Kraft 2013 Annual Report Download - page 14

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such loss or failure could adversely affect our profitability, financial condition, and operating results.
Our geographic focus makes us particularly vulnerable to economic and other events and trends in North
America.
We operate primarily in North America and, therefore, are particularly susceptible to adverse regulations, economic
climate, consumer trends, market fluctuations, including commodity price fluctuations or supply shortages for
certain of our key ingredients, and other adverse events that are specific to the United States and Canada. The
concentration of our businesses in North America could present challenges and may increase the likelihood that an
adverse event in North America would materially and adversely affect our profitability, financial condition, and
operating results.
Changes in regulations could increase our costs.
Our activities are highly regulated and subject to government oversight. Various federal, state, provincial, and local
laws and regulations govern food and beverage production and marketing, as well as licensing, trade, tax, and
environmental matters. Governing bodies regularly issue new regulations and changes to existing regulations. Our
need to comply with new or revised regulations or their interpretation and application, including proposed
requirements designed to enhance food safety or to regulate imported ingredients, could materially and adversely
affect our product sales, financial condition, and operating results.
Legal claims or other regulatory enforcement actions could subject us to civil and criminal penalties.
As a large food and beverage company, we operate in a highly regulated environment with constantly evolving legal
and regulatory frameworks. Consequently, we are subject to heightened risk of legal claims or other regulatory
enforcement actions. Although we have implemented policies and procedures designed to ensure compliance with
existing laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate
our policies and procedures. Moreover, a failure to maintain effective control processes could lead to violations,
unintentional or otherwise, of laws and regulations. Legal claims or regulatory enforcement actions arising out of our
failure or alleged failure to comply with applicable laws and regulations could subject us to civil and criminal
penalties that could materially and adversely affect our product sales, reputation, financial condition, and operating
results.
Product recalls or other product liability claims could materially and adversely affect us.
Selling products for human consumption involves inherent legal and other risks, including product contamination,
spoilage, product tampering, allergens, or other adulteration. We could decide to, or be required to, recall products
due to suspected or confirmed product contamination, adulteration, misbranding, tampering, or other deficiencies. A
widespread product recall or market withdrawal could result in significant losses due to their costs, the destruction
of product inventory, and lost sales due to the unavailability of the product for a period of time. We could be
adversely affected if consumers lose confidence in the safety and quality of certain food products or ingredients, or
the food safety system generally. Adverse attention about these types of concerns, whether or not valid, may
damage our reputation, discourage consumers from buying our products, or cause production and delivery
disruptions.
We may also suffer losses if our products or operations violate applicable laws or regulations, or if our products
cause injury, illness, or death. In addition, our marketing could face claims of false or deceptive advertising or other
criticism. A significant product liability or other legal judgment or a related regulatory enforcement action against us,
or a significant product recall, may materially and adversely affect our reputation and profitability. Moreover, even if
a product liability or consumer fraud claim is unsuccessful, has no merit, or is not pursued, the negative publicity
surrounding assertions against our products or processes could materially and adversely affect our product sales,
financial condition, and operating results.
Unanticipated business disruptions could adversely affect our ability to provide our products to our
customers.
We have a complex network of suppliers, owned manufacturing locations, co-manufacturing locations, distribution
networks, and information systems that support our ability to consistently provide our products to our customers.
Factors that are hard to predict or beyond our control, like weather, raw material shortage, natural disasters, fire or
explosion, terrorism, generalized labor unrest, or health pandemics, could damage or disrupt our operations or our
suppliers’ or co-manufacturers’ operations. These disruptions may require additional resources to restore our supply