Kraft 2008 Annual Report Download - page 21

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Discussion and Analysis
Growth Strategy
At the Consumer Analyst Group of New York (“CAGNY”) Conference in February 2008, we presented the progress we made in 2007 on our long-term growth
strategy and our plans for the second year of our three-year plan to return Kraft to reliable growth. Our four growth strategies and 2007 developments are
summarized below.
Rewire the organization for growth - We made significant changes to our incentive systems, senior management team and organizational structure. Our annual
bonuses and long-term incentive plans are now tied to measures that our people can control and that will increase shareholder value such as operating income
growth. We also complemented our veteran Kraft management team by adding new talent. In February 2008, we announced the implementation of our new
operating structure built on three core elements: business units now have full P&L accountability and are staffed accordingly; shared services that leverage the
scale of our global portfolio; and a streamlined corporate staff.
Reframe our categories - We are utilizing the concept of the “Growth Diamond” to focus on four key consumer trends driving category growth: Snacking; Quick
Meals; Health and Wellness; and Premium.
We also reframed our portfolio through acquisitions and divestitures. In 2007, we divested our flavored water and juice brand assets and related trademarks,
including Veryfine and Fruit2O, and acquired the Danone Biscuit business. These changes will result in increased revenues being derived from Kraft
International. We also announced the planned merger of the Post Business into Ralcorp, which we anticipate will be completed in mid-2008.
Exploit our sales capabilities - We are using our large scale as a competitive advantage as we better leverage our portfolio. Our “Wall-to-Wall” initiative for
Kraft North America combined the executional benefits of direct store delivery used in our Biscuit business unit with the economics of our warehouse delivery to
drive faster growth. Wall-to-Wall will increase the frequency of our retail visits and build stronger, ongoing relationships with store management allowing us to:
reduce out-of-stocks; get new items to the shelves more quickly; and increase the number and quality of displays. We plan to complete the full rollout in North
America by mid-2008.
We plan to build profitable scale by expanding our distribution reach in countries with rapidly growing demand. The acquisition of Danone Biscuit is part of our
efforts to expand our reach in developing markets.
Drive down costs without compromising quality - We plan to contain administrative overhead costs while investing in quality, R&D, marketing, sales and other
capabilities that support growth. We are incrementally investing $100 million into quality upgrades in 2008. Additionally, we anticipate completing our
Restructuring Program in 2008 with total annualized savings reaching $1.2 billion by the end of 2009.
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Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research℠