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The Supply Side briefs: Quaker on pause, Kraft trims management

• PepsiCo pauses to improve Quaker business
Brian Cornell, CEO of PepsiCo Americas Foods, said Quaker has been like many companies that have been caught in some of the headwinds prevailing in traditional center-of-store categories.

“It has really been a tale of kind of multiple stories,” he said during a recent consumer analyst conference in New York. “Our innovation at Quaker continues to really perform well with today’s consumer. I feel great about innovation like Real Medleys, areas where we brought yogurt to bars and some of the things that we have done across our portfolio.”

The ready-to-eat cereal has been a challenged category over the last several years.

“We have a significant ready-to-eat cereal business, (and) the snack bar business has seen some additional headwinds,” Cornell said. As a result these challenges, PepsiCo is “stepping back” with Quaker, he said.

He indicated the company is sharpening its focus on how to build the Quaker trademark, as well as how to bring the right innovation to unlock pockets of growth in the brand’s portfolio.

“So it’s a work in progress right now, but what is working is innovation, which tells me as we look forward we’ve got a better understanding of what the consumer is looking for,” Cornell said. “We have got a very trusted brand and we better make sure that we find ways to unlock and make the brand even more relevant going forward.”

Operating profit for the Quaker Foods North America segment in fiscal 2013 ended Dec. 28, was $617 million, down 11% from $695 million during fiscal 2012. Revenue for the segment was $2.612 million, down 1% from $2.636 million.

Pepsi and Quaker are major suppliers to Wal-Mart Stores with local sales offices. Cornell was formerly CEO of Sam’s Club prior taking the reigns at PepsiCo.

• Kraft trims management structure
John Cahill, executive chairman of Kraft Foods Group Inc., will transition to the position of non-executive chairman, effective March 8. The shift, approved by the Kraft board, was announced earlier this month.

“”The announcement reflects the board’s confidence in the progress of our business,” said Mackey J. McDonald, who is lead director on Kraft’s board. “John has been instrumental in establishing Kraft as a formidable independent company. We are pleased that he will continue to lead the board and work with management to sustain our momentum.”

Cahill joined Kraft Foods Inc. in January 2012 as the executive chairman designate and became executive chairman of Kraft Foods Group in October 2012 when it was spun off from Mondelēz International. Noting the company’s “solid (financial) results” issued recently, Kraft said the change was consistent with succession plans.

In the 2013 fiscal year, Kraft Foods Group reported net earnings of $2.715 million, or diluted earnings per share of $4.51, which was up from $1,642 million, or $2.75 per share, in the previous fiscal year.

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Restructuring costs related to its spin-off were lower than expected for Kraft Foods Group, Inc. as the company reported net earnings growth of 65% in the fiscal 2013. This year, reductions in the government’s Supplemental Nutrition Assistance Program potentially may cut into earnings, the company warned.

Kraft is a supplier to Wal-Mart Stores Inc. with a local sales office in Bentonville.

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