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Shake-up at Kraft
Nation's largest food company moves staff out of Altria building, demotes former co-CEO Holden.
January 8, 2004: 1:02 PM EST
By Joseph Lee, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Kraft Foods Inc. unveiled a long-awaited restructuring plan Thursday, following a year of lackluster sales and earnings and a few personnel departures.

Kraft said it plans to bring together a few key business functions under one global structure to improve cost savings, and the nation's largest food company also named recently demoted co-CEO Betsy Holden as president of global marketing and category development.

Holden will be in charge of the new department, formed to accelerate growth and global expansion. Last month, she was removed from the top post after the company decided to name her counterpart Roger Deromedi as the sole CEO of the company.

Altria Group Inc., Kraft's corporate parent, separately said it is selling an office building in Rye Brook, N.Y., which houses about 1,000 employees, some of whom work for Kraft.

Kraft said it will move those employees to facilities in Tarrytown, N.Y., East Hanover, N.J. or its Northfield headquarters, and its Latin American regional headquarters will be relocated to Miami from Rye Brook.

"The most important opportunities and pressing challenges we face today and going forward demand that we become a more unified, global company," said Deromedi.

Kraft (KFT: up $0.27 to $32.55, Research, Estimates), however, did not mention layoffs in its new organizational blueprint, but a person familiar with the situation told CNN/Money that the company wants to address the issue individually within each division.

The company said more details about the organizational structure will be revealed on Jan. 27 in New York City. "At that point, Roger Deromedi will lay out our business plan, including any implication it may have for our cost structure or staffing levels," said Michael Mudd, spokesman for Kraft.

Kraft, which went public in June 2001, had a tough 2003 as new products failed, high-level executives departed and earnings results fell short.

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The company, which acquired Oreo cookie maker Nabisco in 2000, has also experienced problems in the competitive cookie category.

Altria (MO: down $0.34 to $52.78, Research, Estimates), formerly Philip Morris Cos., owns about 84 percent of Kraft's shares, but the tobacco company's smoking-related litigation has weighed on Kraft's stock.

Kraft, which owns big-name brands such as Honey Bunches of Oats, Maxwell House coffee and Chips Ahoy! cookies, has long been speculated about as a possible spinoff from Altria.

"If you look at what they have done at 120 Park Avenue, where Altria is (headquartered), they are in the process of relocating their domestic tobacco headquarters to Richmond, Virginia," said David Adelman, an analyst at Morgan Stanley.

"Moving Kraft's employees out of the Altria building (in Rye Brook) would be consistent with wanting to have independent corporate identities for these entities, ultimately separation," he added.

Northfield, Ill.-based Kraft employs about 109,000 worldwide with 50,000 employees in the United States.  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.