Kraft seeks expansion into functional foods

The American food group Kraft is looking for acquisitions in healthfoods, snacks and drinks, nine months after its $14.9bn (Euro16.4bn) acquisition of Nabisco, reports the Financial Times. Betsy Holden and Roger Deromedi, Kraft's joint chief executives, said they were looking for "tack-on"​ acquisitions, and planning to use recent purchases as platforms for a broader range of products. In June 2001, Kraft raised $8.4bn (Euro9.24bn) from an initial public offering in which the American tobacco group Philip Morris reduced its stake from 100 per cent to 84 per cent. The IPO lowered its debt from the Nabisco acquisition and gave it the currency for more deals. Ms Holden, responsible for Kraft's North American operations, said: "We are focusing on the snack and beverage areas, US convenient meals, health and wellness, and building in developing markets."​ Mr Deromedi, head of Kraft's international business, noted that many of Kraft's food industry peers, and other groups with food businesses, "have tail businesses that don't fit in their focus."​ According to Ms Holden, Kraft's acquisition policy would adhere to strict criteria. "We look for growing categories, strong brands we can build, attractive double-digit financial returns and [acquisitions which are] quickly accretive to our cash,"​ she said. She added that Kraft was eager to use Balance Bar and Boca Burger, two brands acquired before Nabisco, as platforms for a much broader range of "functional"​ food products. According to Mr Deromedi, the group was also focusing on co-branding opportunities with Nabisco's stable of biscuit and snack brands. However, he cautioned that it would not rush to make larger acquisitions. "We want to make sure we do the Nabisco integration well,"​ he said: "If you try to do too much too fast you don't do it well."​