Food Business News - Feb 06, 2007 - (Page 1)

FoodBusinessNews ® NEWS, MARKETS AND ANALYSIS FOR THE FOOD PROCESSING INDUSTRY Coca-Cola to acquire Fuze Beverage 12 Portion control pushes Hershey 25 Redefining breakfast 28 MARKET WATCH February 6, 2007 Altria Group to spin off Kraft; Rosenfeld to be elected chairman NEW YORK - In a move that would end the company's diversification into the food business, Altria Group, Inc. on Jan. 31 said its board voted to authorize the spin-off of its shares of Kraft Foods to Altria shareholders. Under the plan, Altria would distribute the 89% of Kraft Foods it still owns on March 30, to shareholders of record at 5 p.m. E.S.T. on March 16. Altria said it will distribute about seven-tenths of a share of Kraft for every share of Altria stock outstanding as of the record date. The precise distribution ration will be determined on the record date. "I am extremely pleased to announce the spin-off of Kraft today, a major step in our commitment, announced more than two years ago, to deliver superior shareholder value," said Louis C. Camilleri, Altria chairman and chief executive officer. "I believe that an independent Kraft will enjoy enhanced flexibility to grow its business and be in a substantially stronger position to create enduring shareholder value." Irene Rosenfeld will become chairman of Kraft Following the spin-off, Altria will not Continued on Page 18 Foods once the spin-off is complete. U.S. diesel fuel per gallon $3.25 $3.00 $2.75 $2.50 $2.25 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 2006 2007 Source: Energy Information Administration Retail diesel fuel prices are down 21% from August 2006. Moving the needle Wall Street finds great potential in food innovations but risks lurk Since Campbell Soup Co. announced last year an initiative to reduce the sodium content of its soup, the strongest reaction may not have been from health professionals. Hopeful the effort could revive torpid sales of condensed soup, the most intense response has been from Wall Street ana- lysts who have responded to the effort with unbridled enthusiasm. New product introductions are the lifeblood of the food processing industry, and innovation is watched keenly by securities analysts. Still, a review of analyst reactions to efforts by food company innovation programs demonstrates both the extraordinary potential for new products to "move the needle" of financial performance for companies seeking growth while also underscoring the degree to which new product efforts are fraught with risk, even for the most successful of food companies. Shares of Campbell Soup have climbed more than 20% in value over the past year, a gain that reflects both improvements in the company's results, optimism about the new product initiative and preliminary Continued on Page 32

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Food Business News - Feb 06, 2007