Less than 18 months after fattening up with the acquisition of Cadbury, Kraft plans to slim down by jettisoning scores of its older brands.
The split, announced by Kraft chief executive Irene Rosenfeld yesterday, puzzled many analysts, but it sent Kraft shares sharply higher.
Kraft's grocery brands, including Maxwell Housecoffee, Philadelphia cheese, Jell-O and its own-brand macaroni and cheese, will be spun off into a new company to appeal to value investors. It will pay a large dividend and could be loaded with much of the group's debt.
What remains will be a "truly ubiquitous snacking powerhouse", Rosenfeld said.
"We have now reached a stage in our development with global snacks and grocery businesses in North America in which each benefit from standing on their own and focusing on their unique drivers of success."
The snacks business has been growing sales at a much faster rate and shows more promise in emerging markets, leading Kraft to believe a standalone business will be valued more highly by investors.
The portfolio of brands spans Trident gum, Oreo cookies, Cadbury Creme Eggs, Milka chocolate bars and Tang juice drinks.
Warren Buffett, the billionaire shareholder who voiced his displeasure at the US$19.5 billion ($23.3 billion) takeover of Cadbury, backed the new strategy publicly yesterday.
