Interesting interview in Smart Money with Kraft Foods CEO Irene Rosenfeld. Excerpts:
• The recession: “This economic environment is as difficult for Kraft as it is for most other companies, but people have to eat. Food is a staple. As consumers are starting to eat at home more, we are finding that it benefits our business disproportionately, because when they come home, they come home to Kraft … In the current economic environment, we will see private labels continue to grow. Our focus is to ensure that it's not growing at our expense. Last year's results and this year's so far show we're holding our own.”
• Food safety regulation: “We've been helping the agencies to decide what the appropriate regulatory position ought to be, and we will continue to be an important partner to any of the government agencies … There's no question that we are suffering from the fact that the FDA was particularly hard hit over the last few years. I'm delighted that President Obama has made it a clear priority of his administration.”
• The role of quality: “We had significant share losses in salad dressing for almost a decade. Then we reformulated the dressings with natural ingredients, took out the preservatives, made the packaging more contemporary, improved the advertising. Last year for the first time, we began to see that share performance turn around … When I came back in 2006, only about 44 percent of our products were preferred to the competition. Now that's up to 65 percent.”
• The recession: “This economic environment is as difficult for Kraft as it is for most other companies, but people have to eat. Food is a staple. As consumers are starting to eat at home more, we are finding that it benefits our business disproportionately, because when they come home, they come home to Kraft … In the current economic environment, we will see private labels continue to grow. Our focus is to ensure that it's not growing at our expense. Last year's results and this year's so far show we're holding our own.”
• Food safety regulation: “We've been helping the agencies to decide what the appropriate regulatory position ought to be, and we will continue to be an important partner to any of the government agencies … There's no question that we are suffering from the fact that the FDA was particularly hard hit over the last few years. I'm delighted that President Obama has made it a clear priority of his administration.”
• The role of quality: “We had significant share losses in salad dressing for almost a decade. Then we reformulated the dressings with natural ingredients, took out the preservatives, made the packaging more contemporary, improved the advertising. Last year for the first time, we began to see that share performance turn around … When I came back in 2006, only about 44 percent of our products were preferred to the competition. Now that's up to 65 percent.”
- KC's View:
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One of the more telling components of the interview is the fact that Kraft, in an effort to reduce costs, at one point reduced the amount of cheese in Kraft’s flagship Macaroni and Cheese product. When Rosenfeld returned to the company, one of the first things she apparently did was return the product to its original formulation. This strikes me as the classic case of focusing on efficiency rather than effectiveness…and is a great example of a misstep that companies should avoid.
