Food Business News - Mar 08, 2005 - (Page 1)

' FoodBusinessNews March 8, 2005 NEWS, MARKETS AND ANALYSIS FOR THE FOOD PROCESSING INDUSTRY Redesigning Kraft Foods Roundup from CAGNY 2005 24 Sodium GRAS status challenged in lawsuit 53 New Products Sampling 42 MARKET WATCH "What a difference a year can make." As is often the case at the Consumer Analyst Group of New York annual meeting, Andrew Lazar, senior consumer-food analyst at Lehman Brothers, was gracious in his introduction of Roger K. Deromedi, chief executive officer of the nation's largest packaged foods company, Kraft Foods Inc. "During the past year, Kraft has been narrowing price gaps in key categories, ramping up innovation, not to mention transitioning to an entirely new organizational structure," Mr. Lazar continued. While certainly accurate, Mr. Lazar's remarks could create the impression that Kraft's difficulties, a bump in the road, are behind them and that what lies ahead is long-term sustainable growth. In fact, as Kraft approaches its fifth year as a publicly traded company, a review of its track record since 2001 shows an organization still vigorously searching for the right formula for success. This search was evident in Mr. Deromedi's Feb. 22 comments at CAGNY in Scottsdale. In a manner unusually introspective for such a forum, he acknowledged that while Kraft has been a "very thorough" company, it could also be characterized as "slow and plodding." Unmet potential While better in 2004, the Northfield, Ill.based company's performance in recent years has not lived up to the brilliant promise that Continued on Page 32 Hershey divides business into two segments to spur growth Executives also want to change the company's name Rally in soy complex futures prices continued, but momentum was lost in wheat and corn. Beef and pork prices advanced on a delay in reopening of U.S.Canada trade in live cattle. 30 HERSHEY, PA. - Hershey Foods Corp. will become The Hershey Company if the company's board of directors has their way, and that is not where the changes will stop. The company also announced plans to separate its business into a U.S. Confectionery division and a U.S. Snack division in order to improve its performance. "We're confident in our ability to sustain Hershey's superior performance and to extend our reach within core Confectionery and the broader $65 billion snacks market," said Richard H. Lenny, chairman, president and chief executive officer. "With the creation of these new business groups we will bring sharper focus and energy to Hershey's long-term growth opportunities in each of these markets." The U.S. Confectionery business will consist of Hershey's domestic chocolate and Confectionery businesses, as well as the company's special retail outlets, including Hershey's Chocolate World visitor's center, Hershey's Time Square store and a new Hershey's store, set to open this spring in Chicago. Thomas K. Hernquist, the company's current senior vice-president and chief marketing officer, has been named senior vice-president, president of U.S. Confectionery. The company currently is searching for an Continued on Page 17

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Food Business News - Mar 08, 2005