COMPANY Kraft Foods Inc.

is an American confectionery, food and beverage conglomerate with 2010 revenue US$50 billion . It markets many brands in more than 155 countries. 12 of its brands annually earn more than $1 billion worldwide: Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oscar Mayer, Philadelphia, Trident, Tang. Forty of its brands are at least a century old. The company is headquartered in Northfield, Illinois, a Chicago suburb. Its European headquarters is in Glattpark, Opfikon, Switzerland, near Zrich. Kraft is an independent public company; it is listed on the New York Stock Exchange and became a component of the Dow Jones Industrial Average on September 22, 2008, replacing the American International Group. In August 2011, the company announced plans to split into a North American grocery business and a faster-growing global snacks company. The firm known as Kraft Foods was formed on December 10, 1923 by Thomas H. McInnerney. The firm was initially set up to execute on a rollup strategy in the then fragmented United States ice cream industry. Through acquisitions it expanded into a full range of dairy products. By 1930, eight years after it was founded, it was the largest dairy company in the United States and the world, exceeding Borden. The firm grew quickly through a large number of acquisitions. As is typical in a roll-up strategy, acquisitions were primarily for stock in National rather than cash. Examples of firms acquired include: (list is not complete - National acquired more than 55 firms between 1923 and 1931) On September 7, 2009, Kraft made a 10.2 billion takeover offer for the long-established British confectionery group Cadbury, makers of Dairy Milk and Bournville chocolate. On November 9, 2009 Kraft's 9.8bn takeover bid was rejected by Cadbury. Cadbury stated that the takeover bid was a "derisory" offer. Kraft renewed the offer under the same terms on December 4, 2009. The offer generated significant political and public opposition in the United Kingdom and abroad, even leading to calls for the government to implement a policy of economic protectionism in cases of takeovers of large companies. On January 19, 2010, Cadbury finally approved a revised offer from Kraft, valuing the confectionery business at $19.5 billion (11.5 billion). The funding for the takeover was partially provided by the Royal Bank of Scotland, the British part-stateowned bank.

Major Brands

CONDITIONS The size of global processed food industry is estimated to be valued around US $3.6 trillionand accounts for three-fourth of the global food sales. Despite its large size, only 6% ofprocessed foods are traded across borders compared to 16% of major bulk agriculturalcommodities. Indian food-processing industry is miniscule in comparison and is estimated tobe US $40 billion and is likely to grow at over 10%, on the basis of an expected GDP growthrate of 8-8.5% p.a. India is the world's second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food and food processing technologies, skills and equipment, especially in areas of Canning, Dairy and Food Processing, Specialty Processing, Packaging, Frozen Food/Refrigeration and Thermo Processing. Fruits & Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods, Alcoholic Beverages & Soft Drinks and Grains are important sub-sectors of the food processing industry. Health food and health food supplements is another rapidly rising segment of this industry which is gaining vast popularity amongst the health conscious. India is one of the worlds major food producers but accounts for less than 1.5 per cent of international food trade. This indicates vast scope for both investors and exporters. Food exports in 1998 stood at US $5.8 billion whereas the world total was US $438 billion. The Indian food

industries sales turnover is Rs 140,000 crore (1 crore = 10 million) annually as at the start of year 2000. The industry has the highest number of plants approved by the US Food and Drug Administration (FDA) outside the USA. The total confectionery market is valued at Rupees 41 billion with a volume turnover of about 223500 tonnes per annum. The category is largely consumed in urban areas with a 73% skew to urban markets and a 27% to rural markets. Hard boiled candy accounts for 18%, Eclairs and Toffees accounts for 18%, Gums and Mints and lozenges are at par and account for 13%. Digestive Candies and Lollipops account for 2.0% share respectively. Overall industry growth is estimated at 23% in the chocolates segment and sugar confectionery segment has declined by 19% The Milk Beverages industry is valued at Rupees 16.1 billion with an annual turnover of approx 63,000 tonnes. As per Nielsen estimates the industry is growing at 10.1%. Growth Drivers of Indias food Industry The growth of the food industry is driven by:
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Higher disposable incomes Change in spending pattern Increasing organised food retailing Increasing export opportunities Favourable regulatory environment and Government support and investment inflows

Market Size of Indian food Industry The Indian food industry is projected to grow by US$ 100 billion to US$ 300 billion by 2015, according to a report by a leading industry body and Technopak. The industry, estimated at US$ 200 billion in 2006-07, is projected to reach US$ 300 billion by 2015. During the period, the share of processed food in value terms is expected to increase from 43 per cent to 50 per cent. Exports Exports of organic food products are expected to grow five-fold by 2015, according to the Agriculture and Processed Food Products Export Development Authority (APEDA). The Government agency expects exports to touch US$ 1.43 billion by 2014-15 against US$ 280 million in 2010-11.

Exports of floriculture, fresh fruits and vegetables, processed fruits and vegetables, animal products, other processed foods and cereals stood at US$ 5.45 billion as on November 20102011, according to DGCIS annual data published by APEDA. Spice Board has revealed that the export of spices from India during 2010-11 has registered anall-time-high both in quantity and value. During the year, a total of 5, 25,750 tonnes of spices and spice products valued at US$ 1,502.85 million were exported, as against 5, 02,750 tonnes valued at US$ 1,173.75 million in 2009-10. This is an increase of 5 per cent in volume and 28 per cent in dollar terms of value. Food Processing Industry Food processing Industry is one of the largest industries operating in India, and is highly fragmented. Segments The Food Processing Industry operates across various segments that include:
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Fruits & vegetables Meat & poultry Dairy Marine products, grains and consumer foods (that includes packaged food, beverages and packaged drinking water).

Value addition of food products is expected to increase from 8 per cent to 35 per cent by the end of 2025. Fruit & vegetable processing is also expected to increase to 25 per cent of total production in 2025 from the current level of 2 per cent, states the CCI report. Dairy sector that holds highest share in processed food market holds large potential to be exploited. The report reveals that 37 per cent of the total dairy produce is processed of which only 15 per cent is done by the organised sector. Hence, there still lies a lot of scope for investment and development. The sector has attracted foreign direct investment (FDI) worth US$ 1,253.79 million from April 2000 to April 2011, according to the data provided by Department of Industrial Policy and Promotion (DIPP). The amount of FDI inflow for Food Processing Sector in India during the financial year 2010-11 up to November 2010 (8 months) is US$ 129.2 million. Increase in consuming class in rural areas Nearly 70% of Indias population resides in rural areas and account for nearly 50% of Indiasconsumption. Even with increasing urbanization and migration it is estimated that 63%

ofIndia's population will continue to live in rural areas in 2025. Average income levels forrural India will increase with higher agri-incomes and a gradual shift from farm to nonfarmemployment. 37% of rural households could move into the middle income-and-above consuming class by 2010 according to NCAER survey from just 15-17% in the late 1990s. Thiswill result in a consuming class of 56 million rural households by 2010 more than half ofIndia's overall estimated middle class by this time. This will open up vast and relativelyunexplored section of India to companies. Biscuits The size of biscuits market in India is Rs 5,000 crores of which Rs 3,000 crores is accounted for by the organised sector. Glucose and milk biscuits account for 25% each and Marie biscuits 20% of the biscuits market. The biscuit industry in India witnessed annual growth as below: Biscuit Industry in India 2007-2008 2008-2009 2009-2010 2010-2011

16% 17% 19% 17%

While the growth rate has been stagnating during last 4 years, momentum is expected topick up during 2007-08, mainly on account of exemption from central excise duty onbiscuits with MRP up to Rs 100/per kg, as per Union Budget for 2007-08. Indian Biscuit Manufacturers Association (IBMA), instrumental in obtaining the excise duty exemption,estimates annual growth of around 17-18% in 2011-12. Growth in biscuit marketing hasbeen achieved, mainly due to improvement in rural market penetration.The per capita consumption of biscuits in our country is only 2.1 kg compared to more than10 kg in the USA, UK and West European countries and above 4.5 kg in South East Asiancountries like Singapore, Hong Kong, Thailand, Indonesia etc. China has a per capitaconsumption of 1.9 kg while in the case of Japan it is estimated at 7.5 kg. This shows thehuge untapped potential of biscuit industry in India. Exports of Biscuit is estimated toaround 10% of the annual production during the year 2010-11With the entry of big players, the domestic biscuit manufacturing sector is to see a healthy competition that would ensure good quality products at affordable prices to the consumer.Exports of biscuits would also pick up. It has already increased with Indian biscuits turningfavourite choice in several Middle East markets. The export of high end products (likecream biscuits) to former East European countries has also begun to rise. Thus, the biscuit-manufacturing segment is poised for a stronger growth in the coming days.

Major Players

Britannia Industries Ltd. : Net sales for FY 2008-09 are Rs 3,112.2 Cr. For FY 07-08 biscuits recorded sales of Rs. 2,329.9 Cr. Key Products Tiger, Good Day, Bourbon, 50-50, Treat, Milk Bikis, Marie Gold, NutriChoice, Timepass, Little Hearts

Parle Products Pvt. Ltd : Established In 1929, company has factories in Mumbai, Bangalore, Bahadurgarh in Haryana and Neemrana in Rajasthan, Additionally, Parle Products also has 7 manufacturing units and 51 manufacturing units on contract. Company has about approximate market share of 30-35% of the total biscuit market. Parle-G accounts for the major volume turnover it accounts for approximately 80% of the total biscuit tonnage for the company. Key Products : Parle - G , Hide and Seek ,Krackjack ,Hide & Seek Milano ,Magix ,Digestive Marie ,Monaco ,Parle Marie ,Kreams ,Milk Shakti ,Parle 20-20 Cookies ,Golden arcs ,Nimkin ,Kreams Gold ,Chox ,Monaco Jeera

Surya Food & Agro Ltd : Manufacturing & selling of biscuits under brand Priyagold. Company has three plants located in Greater Noida, Lucknow & Surat. They also outsource some of our requirements to another plant located in Hyderabad. Capacities have reached 1, 50,000 MT p.a. Key Products : Classic Cream , Butter Bite ,Kids Cream ,Bourbon ,Big Boss ,Marie Lite ,Magic Gold ,CNC ,Cheese Cracker ,Snacks Zig Zag ,Don ,Coconut Crunch ,Cheez Bit Classic Salt ,Chatpata

ITC Ltd : In July 2003, ITC forayed into the Biscuits market with the Sunfeast range of Glucose, Marie and Cream Biscuits. Sunfeast with a current market share of ~10% is now clearly established as a credible third brand. Key Products : Sunfeast Milky Magic ,Sunfeast Marie Light ,Sunfeast Golden Bakery ,Sunfeast Dark Fantasy ,Sunfeast Dream Cream ,Sunfeast Snacky ,Sunfeast sweet 'n salt ,Sunfeast Nice ,Sunfeast Benne Vita Flaxseed Biscuits ,Sunfeast Special

Anmol Biscuits Ltd : Anmol is a popular brand of eastern & northern region, having manufacturing facilities in W.B & U.P. Key Products : Lemon Mazaa , Funfill Choco Vanilla , Yummy - Milk Cream , Tip Top Kajoo Kurkure Masala, Coconutty , Thin Arrowroot , Marie,2 in 1, Butter Bake , Cream Cracker , Dil Khush , Dream Lite , E-Time , Funfill Orange , Funfill Rich Chocolate ,Golmol ,Jadoo ,Marie Time , Snackles ,Milk Made

COMPETITORS The Food Industry is highly competitive in nature. Kraft Foods is the second largest food and Beverages industry worldwide and has competitors in all dimensions thought the world. The main competitors include Nestle, PepsiCo, and General Mills etc. The Various competitors of Kraft Foods based on product are listed below (Competitor by Products Report, 2009). y Coffee/ Tea/ Cocoa: The products in this category include Maxwell House, Jacobs and Gevalia. The various competitors are P&G, Unilever, Alexander and Baldwin inc, Blyth, Coffee Holdings, Farmer Brother Co., Green Mountain coffee roaster, Peets coffee and Tea, PepsiCo inc, Sara Lee Corp, Starbucks, The Hain Celestial Group, The JM Smucker company, etc. Juice/ Soft Drinks: The products are Kool-Aid, Country Time, Capri Sum, Tang and Crystal Light etc. The competitors include PepsiCo, The Coco-Cola Company, The JM Smucker Company, Unilever ,Campbell Soup Company, China Nutrifruit Group, Cott Corporation, Dean Foods, Jones Soda Co, National Beverages Corp, etc. Snack Foods: The products are Balance, Kraft, Planters, and Nabisco etc. The Various competitors are, Campbell Soup Company, ConAgra Foods, Diamond Foods, General Mills, J&J Snack Foods, Kelloggs Company, Lance, PepsiCo, The Hain Celestial Group, P&G, Smart Balance inc. Sauces/ Dressings and Oils: The various products are Miracle Whip, Grey Poupon and Kraft. The Competitors are Archer Daniels Midland Company, B&G Foods, Bunge Limited, Campbell Soup Company, ConAgra Foods, General Mills, The Hain Celestial Group, Unilever etc. Dairy Products: The Various products are Cracker Barrel, Hoffmans, Kraft and cool whip etc. The competitor includes American Diaries, Dean food Company, Farmer Brothers Co, General Mills, Groupe Danone SA, Life way foods, Smart Balance, The Hain Celestial Group, The JM Smucker Company, Unilever etc.