Kraft Rolls Out New Oscar Mayer Dogs For The Health Conscious

Responding to changing consumer needs, Kraft Foods (NYSE:KFT) is relaunching its existing line-up of hot dogs called Selects to incorporate newer products that have no artificial preservatives, flavors or colors. Selects hot dogs were first launched in 2010 and generated sales of more than $100 million in the first year of its launch. The company has also stepped up its efforts to boost sales of Trident and Stride gums in 2012. Globally, Kraft competes with players like PepsiCo (NYSE:PEP), General Mills (NYSE:GIS) and Kellogg (NYSE:K), among others.

We currently estimate a $40 price for Kraft Foods, which is slightly above the current market price.

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Improving Oscar Mayer Portfolio in the Long Term

The relaunch of the series consists of six new hot dog flavors as well as five varieties of cold-cuts (all of them free of artificial preservatives). Beyond Selects, Kraft plans to have 20% of its overall portfolio of Oscar Mayer (one of the important brands of Kraft that focuses on meat and cold-cuts) without artificial preservatives by 2015. Furthermore, the company aims to introduce 50% of the new products in 2012 artificial preservative free.

Increasing health awareness has led to a rise in demand for natural and organic products, which are generally considered healthier. Consumers today check twice before what they consume, so we think this is a good decision by the company. ^[1]

Kraft Targeting Teenagers

Kraft is offering retailers a 4-box gum rack for free in order to boost impulse buying. ^[2] It is also introducing its ID gums which includes designs by young artists (and graffiti-style graphics) and different designs for different flavors in the hope to lure teenage audience. ^[3]

Earlier this year, Kraft launched a new marketing campaign for Trident, which deviates from the usual focus on health benefits from the consumption of the product and instead focuses on the emotional benefits, with the aim to appeal to a wider range of consumers.

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1. Kraft’s Oscar Mayer Brand Trims Salt and Artificial Preservatives, brandchannel.com, May 15, 2012 [↩]
2. Kraft Offers Retailers Free Gum Racks, New Variety Cases, csnews.com, May 17,2012 [↩]
3. Kraft to show ID as new gum brand, May 6, 2012 [↩]