Kraft Expands In Middle East With Focus On Children & Chocolates

April 3rd, 2012 by Trefis Team
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KFT: Kraft Foods logo
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Kraft Foods

Kraft Foods (NYSE:KFT) is entering the healthy children’s snack food segment in the Middle East with the launch of its new product Barni. [1] Companies such as Kraft and Nestle S.A. have been targeting Israel’s chocolate market which is estimated to grow at a rate of 5%-10% in the next few years. Kraft extended its range of products in the country last year through the brand Milka. [2] Globally, Kraft competes with players like PepsiCo (NYSE:PEP), General Mills (NYSE:GIS) and Kellogg (NYSE:K).

We currently estimate a $34.68 price for Kraft Foods

See our full analysis for Kraft here

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Middle East Offers Opportunities

With the launch of Barni, the company can boast a portfolio that already includes Tang, Cadbury, Oreo, Flake, Philadelphia and Kraft cheese and Ritz and now is well positioned to grab a foothold in the snacks market in the region. The Middle East is projected to be the fastest growing snacking market in the world, while Kraft has been witnessing a double digit growth rate in the region.

We estimate Kraft has a market share of 13.9% in the global snacks market currently. This should increase to 14.9% by the end of our forecast period as the company expands into new markets and introduces new products. Kraft is benefiting from Cadbury’s network, supply chain and experience in developing markets. Read our article Cadbury Acquisition Starting to Reap Benefits for Kraft.

Food companies are also increasing their investments related to chocolates in Israel, a country which has witnessed 40% growth in the past five years. Although Israel is a small country, consumer income levels are relatively high with GDP per capita of more than $30,000. Besides, it can be a gateway to the rest of the Middle East.

Last year, Kraft announced its decision to split into two independent companies by the end of 2012, namely the North American Grocery division and the Global Snacks division. Kraft will rename its global snacks division to ‘Mondelez’.

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Notes:
  1. Kraft Foods enters new segment with ‘Barni’, Khaleej Times, 31 March 2012 [↩]
  2. Kraft, Nestlé Target Israel, WSJ.com, March 27, 2012 [↩]