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| 8-K - FORM 8-K - Kraft Foods Group, Inc. | d545606d8k.htm |
 The New Kraft
Foods Group Sanford C. Bernstein Strategic Decisions Conference
May 29, 2013
Exhibit 99.1 |
 2
Kraft Foods Group, Inc.
Forward-Looking Statements
This
presentation
contains
a
number
of
forward-looking
statements.
The
words
“plan,”
“drive,”
“make,”
“grow,”
“focus,”
“expect,”
“will,”
“execute”
and
similar
expressions
are
intended
to
identify
the
forward-looking
statements.
Examples
of
forward-looking
statements
include,
but
are
not
limited
to,
statements
regarding
Kraft’s
growth,
progress,
plans
including
its
integrated
business
planning,
employees
and
sales
incentive
program,
productivity,
overheads,
innovation,
marketing
and
advertising,
organic
net
revenue,
operating
income,
EPS,
dividends
and
free
cash
flow.
These
forward-
looking
statements
are
not
guarantees
of
future
performance
and
are
subject
to
a
number
of
risks
and
uncertainties,
many
of
which
are
beyond
Kraft’s
control.
Important
factors
that
could
cause
actual
results
to
differ
materially
from
those
in
the
forward-looking
statements
include,
but
are
not
limited
to,
increased
competition;
continued
consumer
weakness;
weakness
in
economic
conditions;
Kraft’s
ability
to
differentiate
its
products
from
retailer
and
economy
brands;
Kraft’s
ability
to
maintain
its
reputation
and
brand
image;
continued
volatility
and
increases
in
commodity
and
other
input
costs;
pricing
actions;
increased
costs
of
sales;
regulatory
or
legal
changes,
restrictions
or
actions;
unanticipated
expenses
and
business
disruptions;
product
recalls
and
product
liability
claims;
unexpected
safety
or
manufacturing
issues;
Kraft’s
indebtedness
and
its
ability
to
pay
its
indebtedness;
Kraft’s
inability
to
protect
its
intellectual
property
rights;
tax
law
changes;
Kraft’s
ability
to
achieve
the
benefits
it
expects
to
achieve
from
the
spin-off
and
to
do
so
in
a
timely
and
cost-effective
manner;
and
its
lack
of
operating
history
as
an
independent,
publicly
traded
company.
For
additional
information
on
these
and
other
factors
that
could
affect
Kraft’s
forward-looking
statements,
see
Kraft’s
risk
factors,
as
they
may
be
amended
from
time
to
time,
set
forth
in
its
filings
with
the
Securities
and
Exchange
Commission,
including
its
Annual
Report
on
Form
10-K
for
the
year
ended
December
29,
2012.
Kraft
disclaims
and
does
not
undertake
any
obligation
to
update
or
revise
any
forward-looking
statement
in
this
presentation,
except
as
required
by
applicable
law
or
regulation. |
 Tony Vernon
Chief Executive Officer |
 4
Kraft Foods Group, Inc.
This is Kraft Foods Group |
 5
Kraft Foods Group, Inc.
We Have The Best Sandbox in Our Industry
•
$18 billion annual food and beverage sales, and growing
–
Focused on the most profitable market in the world
–
Household penetration 98% in U.S., 99% in Canada
•
The best portfolio of food and beverage brands
–
10 brands >$500MM = ~70% of 2012 net revenue
–
27 brands >$100MM = ~90% of 2012 net revenue
–
Average 2x the share of the nearest branded competitor
•
Tremendous opportunity to make each brand and franchise
more contemporary and the
lowest cost producer
Source: Kraft Foods Group, Nielsen |
 6
Kraft Foods Group, Inc.
Our Mission
Make Kraft North American
Food & Beverage Company
Best Investment in the Industry |
 7
Kraft Foods Group, Inc.
Our Plan |
 8
Kraft Foods Group, Inc.
Making Progress
•
Actively recruiting top talent
•
Launched Kraft University on April 30
th
•
20/70/10 performance management in place for 2013
•
Expanding stock ownership across employee base
•
Early retirement program just completed |
 9
Kraft Foods Group, Inc.
Making Progress
•
Rolling out Integrated Business Planning
–
Focusing Business Units, Sales, Supply Chain on ONE number
–
Piloted in U.S. Cheese in May 2012
–
Executing staged rollout to rest of business units this year
Keys
to Success
Product
Management
Demand
Management
Supply
Management
©
Oliver Wight |
 10
Kraft Foods Group, Inc.
Making Progress
•
Rolling out Integrated Business Planning
•
Changing sales incentive program
•
Increasing focus on cash KPI’s
–
Pushing FCF and ROIC metrics to business unit and category
manager score cards
–
Embedding into compensation metrics in 2014 |
 11
Kraft Foods Group, Inc.
Making Progress
•
Never a greater need to contemporize and innovate
Low
Income
Middle
Income
High
Income
54.9%
2009
Low
Income
Middle
Income
High
Income
52.7%
2012
Source: Nielsen Homescan Panel, 2009 & 2012 |
 12
Kraft Foods Group, Inc.
Making Progress
•
Never a greater need to contemporize and innovate
Consumer
Customer
Competition
Gravitating to value and
premium; the middle is
being squeezed
Prefer healthier
offerings
At home cooking and
bolder flavors growing
Latina and Boomers are
fastest growing segments
Traditional grocers hurt by
retailers targeting ends of
bar-belled consumer base
Looking to us to drive
category growth,
innovation, product
differentiation
Encouraging competition
to enter our categories
Several years of Retailer
Brand share increases due
to value differentiation
and quality improvements
Branded competition
aggressively entering our
higher-margin categories |
 13
Kraft Foods Group, Inc.
Good-Better-Best |
 14
Kraft Foods Group, Inc.
Making Progress
•
Never a greater need to contemporize and innovate
•
Driving gains through bigger, better innovation
Net revenue from new product innovation over last 3 years
Source: U.S. Nielsen Consumption, xAOC Data |
 15
Kraft Foods Group, Inc.
Real Resource Distortion
Kraft Innovation Profile –
2010 to 2012
% NP Revenue
% NP A&C Spending
Source:
Kraft
Financial
Shipment
data,
3
year
rolling
average;
1
2012
Estimate;
Tiers
are
based
on
criteria
for
initiative
size,
investment,
pipeline
and
margin |
 16
Kraft Foods Group, Inc.
Making Progress
•
Never a greater need to contemporize and innovate
•
Driving gains through bigger, better innovation
•
Increasing share of voice behind world-class marketing
–
Advertising to net revenue 3.5% in 2012 vs 2.9% in 2011
–
http://www.kraftfoodsgroup.com/ads |
 17
Kraft Foods Group, Inc.
Making Progress
•
Driving industry-leading productivity
Net Productivity as a % of COGS |
 18
Kraft Foods Group, Inc.
Making Progress
•
Driving industry-leading productivity
•
Redefining lowest-cost overheads
Overhead as a % of Net Revenue |
 19
Kraft Foods Group, Inc.
Our Plan |
 20
Kraft Foods Group, Inc.
Our long-term growth algorithm
Metric
Long-Term Target
Organic Net Revenue
Operating Income
EPS
Dividends
Profitable growth at or above market growth
1
Consistent mid-single-digit growth
Consistent mid-to-high, single-digit growth
Consistent mid-single-digit growth
(1)
Market defined as the North American Food & Beverage market |
 21
Kraft Foods Group, Inc.
Priorities for Free Cash Flow
Fund a highly competitive dividend
Fund a highly competitive dividend
Reinvest in the
business
Acquisitions that quickly
achieve EPS accretion and
an IRR > risk-adjusted
hurdle rate
Share
repurchase |
 22
Kraft Foods Group, Inc.
Our Mission
Make Kraft North American
Food & Beverage Company
Best Investment in the Industry |
 |