Kraft Foods Announces Additional Simplification Initiatives

Kraft Foods Inc., a leader in branded food and beverages, today announced that it is proceeding with several simplification initiatives in support of its Sustainable Growth Plan.

Building upon its global organization structure that was put in place last year, Kraft has been pursuing simplification in several areas, including driving the complexity out of its business processes, harmonizing its information systems and restructuring its supply chain. Today, the company announced a number of moves to streamline and de-layer its organization structure, enabling its business teams to increase their focus on consumers to further accelerate growth.

Kraft North America Commercial (KNAC) will retain its existing five consumer sectors (Snacks, Beverages, Cheese & Dairy, Convenient Meals and Grocery), with no change in the leadership of any sector. Divisions within the sectors will be eliminated, and, effective immediately, leaders of specific product categories - such as pizza, cream cheese and cookies - will report directly to the KNAC sector heads.

Effective in January 2006, the Kraft Canada organization will be realigned to better integrate it into the KNAC sector structure. Canadian business leaders will report directly into the KNAC sectors to better leverage the company's scale and marketing programs in North America and reduce duplication of resources, while maintaining local consumer insights.

The company's Global Supply Chain function in North America has been redesigned to align with the changes being made in KNAC, and global corporate functions will also be streamlined to support these new structures.

As a result of these decisions, the company will be exiting its leased office facility in Tarrytown, NY early next year. The teams currently located there will be relocated to other Kraft-owned facilities in the U.S.

These changes will lead to approximately 600 salaried positions being eliminated. The staff reductions and associated costs are part of Kraft's previously announced global restructuring program, communicated in January 2004. Under that program, the company said about 6,000 positions at all levels of the organization would be eliminated over a three-year period; including the reductions announced today, a total of about 5,200 positions have now been identified. Affected employees will be eligible for severance benefits and other transition assistance.

Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 155 countries.

SOURCE: Kraft Foods