Kraft Foods (NYSE:KFT) has taken a step further in its marketing efforts by rolling out its much-awaited sampling machine in Chicago. The machine dispenses out the mousse-like dessert called Temptations by Jell-O after it does a facial screening to determine if the customer if is an adult or a child. ^[1] This initiative will help Kraft attract more buyers and also give it more information about sex and age of its customers, which is valuable for launching new products. Free sampling products will only be available to adults for now, and the company will eventually extend this concept to its full range of products. Kraft competes with players like PepsiCo (NYSE:PEP), General Mills (NYSE:GIS) and Kellogg (NYSE:K).

See our full analysis for Kraft here

Sampling is Key to Brand Awareness…

The Food & Beverage industry spends more than $1 billion on sampling. Kraft has more than a dozen billion dollar brands, so creating the right formula for the product is quintessential. Kraft hopes that all the curiosity and hype generated by the launch of the machine will nudge customers to try the products and subsequently generate higher sales in the retail stores.

… Will Benefit New Product Launches

Kraft plans to introduce a range of products in the U.S., some of which include Snowflake and fudge covered Ritz, Royal Vinter Spice Gevalia coffee, Tailgate Nut Mix, Philly Indulgence, among several others. If Kraft can integrate the new, yet-to-be-introduced products with the sampling machines, the possibility of one of these products becoming a hit are higher. At the same time, it will help the company assess the products not finding favor with consumers. ^[2]

Kraft will also introduce milk and chocolate Barni bear biscuits in Russia. In Europe, it will introduce Milka Santa Claus, Milka chocolate and Aladdin Dark chocolate. In China, the company plans to launch new Choclair Tins and Oreo tins. Currently, Kraft’s market share in the global grocery market is 10.6%. ^[2] We expect it to rise by a percentage to 11.6% by 2015. We also expect the global market size of groceries to increase to $47 billion from $40 billion for the same period.

We currently estimate a $34.68 price for Kraft Foods, which is about 5% below the current market price.

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1. Kraft hopes technology will tempt consumers to try, buy new products, Chicago Tribune, December 15, 2011 [↩]
2. Kraft Foods launches seasonal biscuits and chocolates, food-business-review.com, December 15, 2011 [↩] [↩]