• by Thom Forbes , September 8, 2011

Depending on whom you read, Kraft Foods chairman and CEO Irene Rosenfeld yesterday either "defended" or "highlighted the benefits" of her plan to split up the company into two separate entities in a 45-minute presentation at the Barclays Capital Back-to-School Consumer Conference in Boston.

In a Planter's Peanut shell, her message can be gleaned from the three subheds in the company's press release about the event: "North American Grocery Will Deliver Consistent Growth, Strong Free Cash Flow" "Global Snacks Will Deliver Exceptional Growth" and "Targeting Launch of New Companies by Late 2012."

"By operating each separately, we will achieve peak performance even faster," Rosenfeld said. "I'm confident this is the best way to stage our businesses for long-term success, the best way for shareholders to value each business and the best way to ensure a bright future for our people," she concluded. A replay of the webcast and slides is available at kraftfoodscompany.com.

Barron's blogger Avi Salzman sees Kraft's marketing savvy at work here, but the target isn't the consumer. It's Wall Street.

"Rosenfeld is speaking to investors: it's not clear from her announcement how the businesses themselves will benefit from a split," Salzman writes. "Instead, Kraft is basically marketing its shares to two different classes of investors: for those interested in a stable business with a growing dividend, the grocery company should be attractive. For those looking to cash in on growing overseas incomes, the snacks company will satisfy their needs."

The grocery business will include such megabrands as Kraft Macaroni & Cheese, Oscar Mayer, Philadelphia, Maxwell House and Jell-O. It will "be a pure play as a lean, mean, center-of-the-store machine in the most profitable market in the world," Rosenfeld said, with annual revenues of about $16 billion and market-leading positions in about 80% of its categories.

The snacks business will market treats under eight billion-dollar brands, including Cadbury, Oreo and Trident, with 42% of its approximately $32 billion in annual revenue from developing markets -- "a brighter source of growth for food marketers than struggling mature markets such as the U.S., EJ Schultz writes in Ad Age.

"Rosenfeld's comments offer at least some comfort to ad agencies working on the grocery business that the food giant is not giving up on the brands, which have been overshadowed by the faster-growing snacks unit ever since the company made its plan public last month," Schultz observes.

Kraft recently benefited from introducing necessary price increases early, Rosenfeld believes, and by "ramping up advertising" to support the bumps, as Alan Rappeport points out in Financial Times. "We feel quite comfortable with the response that we've seen to our pricing actions and, in fact, I think our shares have held up reasonably well," she said.

But she also "painted a dark picture of the U.S. consumer," Rappeport reports, with the observation that North America is "facing a 'new normal' of slowing consumption growth that, when mixed with higher costs, have created a perfect storm."

I don't know about you, but my feeling on the waterlogged East Coast this morning is "enough already with the perfect storms" -- both literal and metaphorical.