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Kraft Foods Revs Old Brands With Kraft Spin-Off and Mondelēz Launch

Posted by Dale Buss on October 1, 2012 02:22 PM

A major part of the logic behind the split-up of Kraft into snacks go-getter (and naming-challenged) Mondelēz International and its more tired North American grocery business is to create a "global snacking powerhouse" — and spur growth in the latter enterprise.

As Forbes noted, Kraft is moving from the New York Stock Exchange to NASDAQ with the move to spin off its North American business and rebrand its corporate parent: "Kraft is keeping its faster-growing global snacks business into a new company named Mondelēz International, ticker MDLZ, while its spun-off North American grocery business will keep the Kraft Foods name but trade under ticker KRFT. Both stocks will list on the Nasdaq when the breakup is complete, and the KFT symbol will be retired."

Now that Kraft Foods Group can begin selling shares with its own listing as an independent company after the market's close on Oct. 1st, it's time for Kraft to fulfill investor expectations as Mondelēz (which will debut on Oct. 3rd, with a defiant macron over its final 'ē') is considered to be the higher growth stock.

The Wall Street Journal reported that analysts were "bullish" ahead of the Kraft-Mondelēz separation on Monday. "Parts of Kraft have been undermanaged for a very long time," Edward Aaron, analyst with RBC Capital Markets, told Bloomberg. "Part of the merit of the split is to improve resource allocation and make cultural changes that should have been made a long time ago."

To that end, the new management team running Kraft Foods Group, led by CEO Tony Vernon, are launching a host of initiatives designed to revitalize or extend a huge cupboard full of Kraft-owned traditional brands including Oscar Mayer, Velveeta, Planters, Jell-o and the Kraft brand itself. Current Kraft CEO Irene Rosenfeld will be heading up Mondelēz International.

Now it's up to Vernon and his team to revive Jell-O, for instance, which has just rolled out Mix-Ins: toppings and pudding in a single cup, with real milk and no artificial sweeteners or high-fructose corn syrup. Kraft executives acknowledged this is an idea that might have been launched long ago as Jell-O pudding has lost ground to yogurt as a kids' snack.

Cool Whip has been trying to stir interest with a campaign that uses characters from Family Guy, an emerging co-branding platform, and has been expanded to new Cool Whip frosting.

Kraft also hopes to get more mileage out of one of its most successful creations of a brand-new category in many years: Mio, a concentrated-liquid version of powdered drink mixes. The pocket-portable product was an internally generated employee innovation that became Kraft's biggest launch in more than a decade last year and then hit more than $100 million in sales within a year. No wonder Coca-Cola is taking aim at it with Dasani Drops.

But VP of marketing Debra Berman and other Kraft Foods Group leaders will have to make a lot of progress before investors cozy up to the newly independent enterprise as they have to Mondelēz, even as Rosenfeld's corporate team aims to manage expectations. As the now rebranded Mondelez Facebook page has been asking followers in the countdown to the spin-off,

We’ve come a long way since 1903 when J. L. Kraft had 65 dollars and a dream. On Oct. 01 we separate into two new companies — Kraft Foods Group and Mondelēz International, Inc. Both are still driven by our iconic brands, including KRAFT, Oscar Mayer, HALLS, NABISCO, Trident Gum and CADBURY. Which brands bring you joy?

Even in new skins, crusty CPG companies take time to change. Kraft Foods is beginning its hoped-for transformation in earnest.

Update: More on the $36 billion Mondelēz split from Kraft in the Wall Street Journal and Reuters' TV report below —

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