods Company

Kraft started embracing the emerging medium of television 4

Kraft Television Theatre became the first commercially sponsored

programme on network television in 1947

Cheez Whiz was created as an all-purpose cheese sauce

Cracker Barrel was launched in 1954

Kraft Fudgies and the first portion-controlled mayonnaise was fist

introduced in 1956

Kraft Catalina French Dressing was introduced in 1957

Kraft Jet-puffed Marshmallows together with whipped cream

cheese were introduced in 1959

In 1960, the compny was the first major player to introduce low-

calorie salad dressings

In 1976, it was renamed as Kraft, Inc.

It has been one of the best acquisitions in packaged goods history

with sales of just under $5 billion

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Kraft’s first global expansion happened in Canada in 1920

They purchased MacLaren’s Imperial Cheese Co., which had a

factory in downtown Montreal

Canada gave easier access to the British market, which Kraft

exploited four years later by opening a sales office in London

Britain also gave ready access to the other main markets of the

British Empire including Australia

The company operated in 68 countries

Milka was just behind at 91 countries, followed by Maxwell House

at 78 and Ritz Crackers at 49

In 2003, they accounted for 11% of Kraft’s sales despite its 30%

share of global packaged foods

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In 1970’s, Philip Morris began to diversify along with other tobacco

companies

Kraft acquired Miller Brewing and Seven-Up

R. J. Reynolds acquired Nabisco Brands for $4.9 B

Philip Morris quickly followed by acquiring General Foods for $5.75

B

General Foods was by then a $9 B turnover company that had

acquired along the way many brands

Philip Morris had a food business with combined sales of over $15

B

In 1989, launched Kraft’s Fat Free Miracle Whip and pourable salad

dressings

Oscar Mayer’s award-winning Lunchables was launched in1989

They launched DiGiorno Rising Crust Pizza onto a national market

The company’s sole asset was an 80.1% share in the Nabisco

foods

The next year, Philip acquired Nabisco Holdings for $18.9B

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Philip Morris sold a 16.1% stake in the newly enlarged Kraft Foods

In 2001, Kraft Foods was a gigantic foods business, the largest in

North America and the second largest in the world

The new business defined its strategy:

Accelerate growth of core brands

Drive global category leadership

Optimize the portfolio

Deliver world-class productivity, quality and service

Build employee and organizational excellence

Four-point strategy:

Build superior brand value

Transform the portfolio

Expand global scale

Reduce costs and asset base

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Even more than Kraft’s international development, it is instructive

to consider the evolution of Kraft’s management structure before

the merger with General Foods and the incorporation of Nabisco.

Prior to being acquired by Philip Morris, Kraft had nine divisions

reporting to a Chief Operating Officer: Refrigerator Products,

Grocery Products, Frozen Foods, Dairy, Food Ingredients, Food

Service, Sales, Operations and Technology, and International.

In 1990, a mini-restructuring was Kraft General Foods’ first move

to an over-arching marketing function with links to all the business

units

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2004

New strategy and structure were apparently off to a good start

leading to an increase in sales by 5.5% to over $32 billion and in

volume by 2.8%

However, the company was at the beginning of a strategic

transformation, so what was more important was the progress

being made to reshape Kraft Foods

Here were the promising signs within the now expanded number of

strategic thrusts: Build Superior Customer Brand Value Build Shopper Demand Through Superior Customer

Collaboration Transform the Portfolio Expand Global Scale Drive Out Costs and Under-Performing Assets Strengthen Employee and Organisational Excellence Act Responsibly

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2005

Sales for new products hit a company high of $1.5 billion

The Crystal Light/Clight brand grew by 12%, reinforcing its position

as the US’ number one non-carbonated diet beverage

Tang, available in 80 countries, grew by 10% worldwide

Philadelphia’s global sales increased by 7%

Thin Crust frozen pizza technology delivered $175 million in sales

across three brands

The final change announced in the year was the addition of 3

guiding principles to the 7 elements of the strategy:

Put Consumers First, Work Simply

Act Quickly

Play to Win

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2006

An ex-General Foods executive, Irene Rosenfeld, was brought in as

CEO from PepsiCo, where she had been successfully running the

Frito-Lay unit

She was clearly not impressed with what she found, with volume

down by 5% year-on-year (3%, discounting the 2005 53rd

accounting week)

2007

Kraft bought Danone’s entire global biscuit business for

approximately $7.6 billion

Within the year itself, top-line sales increased by an 8.4%

Organic volume growth was lagging at 1.7%

An investment of $100 in Kraft shares in 2002 had so far yielded a

total shareholder return of minus $4.75

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2008

The structural, operational and cultural remaking of Kraft Foods

continued apace

A breakdown of Kraft’s sales by division:

Division Total

sales (%)

Snacks (biscuits, chocolate, salted snacks)

37.7

Beverages (coffee, packaged juice, powdered) 20.1

Cheese

17.7

Convenience Meals (pizza, dinners, lunches, meats)

14.6

Grocery (dressings, condiments, desserts)

9.9

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2009

The latest structural changes involved the disappearance of Kraft

International

The business now had three main reporting units: Kraft North

America, Kraft Europe and Kraft Developing Markets

2010

Kraft Foods announced the terms of its final offer for Cadbury

Cadbury held a 10% global confectionery market share

Cadbury topped with over 70% market share and was one of

the country’s top packaged goods companies in India

Kraft became the world’s second largest food and beverage

company with a turnover of $49 billion

DiGiorno, Tombstone and Jack/s brands in the US and Delissio in

Canada were sold to Nestlé in March for $3.7 billion

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2011

10.5% increase in sales to $54.4 billion

Twelve brands each had sales that topped $1 billion

The performance of Kraft Foods Developing Markets is the highlight

of the year.

It added over $2 billion in sales to jump to 27% of total company

sales

Organic volume was up a very healthy 3.9%

Starbucks offered Kraft $750 million in August 2010 to terminate

the partnership, but Kraft declined

Annual sales had increased ten-fold to about $500 million a year

The company announced in August that it was going to split into

two

Irene piloted the new Global Snacks Business (Mondelēz

International, Inc.) which consist of Kraft Foods Europe, Kraft Foods

Developing Markets and North American snacks and confectionery

businesses.

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2012

The newly-reconstituted Kraft Foods Group ‘s sales was over $18

billion.

Kraft Foods Group was in the business of managing big customers:

25% of sales went to Wal-Mart, with an other 17% going to its next

four biggest customers.

Mondelēz International had sales of $35 billion.

Over 80% came from outside North America, 45% from developing

markets)

Operating in the much sexier categories of biscuits (27% of sales),

chocolate (another 27%) and gum and candy (15% of sales), and

with no customer anywhere accounting for over 10% of total sales

(the five largest accounting for only 15%)

The company had a new strategy: “Drive Efficiency to Fuel Growth

and Protect the Well-being of our Planet (As everyone does) “ 16

The sequence of colossal mergers, acquisitions and splits since

1988 have created the most modern of companies: one built and

remodeled more by Philip Morris and Wall Street than by a

definable management culture

Mondelēz International is a cohesive organization with a clear

category focus, but it is not yet a company, with a definable DNA

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No other company has been through such a prolonged period of

major upheaval. It has been progressively combined and re-

combined with other long-established packaged goods giants,

each with their own histories, competencies and operating

cultures.

We believe this uniqueness will fade over time, not because Kraft

will become more like other companies but because other

companies will become more like Kraft. As retailers get ever larger

and more powerful, and in the absence of a laser-accurate niche

focusing, size has become a crucial strategic component for the

large FMCG companies. Be big or be unique.

Kraft Foods/ Mondelēz International experience will provide a

valuable pointer as to whether size can be made a supplier – as

well as a retailer-strength

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Website: www.kraftfoodsgroup.com LinkedIn: www.linkedin.com/company/kraft-foods-group Facebook: www.facebook.com/KraftFoods

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