Kraft Foods consolidates operations

Jan. 23, 2012
Kraft Foods announced several moves to help ensure its North America-based snacks and grocery businesses are well-positioned to become two independent public companies before the end of 2012.

Kraft Foods (NYSE: KFT) announced several moves to help ensure its North America-based snacks and grocery businesses are well-positioned to become two independent public companies before the end of 2012.

Key decisions include realigning the US Sales organization, consolidating US management centers, and streamlining corporate and business unit organizations. These actions will result in the reduction of about 1,600 positions in North America throughout 2012, about 40% of which are due to the realignment of US Sales.

The grocery and snacks businesses have distinct portfolios and routes to market. By realigning the US Sales structure to create more focused teams, each company can customize its approach to in-store sales and execution to maximize impact.

The snacks business will leverage a direct store delivery model, with most US retail sales employees shifting to the North American region of the global snacks company.

To capitalize on its warehouse distribution strength, the grocery company will reorganize within the United States. Local retail support will be contracted to two leading sales agencies, with Kraft oversight and direction. Acosta Sales & Marketing will become the company’s partner for grocery store and mass retail channel execution. CROSSMARK will continue to support Kraft in the convenience store channel.

Kraft anticipates having both US Sales organizations in place by April 1, 2012.

When the North American grocery company is spun off later this year, it will reduce its US management center locations from four to two.

The Beverages business unit in Tarrytown NY and the Planters brand in East Hanover NJ will relocate to the Chicago area by December 2012. Most employees affected by these moves will have the option to transfer with their businesses to the future grocery company headquarters in the Chicago area. Kraft also will close its Glenview IL management center by the end of 2013.

In Canada, both companies will retain sites in the greater Toronto area. The Kraft grocery business will stay in the Don Mills offices, while the snacks business moves to recently opened offices in Mississauga. The Madison WI management center will remain the site for the Oscar Mayer business unit.

Throughout 2011, the North American business has been lowering costs to provide funds to invest in its brands. Kraft plans to eliminate about 1,600 positions throughout the United States and Canada over the next 12 months, primarily from sales, corporate, and business unit areas. About 20% of these job eliminations are currently open positions.

These planned workforce reductions do not include manufacturing facilities.

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