CEO Forum: Rosenfeld keeps Kraft from being too cheesy

Men and women have to consume, even in a recession. So you may consider that Kraft CEO Irene Rosenfeld has a cushy gig selling some of the world's most iconic packaged comfort food items. Kraft KFT says that 99% of the nation's homes have at least 1 of its products, which consist of Oreos, Philadelphia Cream Cheese, Ritz crackers, Kool-Aid, Maxwell Property coffee, Oscar Mayer lunch meats and DiGiorno pizza. But considering that 2006 when she landed the top work at Kraft following its spinoff from Altria Group (formerly Philip Morris) Rosenfeld, 55, has struggled to reinvigorate a giant that was shedding market place share at a time of growing expenses. A single of just twelve female CEOs at the top 500 corporations, the 27-12 months foods-market veteran made innovation a prime priority. She introduced merchandise like Bagel-fuls (a frozen bagel prefilled with cream cheese) and Oreo Cakesters (a soft model of the traditional cookie), even though offering sleepier lines including Publish cereals.Her moves impressed legendary investor Warren Buffett, who grew to become Kraft's greatest shareholder in late 2007 when he purchased 8.6% of its stock. This 12 months Kraft shares have fallen 18%, but that is less than half the 39% drop in the benchmark Common &amp Poor's 500 index. Now, the USA's greatest foods firm, anticipated to produce much more than $40 billion in revenue this yr, is grappling with a weak economy and questions about the industry's contribution to childhood obesity.Rosenfeld shared her thoughts about her firm, the economic system and leadership with USA TODAY's David Lieberman at the ninth USA Today CEO Forum in conjunction with Duke University's Fuqua College of Company.The interview took place in front of an audience. Edited for length and - find free content - clarity, right here are Rosenfeld's thoughts on: The economy Q: It's now official: We have been in a economic downturn for a 12 months. What does your crystal ball tell you about 2009?A: We see far more of the exact same. We (in the U.S.) are at the forefront of some of the economic problems that we're seeing elsewhere in the world. Europe is starting to be affected. We're seeing even establishing markets, exactly where our development prices are even now fairly robust, they are slowing down relative to the place they had been. The excellent information is that as the economic climate has softened about the planet, we're seeing individuals consuming far more at property. And as they come property, they're coming home to Kraft. So we are battening down our hatches and getting ready to carry on to compete in a hard surroundings. Q: What certain goods are undertaking well?A: We're undoubtedly seeing (strength in) items that supply clear worth: powdered drinks like Kool-Help and Crystal Light, for example, in comparison to prepared-to-drink alternatives. We're locating that individuals are consuming grilled cheese a lot much more. We're seeing products like DiGiorno pizza, in contrast to pizzeria pizza or restaurant pizza, are doing quite well. Even merchandise like Oscar Mayer meats are getting a resurgence. People are eating sizzling canines more for dinner.Innovation Q: Can you consider us via the thinking behind two of your new merchandise: Oreo Cakesters and Bagel-fuls?A: We have an outstanding powerhouse trademark, known as Oreo, which competes in a extremely defined segment in the U.S.: the sandwich-cookie section. Cakesters was an opportunity for us to compete in a entire new segment of the snack market, soft moist cakes, which is about a $1.five billion section. We have an authentic edition, we have a vanilla model, which we referred to as Golden Oreo, and we're about to introduce a peanut butter model which will be our Nutter Butter model of it. Bagel-fuls was one more possibility for us to make a single of our crown jewel, iconic trademarks, Philadelphia Cream Cheese, more practical. For those of you who aren't acquainted with it, it's primarily a bagel with cream cheese in it that's easily microwaved in the morning. Q: You have one thing online referred to as "Innovate with Kraft" the place ordinary folks can submit item ideas. Is it useful or just a gimmick? A: They are gimmicks if you don't use them. Very usually men and women submit suggestions and, if they don't see anything at all happening to them, they end really quickly. They have a actually good smell test on individuals sorts of applications. 1 of the issues that has been most helpful to us as we are transforming Kraft is to unleash the energy to our folks. For instance, there is a guy in our Canadian operation who has a passion for Halal items. He practices Halal himself and adheres to the dietary restrictions of the Muslim religion. He has been a terrific advocate of our chance to make a lot more of our items accessible to individuals buyers. He has single-handedly taken on the activity, laying out a company proposition, speaking to the sales group about what they require. And we ought to have some products I would hope in the course of the following year in that market place place. Q: How can you distinguish in between an chance and a fad? For instance, a number of many years in the past absolutely everyone was producing reduced-carb items, and most have died.A: Occasionally it really is hard to inform. There's no query, we see products come and go. The more that their basis is based mostly on great scientific understanding, we locate, they are a lot more sustainable.Q: How did you take care of the situation? You now supply similar merchandise for the South Seashore Diet program.A: We had goods that offered reduced-carb benefits. But we have been extremely mindful to make certain we weren't inventing new manufacturers to do it, that we were managing our inventories, because it wasn't clear regardless of whether it would be a lengthy-phrase phenomenon. I consider South Seaside has turned out to be a terrific platform for us, since it gives established fat-management benefits, and that is why it really is endured.Marketing Q: Will you carry on to spend cash on marketing, which may possibly call for you to hold charges up, or would it be better for you to discount?A: We have never ever looked at pricing as a indicates of affording our promoting. Our prices will go up and down as the price of our ingredients goes up and down. But that will not preclude our investment in our brands. Q: Are you altering the branding messages?A: We have undoubtedly shifted to much more of a worth story. So far, it truly is serving us quite well.Q: The place do you get the most significant bang for your buck in marketing? A: As we continue to search for possibilities for a mass message, Television is one particular of the most affordable automobiles close to.More and more, although, which is not the place folks are investing their time. I had an opportunity at lunch right now to speak with a amount of college students, and more and more they're turning to digital media and the Web for their info. Even in creating markets, we're seeing the development of digital communication is proceeding at a extremely speedy pace. And that's in which we're putting our cash.Competition Q: Buyers searching for worth may possibly choose significantly less-costly store brand names. Is that an issue for you?A: There is no query that customers are searching for worth today. Our obligation is to guarantee that the goods that we are providing offer them satisfactory worth, and so we have spent the final couple of years investing in the quality of our brands, the marketing and advertising of our brand names and our innovation pipeline. Q: Will this carry on to be a risk? A: Personal label's been a quite important phenomenon in numerous markets outside the U.S. for a quantity of many years. In markets like Europe and Canada, for instance, the market place share of personal label is upward of 30%. For also lengthy we in the U.S. and I would say, really frankly, we at Kraft did not consider critically the private-label risk. We are doing work with our consumers to produce win-win economic propositions so their personal labels can thrive at the exact same time that our branded items can thrive. The excellent news is, in numerous instances, our items will still drive group demand, and the investments we're creating in advertising and marketing and new product growth have every thing to do with the development of these categories. Which is what will carry on to hold us wholesome over time.Biofuels Q: Like most businesses, you have lobbyists in Washington. What is their agenda with the new administration coming in?A: 1 of the most important agenda things for us is the whole biofuels phenomenon. Forty percent of the food provide is getting diverted for use in fuel. There is not a great deal of indication that it has a beneficial impact on the surroundings. Corn-to-ethanol has had a quite tough influence on the cost of food, and I would like to see the administration take that challenge on.Q: Can you place a quantity on how a lot your fees have gone up?A: Our expenses have gone up drastically in 2006 to 2007 and once again in 2008. The certain impact of our biofuels policy is challenging to tease out. But there is no query that people policies have had some unintended consequences. We need an administration that is inclined to talk about the details and science as opposed to bending to political pressure to address some of these issues.Q: You mentioned a couple of times: science-based. Have we gone through a time period exactly where choices in Washington weren't science-based?A: Yes. Would you compose that down? Kids Q: The Federal Trade Commission reported in July that one-third of kids are obese, and the meals and beverage sector invested $1.six billion in 2006 marketing and advertising to 17-yr-olds and younger. Must Washington limit marketing to youngsters?A: We do not marketplace to youngsters underneath six. Our merchandise for 6- to twelve-yr-olds meet certain criteria that are consistent with the meals pyramid. We will continue to assure that we are acting in a socially accountable style.I am delighted that so numerous of our peer companies have gotten on board, since we had been really one of the early pioneers in that policy and, quite frankly, suffered some share loss as a result. Q: A law governing marketing and advertising practices would guarantee that you happen to be all playing by the identical principles? A: There's no question we would like there to be a level enjoying field. We believe the way to get that is for the foods companies to operate together to trigger that to come about. I will not believe there's any indication that having the government concerned will always make that a a lot more efficient approach or have the sought after end result. There's ample evidence that we can in fact work collectively in a productive way, and that's a a lot more powerful way to deal with the situation. Strategy Q: About a year in the past, you described four development areas: snacking, quick meals, health and wellness, and premium goods. Has the change in the economic system forced you to adjust that emphasis?A: Premium, the phenomenon of shoppers trading up, is going to be significantly less pertinent than the mainstream goods. We're focusing our efforts on the other 3 areas: snacks, on quick meals and on well being and wellness. Q: How far along are you in your turnaround programs?A: The largest issue I faced as I came back to the organization was that the expense focus had overtaken so significantly of our choice making. Our reaction was to centralize more of our functions, to take quality out of our products and to lower into overhead, like sales, because they have been viewed as costs rather than abilities. And so probably the most important factor I did as I came back was to try out to get a better balance. Charges will carry on to be a critically essential focus spot for us, notably in the encounter of the difficult economic atmosphere. But we want to be as focused on effectiveness as we are on efficiency. So we invested in excess of $400 million above the last two years in merchandise high quality, in our marketing efforts and in our innovation pipeline. We have invested heavily in our revenue infrastructure, since I do think it can be a source of aggressive advantage. And most likely one particular of the most substantial things we have completed in the final two years is to decentralize our organization so our regional managers have far more authority to be in a position to make the selections affecting their regional markets.Glass ceiling? Q: Handful of big corporations are run by women. Is there nonetheless a glass ceiling?A: I was most encouraged, when I and a variety of my colleagues moved into the CEO roles, that there was not a good deal of speak about the reality that we were women. There was a whole lot of discussion about the truth that we had been extremely competent company folks. The excellent news is we've received a lot of that behind us. Possessing mentioned that, there's nevertheless not adequate diversity of any variety in our boards, in our businesses and definitely in our leadership, and we all have a specific obligation to proceed to deliver individuals behind us along with us. There's no question that our companies will advantage as a outcome.Q: Is there anything at all institutionally which is holding ladies from acquiring individuals prime jobs? A: The most significant institutional challenge is that in so many organizations there is not enough discussion along the way as element of succession planning about the type of experiences that 1 wants to attain the prime jobs. A large component of Kraft's advancement-preparing approach is to speak about who our prime talent is, what sorts of experiences they require to have in order to move up to the jobs that they aspire to. And then we commit a good deal of time speaking about what we need to do to give them these jobs. Q: Plenty of folks think they cannot get the proper stability in between their personal existence and their perform existence. A: Effectively, I think all of us are multitasking a minor much more right now than we utilised to or than we would like to. And I consider that the issue of work-existence balance is a critical issue for each business all around the world. We have found the issue of function-life stability is not about a policy. It is about our capacity to listen and be flexible. Q: Is that a luxury in this economic system?A: No. The initial piece of tips I give is to know what you want, know what is important to you and make positive you happen to be taking care of that. The rest of it will fall into place.Leadership Q: You're studying Doris Kearns Goodwin's Staff of Rivals. Which is had a huge impact on President-elect Barack Obama. It really is an exciting concept, acquiring your enemies to be on the exact same crew.A: I do not view that guide as really speaking about acquiring your enemies on your team. I consider it is obtaining individuals that might have had a diverse point of view from you on that team. The troubles dealing with our nation and our worldwide economic system are far as well complex to be the province of a single celebration or one personal. And I consider one particular of the factors that I am most impressed by in the early days of President-elect Obama's administration is his willingness to collect around him a selection of factors of view. That notion of fighting it out to get consensus is a very potent notion that I hope will proceed into his administration.Q: Could that function in organization? Usually when a single person gets the leading job, the individuals who are passed over send out their rsums. A: It takes place every day in a organization setting. The challenge (is to create an) atmosphere exactly where folks are comfy speaking their minds. The more we can inspire that kind of culture in our companies and our government and in any other institutions that we're dealing with, that's how we're going to be in a position to get much better remedies. Q: Do you make particular accommodations to get skeptics in and stay away from group-believe? A: I think extremely strongly in the worth of getting a various group about me that comes from quite distinct backgrounds and various points of see. My chief financial officer comes from Ingersoll-Rand, which is about as far from a customer business as you can get. And he brings a extremely distinct standpoint than my head of approach, who comes from Bain Consulting, or my head of international, who comes from one more customer business. Obtaining a various set of perspectives close to the table in an atmosphere exactly where they are encouraged to speak their thoughts and to carry their differing perspectives to the resolution to our issues has served us exceptionally nicely. And it is a model that can operate in the government, it can perform in organization and in academics, and any institution can advantage. href='' - -