Kraft has placated shareholders recently with a boost in per-share earnings, but a tougher battle remains ahead: Rejuvenating flagging food brands that have been losing market share to
private-label products and higher-margin, more healthful offerings.
In the 12 weeks leading up to Feb. 24, Kraft lost market share in 10 of 12 food categories, according to a report by
Citigroup and ACNielsen, which ranks global brands. But its share price has gained in the last two days after ratings upgrades by two brokerages. Their analysts expect earnings and revenue growth in
2008, when CEO Irene Rosenfeld's efforts at brand marketing, product innovation and potential acquisitions could start to show results.
This year, Kraft plans to spend between $300
million and $400 million, or about 1% of sales, on research and marketing. That will have an impact on margins this year, Rosenfeld says, but she expects to see operating income grow faster than
revenues in 2008.
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