Recessing Cannot Affect Kraft Foods

 

 

 

 

 

 

 

Consumer spending patterns during the current economic recession have trended toward lower- priced options, whether with respect to necessities or discretionary items. Among the essential purchases, food label options have dwindled as manufacturers and retailers have dropped numerous items from the store shelves.

Kraft Foods (NYSE: KFT) for example has eliminated many less profitable items from its product lines, dropping labels like the South Beach Living frozen meals. As a result of the reduction of product offerings and the impact of currency valuations, Kraft is projecting a decline in first-quarter 2009 revenues of 5%.
Kraft Chief Executive Officer, Irene Rosenfeld, is nonetheless projecting overall revenue growth for the year to reach 3%. Rosenfeld has noted that Kraft is less affected than its competitors by consumers trending to so-called "white label" store brands, stating that private labels have had less than a 1% impact on Kraft revenues.

With consumers looking increasingly for value in their food purchases, Kraft's line of packaged food products, snacks, beverages, cheeses and convenience meals at modest prices is attractive, reducing the company's earnings from exposure to the recession.

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