Kraft exec: We're focused on Cadbury integration not new acquisitions

Kraft Foods Inc. plans to focus on integrating the acquisitions of Cadbury Plc and Groupe Danone SA's LU unit rather than make more purchases to sustain growth in Europe, where revenue advanced in the past quarter.

"I don't think we need at this time to buy other businesses to grow," Mike Clarke, Kraft's European president, said in an interview. "I will continue to accelerate what we've got already. I couldn't comment on whether we would or would not look at any acquisition, but my first comment is the one you should listen to. We've got enough on our plate."

Kraft's so-called combined organic net revenue rose 3.9 percent in the region in the second quarter as it sold more Jacobs coffee and Philadelphia cheese while North American revenue dropped 1.3 percent on that basis, the Northfield-based company said yesterday. Unilever, the maker of Ben & Jerry's ice cream, posted a 2.2 percent decline in underlying sales growth in the area.

Kraft acquired Cadbury, the maker of Dairy Milk chocolate, this year after a five-month takeover battle and bought Danone's LU cookie business in 2007. Integrating Cadbury, which made the company the world's biggest confectioner, will take a "lot of effort," Clarke said. The process is "going very well" and will continue until 2011, he said.

Kraft has "definitely been hurt" by a shift in public opinion after the company drew criticism from a panel of U.K. lawmakers over its decision to close a Cadbury factory it had previously pledged to keep open.

'Brand Equity'"We've lost brand equity from a Kraft point of view," Clarke said. Consumers are continuing to buy Kraft products and like the company's brands, he said. "It's unfortunate there hasn't been that halo effect upwards on the love from the brands to the company."There won't be any further closures in the U.K. for at least two years, Clarke said. While the company may decide in the future to merge facilities or change its production infrastructure, it would more likely be on the continent than in the U.K., he added.Kraft wants to improve profitability in Europe amid rising commodity prices, and competition from Nestle SA and Unilever. Sales are growing in all countries excluding Greece, where revenue fell about 8 percent in the second quarter, Clarke said. Revenue swelled 34 percent in Europe, which provides about 25 percent of Kraft's total, compared with 6.3 percent in North America, the source of half of the company's sales.Kraft isn't looking to divest any more units after selling Cadbury's Romanian and Polish businesses to fulfill requirements from European regulators, Clarke said."To start offloading small businesses takes a lot of time and a lot of effort, and I don't want to distract the organization," he said.The executive declined to comment on whether Kraft would bid for United Biscuits Holdings Ltd. The Financial Times reported last month that Blackstone Group LP and PAI Partners Holdings Inc. may sell the snackmaker for about 2 billion pounds ($3.2 billion). <div class="infoBox"><h1>More Coverage</h1><div class="infoBoxContent"><div class="infoArea"><h2>Stories</h2><ul class="links"><li><a href="/story/?id=398860">Kraft profit climbs 13 percent on overseas sales <span class="date">[08/06/10]</span></a></li></ul></div></div></div>