Kraft also plans to split into two separate units by the end of the year. The largest will be a global snacks company called Mondelez International, pronounced "mohn-dah-leez," to sell its Trident gum and Cadbury chocolates in fast-growing countries worldwide.
CAFFEINE WITH YOUR CEREAL?
Kellogg Co., the world's largest cereal maker, also has intensified its focus on catering to local tastes as it attempts to grow its snack business overseas.
Last year, the company's revenue in Latin America topped $1 billion for the first time. And in February, Kellogg said it agreed to buy Pringles chip brand from Procter & Gamble for $2.7 billion. The deal will nearly triple its international snack business, making it the world's second-largest snack maker behind PepsiCo Inc.
The company, based in Battle Creek, Mich., already sells products in more than 180 countries. It's learning that on-the-ground insights can pay off. In Europe, for instance, Kellogg for many years had marketed its cereals there just as it did in the U.S. But it failed to take into account that many in the region don't drink cold milk in the morning.
Now, an American traveling in Spain might find it surreal to see TV ads showing All-Bran cereal floating in a steaming cup of coffee. Kellogg, which makes Keebler, Cheez-It and Kashi bars, declined to give details on how well the cereal is selling there, but it said the marketing has resulted in "great results."
A similar story played out for PepsiCo. For the first time last year, revenue from the company's international snacks division surpassed revenue in North America. To achieve that, PepsiCo has had to adjust its recipes.
In 2005, PepsiCo's food division began a quest to make its Lay's potato chips more appealing to local tastes in Russia. It wasn't easy. Russians still like packaged versions of a Soviet-era snack — stale bread slathered in oil and baked to a crisp.
"Potato chips were not big in the Communist time, so it's something we're gradually building," says Marc Schroeder, who heads PepsiCo's food division in Russia.
To get a better sense of what Russians like, employees traveled around the country to visit people in their homes and talk about what they eat day-to-day. That was a big task. Russia has nine time zones and spans 7,000 miles, with eating habits that vary by region.
The findings were invaluable for executives at the company's Purchase, N.Y. headquarters. In the eastern part of the country, PepsiCo found that fish is a big part of the diet. So it introduced "Crab" chips in 2006. It's now the third most popular flavor in the country.
A "Red Caviar" flavor does best in Moscow, where caviar is particularly popular. "Pickled Cucumber," which piggybacks off of a traditional appetizer throughout Russia, was introduced last year and is already the fourth most popular flavor. Other favorites include onion, bacon and "sour cream and herbs," which is a bit sweeter than the American version.
The chip translations are paying off; sales of Lay's have more than doubled in the past five years. As for the classic Lay's — an American favorite — Russians still aren't biting.
"They find it a very boring flavor," Schroeder said.