The prospects are daunting for Kraft’s incoming marketing chief

Kraft new vice-president and area director for the UK and Ireland Ben Clarke certainly has his work cut out. Previously head of the US packaged food giant’s Australian operations, Clarke finds himself assuming control of food and confectionery divisions in this country (MW last week). Kraft declined to comment on his brief, but observers warn he faces some serious problems.

Clarke’s appointment comes amid upheaval at the company. To combat rising processing, packaging and distribution costs, it last week unveiled cost-cutting measures designed to save $1.15bn (&£656m) a year. Chief executive Roger Deromedi stated that more than 8,000 jobs would go by 2008 – on top of another 5,500 already announced – taking the total loss to 13 per cent of Kraft’s workforce. He added that 39 plants would also be closed – twice the number Kraft had originally earmarked.

It remains unclear whether Clarke will be forced to oversee job cuts in the UK. However, one source who has worked closely with him before says: “Rather than cut jobs, I would have thought he’ll want to go the opposite way and build brands to drive revenue.” Either way, provided Clarke does have the freedom to run the UK business the way he wants to, choosing which brands to build will be his first problem.

Kraft has unwieldy portfolios in key categories such as coffee, confectionery and food. In coffee, it owns the Carte Noire, Kenco, Maxwell House and Mellow Birds, none of which seriously challenges Nestlé’s Nescafé. “It has four coffee brands and none of them makes a massive connection with consumers,” says vice-president of strategy and innovation at Futurebrand Adrian Goldthorpe. Kraft has asked JWT, which handles the &£7m Kenco creative work in the UK, and Ogilvy & Mather to develop ideas to raise the brand’s profile, but claims it is not holding a full-scale review of the business.

In the UK’s confectionery market, which Euromonitor valued at &£5.8bn in 2004, it is the same story. Brands such as Terry’s and Toblerone are dated, with Kraft accounting for just 3.3 per cent of the market, while in the UK’s &£45bn packaged foods market it is 13th, with a one per cent share. “Nestlé is winning in coffee; Cadbury and Masterfoods beat it in confectionery; and Cadbury and Unilever outgun it in foods,” says managing director of branding consultancy Brand Catalyst Peter Shaw. “On every front it’s losing the battle.”

Kraft’s major success is Dairylea, the UK’s leading processed cheese brand. But with consumers adopting healthier lifestyles, and the government issuing strict guidelines on fat and salt levels, processed foods face tough times. “Consumers want products that are healthier, as well as being environmentally and ethically sound,” says Euromonitor news analyst Diana Dodson. “Processed food isn’t coming to the end of its lifespan but does need a more responsible image.”

Kraft has begun to make changes. Recently, it has concentrated on repositioning Dairylea as a healthy brand, reducing salt levels, and divested some of its peripheral brands. But some experts say that, along with focusing on a few core lines, Clarke may have to adopt the risky strategy of innovation, and invest in new brands.

Barny Stokes

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