Kraft Foods

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INTEGRATED COMPANY ANALYSIS
Andy Fleming • Laura Hausfeld • Brett Hoerz • Anna Lyman • Eduardo Saenz

DECEMBER 15, 2010

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TABLE OF CONTENTS EXECUTIVE SUMMARY COMPANY OVERVIEW COMPETITOR OVERVIEW GLOBAL GROWTH STRATEGY - “HITTING OUR SWEET SPOT” OREO IN INDIA: MARKETING ANALYSIS TARGET SEGMENT POSITIONING MARKETING MIX (PRODUCT, PLACEMENT, PROMOTION, PRICING) COMPETITOR ANALYSIS 3 3-4 4 4-5 5 6 6-8 8 8 8-9 9 9-11 11 12 13 14 14-15 15 16 17 18 19 19 20 20 21 21 22 23 24 25 26 27 28 29 30-31 31 32 33 34 35 36 36 37 37 38 39-40

KRAFT IN INDIA: FUTURE MARKETING STRATEGIES
NEW PRODUCTS INNOVATION

ACCOUNTING
INCOME STATEMENT ANALYSIS BALANCE SHEET ANALYSIS

VALUATION DISCOUNTED CASH FLOW (DCF) ANALYSIS CONCLUSION APPENDICES A. NET REVENUE BY OPERATING SEGMENT (2006, 2010) B. HISTORY OF MERGERS, ACQUISITIONS & NAME CHANGES C. NET REVENUE BY CONSUMER SECTOR (2006, 2010) D. 11 $1 BILLION KRAFT BRANDS E. 54 KRAFT BRANDS F. KEY COMPETITOR ANALYSIS G. HISTORY OF NEW PRODUCT INTRODUCTION (DOMESTIC) H. SWOT ANALYSIS: KRAFT FOODS, INC. I. SWOT ANALYSIS: CADBURY J. SWOT ANALYSIS: OREO IN INDIA K. EXAMPLE: OREO IN CHINA L. INCOME STATEMENT: FORECASTING VARIABLES M. INCOME STATEMENT (2008-2010 REAL, 2011- 2015 FORECASTED) N. KRAFT OPERATING PROFITS BY SEGMENT O. BALANCE SHEET: FORECASTING VARIABLES P. BALANCE SHEET (2008-2010 REAL, 2011- 2015 FORECASTED) Q. COMPOSITION OF DEBT R. HISTORICAL CAPITALIZATION S. LONG TERM AMORTIZATION TABLE T. CAPITAL STRUCTURE DETAILS (2008, 2009) U. HISTORICAL CASH FLOW V. DISCOUNTED CASH FLOW MODEL - KRAFT W. CAPITAL STRUCTURE X. EARNINGS PER SHARE (EPS) Y. KEY RATIOS Z. MARKET CAPITALIZATION AA. KEY EQUITY MULTIPLIERS BB. KRAFT DEBT SCHEDULE CC. NOTES TO WACC CALCULATION DD. BETA CALCULATION: KRAFT EE. BETA CALCULATION: COMPARABLES FF. BETA CALCULATION: COMPETITORS

SOURCES
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EXECUTIVE SUMMARY With its well-publicized acquisition of Cadbury in February 2010, Kraft gained access to the British confectioners‟ extensive network of distribution channels in developing markets in Africa and Asia. Declining domestic sales and the maturity of North American markets makes success abroad of critical importance to the company‟s future. In addition, Kraft is targeting high margin categories such as snacks, confectionary and quick meals for growth. The company‟s long-term growth strategy is to position itself as a “global snacks powerhouse.”1 In order to accomplish this strategy successfully and sustainably, Kraft should:    employ a locally-focused marketing strategy in launching Oreo in India, and be conscious of Indian consumers‟ tastes, buying preferences, and price sensitivity. use successes and failures from the Oreo launch to develop best practices for other large-scale product introductions in developing markets manage its significant long-term debt through further restructuring, and avoid investing activities that would increase its long-term debt COMPANY OVERVIEW Kraft Foods, Inc. is the world‟s second largest food company. 2009 revenues from its three operating segments – Kraft Foods North America, Kraft Foods Europe, and Kraft Foods Developing Markets - exceeded $40.4 billion. With respect to percentage of total revenues, Kraft is experiencing significant growth in international markets (see Appendix A). The company currently has approximately 97,000 employees worldwide and sells its products to consumers in over 160 countries. Domestically, Kraft products are present in more than 99% of American households. Kraft‟s brands span six consumer sectors: Snacks, Beverages, Confectionary, Cheese, Grocery and Convenient Meals. In February 2010, Kraft finalized its $19.5 billion acquisition of Cadbury, the world‟s largest confectionary company (see Appendix B). While in 2006 Snacks and Beverages were Kraft‟s two largest sectors, today Confectionary and Snacks are, and generate 51% of its revenues (see Appendix C).

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Kraft Foods, Inc. Annual Report. 2009. 25 February 2010. 3

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