• Chicago Tribune (free registration required), Monday, April 24, 2006 11:31 AM

The heat is on Kraft Foods to improve its financial performance, and observers are watching closely because the results could reveal something even more important than dollars and cents--it could show whether consumers are willing to accept a food marketer that concentrates its marketing efforts on health. At the center of the scrutiny is company CEO Roger Deromedi, who previously decided that Kraft Foods Inc. would no longer advertise its sugary snacks to kids in a nation that has shown it prefers cookies and snacks to more healthy alternatives. But the company has yet to introduce new brands that are as valuable as its core brands, and last week the company reported another quarter in which revenue barely increased. "The heat is on, and there is no doubt about that," said Bob Goldin, an analyst at Technomic Inc., a Chicago food-consulting company. "While they are highly profitable, the profit growth hasn't been what many hoped would occur after the Nabisco acquisition" six years ago. Besides banning the marketing of less healthy foods to kids, Kraft has introduced a brand linked to a diet program--South Beach--and changed packaging designs to highlight the products that meet dietary guidelines. However, quick payoffs have been elusive, and since ending marketing to kids, the company says sales of its Post cereals aimed at children are down more than 10 percent.

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