FINANCIAL ANALYSIS OF KRAFT INC.

Financial Analysis of Kraft Inc

Financial Analysis of Kraft Inc

Executive Summary

The purpose of this study is to expand the boundaries of our knowledge by exploring some relevant facts and figures related to Kraft Inc. In this paper, the author has presented basic information about the company and its operation, together with the information regarding the financial performance of the company during the past 5 years. Furthermore, the author has also analyzed company's basic strength, and provided a comprehensive financial analysis of Kraft Inc.

Kraft Inc: Description

Kraft is the largest packaged foods company in North America and the second largest in the world, behind Nestle. In Europe, the company is the number one player in chocolates, biscuits, gums and candies, coffee, and cheese and groceries product categories. The company has established its dominance in the European market based on its 15 power brands, including Cadbury, Oreo, Halls, Jacobs, and Philadelphia. In Latin America, the company holds four of the top five confectionary brands in the region, led by Trident (11.4% market share as compared to 4.8% market share of Nestlé's Garoto). Overall, the company holds 31.2% market share in the Latin American confectionary market, compared to Nestle/Garoto's 19.4% market share. In addition to these, the company extended its leadership in Asia through the acquisition of Cadbury. Strong market position in several regions imparts distinct competitive advantage and favorable market dynamics for Kraft, which facilitates its revenue and business expansion growth prospects (Libby, 2011, pp. 13-18).

Kraft Inc: Overview

The company' s 70 brands generate more than $100 million in annual revenues. Apart from broad product portfolio and a strong brand image, the company is also well-diversified in terms of revenues. For instance, in FY2010, the company generated 19% of revenues from biscuits, 17% from chocolates, 14% from cheese, 11% from coffee, and 10% from gums and candy, and rest from others. An extensive range of products enables the company to cater to wide range of customers, which in turn helps it to stabilize its revenue growth. Moreover, it provides multiple avenues of revenue, thereby, reducing the dependence on particular product segment (Cadle, 2010, pp. 11-19).

Kraft's multi-category distribution and consumer awareness are its primary strengths. The distribution function at Kraft currently encompasses two distinct operations and organized around varying go-to-market strategies: warehouse delivery and direct store delivery. A strong distribution network enables the company to manage its inventory in an efficient manner and reach target market at optimal.

Kraft acquired Cadbury to expand its snacks and confectionary business in early 2010.The acquisition assumes importance considering the fact that Cadbury had significant presence in emerging Asian markets, where Kraft had minimal market base (Libby, 2011, pp. 13-18).

With Growing demand for 'health and wellness' products and services, Kraft is tapping into people's growing health and wellness concerns by improving the nutritional profile of its snacks portfolio. It has reduced or eliminated trans-fat in most of its products; introduced whole-grain versions of snacks. Kraft Foods reformulated fat-free cookies by launching low-fat Oreo; and Nabisco 100 Calorie ...