Kraft Eyes Growth in Snacks with MilkBite: One of its Big Bets for 2012
Kraft Foods (NYSE:KFT) plans to launch the first of its kind milk-and-granola bar, called MilkBite, early next year. Droga5 was chosen as the creative agency for launch. [1] The company plans national launch in January 2012 which will include TV ads, digital, social media, sampling and in store marketing. The company has characterized the product to be one of its ‘Big Bets’ for 2012. Kraft currently competes with players like PepsiCo (NYSE:PEP), General Mills (NYSE:GIS) and Kellogg (NYSE:K).
We estimate a $34.60 price for Kraft Foods, which is 5% below the current market price.
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See our complete analysis for Kraft Foods here
Good Time to Launch
This is certainly a good time for Kraft Foods to launch new products. In a recent survey, Kraft was ranked as having the second most innovative equity with consumers. [2] The Innovation Equity Quotient measures the consumers’ willingness to try new products and services. MilkBite is just one of the many products that Kraft plans to launch in the coming years. Major Food and Beverage companies (F&B) are spending a great deal on developing new products to capture greater market share of the highly competitive F&B market.
Read more on Kraft’s new products in Kraft Betting on New Products: Caffeinated Energy Drink, Breakfast Bars.
Currently, Kraft has a 14% market share of the global snacks market. Given Kraft’s brand name and its past success in launching new products, we believe the market share will increase to 14.5% by 2014, which is quite significant given that the the global snacks market is $83 billion and is expected to grow to $94 billion by 2014.
Major F&B companies have significantly stepped up their presence in developing countries like Brazil, China and India. Large population with rising disposable income in these markets offer tremendous opportunity. Recently, Kraft Foods CEO, Irene Rosenfeld, said she expects India to contribute significantly to the overall growth of the company. Last year’s acquisition of Cadbury has helped the company grab a share of the Indian snacks market.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Kraft plans national launch for refrigerated ‘MilkBite’, Chicago Business, December 2, 2011 [↩]
- Hershey, Kraft Foods and Kellogg Have the Most Innovation Equity with Consumers, Press Release, December 2, 2011 [↩]