The business of selling Oreo cookies and Trident gum is very different from what it takes to move Oscar Mayer lunch meat and Maxwell House coffee. So much so that processed foods giant Kraft Foods Inc. is breaking itself in two.

Illinois-based Kraft announced that by the end of 2012, it will cleave itself into a global snack foods business focusing on such brands as Oreos, Trident and Tang and a North American grocery business revolving around such products as Kraft Macaroni & Cheese and Jell-O.

Cool Whip and Lunchables would be part of the grocery business, Kraft spokesman Michael Mitchell said.

The split "is about operational benefits," CEO Irene Rosenfeld said in a conference call. "The focus of the grocery business on low-cost efficiency versus the profile of the global snacks business, which is about high growth."

The split also would mean the two operations wouldn't be competing for investment dollars inside the company, Rosenfeld said, while investors would get a better understanding of the two distinct companies, both of which would be publicly traded.

The breakup is expected to happen before the end of 2012.

According to Kraft, the snacks business would have an estimated $32 billion a year in revenue, with a focus on beefing up its sales, distribution and manufacturing to support growth. The grocery business, meanwhile, would have an estimated $16 billion a year in revenue and focus on keeping its costs down and paying a dividend to shareholders.

While some brands would be split between the two companies, Rosenfeld said that for the most part "it's a pretty clean separation."

Specifics of the two companies, such as their names and management teams, have yet to be decided, said Rosenfeld, who would be CEO of one of them.


From the August 8, 2011, Prepared Foods' Daily News.