Kraft's innovation pipeline busy despite recession

by Allison Sebolt
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New confectionery products lead product launch statistics

With a focus on top-performing categories, product innovation at Kraft Foods Inc. has been on par with past years despite the economic recession. In fact, innovation during the first quarter of 2009 has exceeded past efforts.

According to The Netherlands-based research firm Innova Market Insights, many companies have been bouncing back in 2009 after reaching lows for product launch levels in the last quarter of 2008. Innova said companies have responded in different ways to the economic crisis with some focusing on their core products and brands with increased promotional and marketing activities and sometimes pulling less profitable products from the shelves. This is exactly what Northfield, Ill.-based Kraft has done.

"We’re leveraging our portfolio around the world by focusing our investments on priority categories, core brands and key markets," said Irene Rosenfeld, chairman and chief executive officer of Kraft, in a conference call in early May. "We’re driving profitable growth in the categories that matter most. We’re also pruning less profitable product lines to further improve our product mix."

With the recent offer to acquire London-based Cadbury, Kraft is clearly looking to build on its top category for new product introductions. Between July 2008 and June 2009 the company introduced about 450 new chocolate products globally, which represents about 33% of the company’s overall innovation during the period according to Innova.

"Cadbury is a compelling strategic opportunity, consistent with our long-term strategy," Ms. Rosenfeld said on Sept. 9. "We believe Cadbury has few catalysts for future value creation as a standalone entity in an increasingly competitive environment. And we have a proposal that we believe delivers both an attractive premium to Cadbury shareholders as well as substantial value to both Cadbury and Kraft shareholders."

According to Innova, sweet biscuits and cookies as well as savory biscuits and crackers were the next most popular categories for new product introductions with 13% and 10% share of the innovation pipeline, respectively.

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