Last May, Switzerland-based Barry Callebaut opened its first chocolate plant in Brazil, near Sao Paulo in Extrema, Minas Gerais.
A little later in the year, the world's largest food company by revenue, Nestle opened two premium chocolate production lines in Russia's Samara region and
about the same time Italy's Ferrero announced its plans to set up a US$125 million manufacturing facility in Maharashtra, India.
Africa too is attracting global candy and confectionery makers.
Kraft SA has invested 160 million rand in a pilot skills programme in its sub-Saharan African operations as it positions itself in Africa's increasingly
competitive fast-moving consumer goods (FMCG) market.
Its parent, US-listed Kraft Foods last week said it was splitting its business into two: a global snack business that would punt products like Cadbury
chocolates and Oreo biscuits into fast-growing emerging markets and a higher-margin North American grocery business that will pay superior dividends to
shareholders.
Kraft, whose brands include Philadelphia cream cheese and Miracle Whip salad dressing, paid US$22.2 billion to acquire Cadbury Plc last year to become the
second-largest food company in the world.
It is believed that the Cadbury acquisition boosted the business and allowed for the split, which was first considered in 2007 but could not be sustained as
the snacks business wasn't large enough to stand alone at the time.
The company, led by CEO Irene Rosenfeld expects to conduct the split before year-end 2012, with a tax-free spin-off of the North American grocery business to
shareholders, meaning investors will get the benefit of both companies.
Rosenfeld, who took over the company in 2006 was recently ranked second by Forbes on its most powerful women list, ahead of Oprah Winfrey.
Ildiko Szalai, senior food analyst at Euromonitor International, said that the split was intended to help the company achieve the next stage of its ongoing
restructuring process, since its acquisition of Cadbury.
"Between 2007 and 2010, Kraft has undertaken a major restructuring of its packaged food operations after making two significant acquisitions: Cadbury in
confectionery and Danone in biscuits. The company also sold off divisions falling outside its identified growth areas, namely its US frozen pizza and Post
cereals businesses.
"With the completion of the Cadbury acquisition, Kraft has clearly and consistently outlined its strategic aim to become a 'global powerhouse in snacks,
confectionery and quick meals'," he said.
However, he pointed out that there remained some rather large operations that had become strategic misfits.
"One large but ill-fitting division is the company's dairy operations, which has remained untouched during the recent restructuring process and only falls
partially into Kraft's present focus on snacking. That said, even after the integration of Cadbury, dairy comprises about 17% of Kraft's overall packaged
food retail value sales, equal to some US$10 billion," he said.
According to Szalai, given that these business units somewhat narrow geographic market reach, their limited potential to generate dynamic growth in mature
markets that have also been strongly impacted by the global recession and the fact they do not sit well with the company's current strategic priorities, has
led Kraft to cleave them from the dynamically performing global snacks business.
"The major competitive strengths of both new Kraft entities continue to centre on the strong brand equities within their respective portfolios, their
established consumer base and their operational infrastructure.
"Although the North American grocery business will face challenges in terms of sustained and significant growth in a currently sluggish market, it is still
large and affluent enough to generate a strong revenue stream. Meanwhile, the global snacks business will have to continue expanding into both new and
existing markets in order to remain globally competitive over the long term," Szalai said.
In terms of its global snacks business, Kraft said 75% of revenues would be from snacks around the world, and approximately 42% would come from developing
markets, including a diversified presence in "numerous highly attractive emerging markets".
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
