• Business Week, Thursday, February 8, 2007 11:15 AM

Now that Altria Group is distributing its remaining 88.6% stake in Kraft to shareholders, Kraft CEO Irene B. Rosenfeld concedes that the packaged-food giant needs to slip into a higher gear. She says. "We've got some fundamental work to do."

Among other things, Rosenfeld will have to hike outlays on marketing, R&D and information technology to make up for inadequate spending in the past. Rosenfeld was brought in last June from PepsiCo, where she was CEO of its Frito-Lay division.

Kraft has a lot going for it. Look through the kitchens of 200 U.S. households, and you'll find a Kraft product in all but one of them. Its brands include Oscar Mayer, Post and Nabisco. A half-dozen boast sales of more than $1 billion a year, while 50 top $100 million.

Problem is, old brands like Velveeta, Maxwell House and Jell-O are sinking. Like its rivals, Kraft has extended product lines to get the most from its blockbusters. But the strategy may be played out. Rosenfeld agrees. "We need to rebuild our pipeline," she says.

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