Kraft Foods Inc.

Kraft Foods Inc.

Company type	Public
Industry	Food and beverage
Founded	1923-12-10
Founder	Edward E. Rieck, Thomas H. McInerney
Fate	Split into Mondelez International (snack division) and Kraft Foods (grocery division)
Successor	Mondelez International, Kraft Heinz
Headquarters	Northfield, Illinois , United States
Area served	Worldwide (over 170 countries)
Products	Confectionery, food, and beverage products including Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Trident, Tang
Owner	Publicly traded on NYSE

Kraft Foods Inc. () was a global leader in confectionery, food, and beverage products, distributing its brands across more than 170 countries. Among its portfolio, twelve brands each generated annual revenues exceeding $1 billion, including Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Trident, and Tang. Additionally, forty of its brands had histories spanning over a century.

With its headquarters situated in Northfield, Illinois, near Chicago, Kraft was publicly traded on the New York Stock Exchange and became a component of the Dow Jones Industrial Average on September 22, 2008. In August 2011, the company declared intentions to divide into two separate entities: one focusing on North American grocery products and the other on rapidly expanding global snack items. The snack division evolved into Mondelez International Inc., recognized as the legal successor of Kraft Foods Inc., while the grocery division retained the Kraft Foods name before eventually merging into Kraft Heinz.

Origins

The roots of Kraft Foods extend back to National Dairy Products Corporation, which was established on December 10, 1923, by Edward E. Rieck and Thomas H. McInerney. This enterprise aimed to consolidate the fragmented U.S. ice cream market through a rollup approach and soon broadened its focus to encompass a wide array of dairy products. By 1930, it had become the largest dairy company both in the United States and globally, surpassing competitors such as Borden.

Thomas H. McInerney, who managed Hydrox Corporation in Chicago, secured capital from major investment banks like Goldman Sachs and Lehman Brothers to facilitate consolidation within the ice cream sector. This effort culminated in merging Hydrox with Rieck McJunkin Dairy Co based in Pittsburgh, Pennsylvania, resulting in the formation of National Dairy Products Corporation. The company went public on the New York Stock Exchange with an oversubscribed issuance of 125,000 shares.

Following its inception, National Dairy pursued an aggressive acquisition strategy primarily financed through stock rather than cash payments. From 1923 to 1931, it acquired over fifty-five companies, including significant firms such as:

Year	Company	Industry Segment	Location
1924	W.E. Hoffman	Ice cream	Pennsylvania
1925	Dunkin Ice Cream	Ice cream	Illinois
1925	Sheffield Farms	Fluid milk and ice cream	New York
1926	Breyer's Ice Cream (currently owned by Unilever)	Ice cream	Pennsylvania
1928	Breakstone Brothers	Fluid milk and cheese	New York
1928	General Ice Cream	Ice cream	East Coast, New York
1929	Hiland Dairy	Fluid milk and other dairy products	Kentucky
1930	Kraft-Phenix	Cheese and dairy products (U.S. and international)	Various locations
1931	Consolidated Dairy Products	Ice cream and dairy products	New York and New Jersey

This acquisition approach accelerated expansion and increased National Dairy’s presence across diverse dairy markets.

Foundation

Born in Stevensville, Ontario, Canada in 1874, James L. Kraft immigrated to the United States in 1903 and initiated a wholesale cheese business operating door-to-door in Chicago. Despite facing initial setbacks including a $3,000 loss and losing a horse during the first year, he was later joined by his four brothers to establish J.L. Kraft and Bros. Company in 1909. By 1911, the firm incorporated circulars and advertisements into its marketing efforts.

In 1912, Kraft set up its headquarters in New York City to support international growth ambitions. By 1914, it offered thirty-one varieties of cheese across the nation, fueled by product innovation, marketing strategies, and ownership of a dedicated cheese factory located in Stockton, Illinois.

In 1915, the company secured a patent for pasteurized processed cheese that boasted an extended shelf life without refrigeration requirements. During World War I, approximately six million pounds were supplied to the U.S. Army for military provisions.

By 1916, Kraft had initiated nationwide advertising campaigns and completed its first acquisition—a Canadian cheese producer. The company rebranded as Kraft Cheese Company in 1924 and gained listing on the Chicago Stock Exchange. It expanded further by entering the New York Stock Exchange in 1926 while continuing consolidation efforts within the U.S. dairy industry to compete with National Dairy and Borden.

Between 1927 and 1929, key acquisitions included A.E. Wright (salad dressings), Phenix Cheese (cream cheese), Southern Dairies (fluid milk), several mayonnaise manufacturers, as well as numerous regional cheese distributors.

In May 1926, Kraft Walker Cheese Co. was incorporated in Australia as an independent entity operated alongside Fred Walker & Co., with Fred Walker serving as chairman until his death in 1935 when Kraft acquired full ownership.

Internationally, Kraft launched sales offices in London and Hamburg in 1927—marking its initial ventures beyond North America—with sales reaching $60.4 million that year.

Following its acquisition of Phenix Cheese Company—the producer of Philadelphia cream cheese—in 1928, the firm adopted the name Kraft-Phenix Cheese Company.

By 1930, Kraft controlled approximately forty percent of the U.S. cheese market and ranked as the third largest dairy company after National Dairy and Borden.

During this era, there were reports of merger discussions involving Kraft Phenix alongside The Hershey Company, Colgate-Palmolive, National Dairy, Borden, and Standard Brands; however, these negotiations did not come to fruition.

Post-Acquisition Period Following National's Purchase of Kraft-Phenix

When National Dairy acquired Kraft Phenix in 1930, National's sales stood at $315 million compared to Kraft Phenix's $85 million, with National Dairy’s leadership managing the consolidated enterprise. The combined entity operated under the National Dairy name until 1969, at which point it adopted the Kraftco brand.

Initially dedicated exclusively to dairy offerings, the company broadened its portfolio to include caramel confections, macaroni and cheese meals, and margarines. Starting in the 1950s, it gradually moved away from low-margin products such as fluid milk, ultimately focusing predominantly on cheese—a category that remains central to its current product lineup.

The company initiated radio sponsorship advertising in 1933 and introduced the national Sealtest ice cream brand in 1935. During World War II, it played a crucial role by supplying Britain with four million pounds of cheese every week.

Postwar expansion was fueled by innovative product introductions and marketing efforts, including the launch of sliced processed cheese and Cheez Whiz during the 1950s. The company also ventured into glass container manufacturing by acquiring Metro Glass in 1956.

In 1947, Kraft experimented with television advertising through Kraft Television Theatre, which promoted MacLaren’s Imperial Cheese. Despite lacking additional promotional support, this initiative successfully stimulated consumer interest and boosted retail sales.

The 1960s brought a surge in product innovation with new offerings such as fruit jellies, preserves, marshmallows, barbecue sauces, and Kraft Singles—individually wrapped cheese slices—while simultaneously expanding its international footprint.

Key acquisitions during this time included Dominion Dairies in Canada (1961), marking an entry into fluid milk and ice cream markets outside the United States, and The Southern Oil Company in Manchester, England, underscoring a broader strategy for global expansion.

Transition from National Dairy to Kraft

In 1969, reflecting its diversification beyond regional milk and ice cream products—which by then represented roughly a quarter of total sales—the company rebranded as Kraftco Corporation. The corporate headquarters relocated to Glenview, Illinois, in 1972. By 1976, it adopted the name Kraft, Inc. to emphasize its flagship brand as non-cheese dairy products had become relatively minor contributors to revenue. This era also involved significant organizational changes.

Merger with Dart Industries

In 1980, Kraft merged with Dart Industries, recognized for brands such as Duracell, Tupperware, West Bend, and Wilsonart, creating Dart & Kraft.

Throughout the 1980s, Dart & Kraft expanded its food division through acquisitions including Churny cheeses, Tombstone Pizza, Lender's Bagels, Frusen Gladje ice cream, and Celestial Seasonings tea to enhance market penetration. However, setbacks in Tupperware sales and KitchenAid’s competitive standing resulted in uneven financial outcomes. As a result, the company divested most non-food operations (retaining only Duracell) into Premark International while reverting to the Kraft name. Premark was eventually purchased by Illinois Tool Works in 1999.

In 1987, Kraft further grew by acquiring General Host’s All American Gourmet Co. division. Duracell was sold to private equity firm Kohlberg Kravis Roberts in 1988 and went public in 1989; subsequent ownership transferred to Gillette (1996) and later to Procter and Gamble (2005). Additionally, Kraft sold Celestial Seasonings to Vestar Capital Partners in 1988.

Acquisition by Philip Morris and Integration with General Foods

In late 1988, the Philip Morris Companies completed the purchase of Kraft for $12.9 billion. The following year, Kraft combined with Philip Morris's General Foods, known for brands such as Oscar Mayer, Maxwell House, Jell-O, Entenmann's, Kool-Aid, and Post Cereals, creating Kraft General Foods. After the merger, product innovation decelerated as a result of the company's expanded scale and internal organizational challenges.

Kraft broadened its international presence in 1990 by acquiring European leaders in coffee and confectionery, including Jacobs, Suchard, and the Scandinavian chocolatier Freia Marabou, thereby diversifying beyond its strong U.S. market focus. In 1993, it further expanded by purchasing RJR Nabisco's cold cereal division and Terry's of York, while divesting its Breyers ice cream segment to Unilever and the Birds Eye unit to Dean Foods. The frozen meals business was sold to H.J. Heinz in 1994, followed by the sale of the foodservice division in 1995. Additionally, Kraft acquired an 82% ownership in Romanian confectioner Poiana-Produse Zaharoase SA during 1994.

Rebranded as Kraft Foods in 1995, the company divested several divisions including most of its bakery operations—except for Lender's Bagels, which was sold to Kellogg Company in 1996—as well as its caramel and marshmallow lines and tablespreads division. The Log Cabin syrup brand was sold off in 1997.

In terms of strategic collaborations, Kraft entered into an agreement in 1996 with PepsiCo to market grocery products under the Taco Bell brand, and later in 1998 formed a partnership with Starbucks to distribute Starbucks coffee beans within supermarket channels.

By 2007, Philip Morris—renamed Altria Inc.—had divested its holdings in Kraft Foods, marking an end to their corporate association.

Growth Through Financial Transactions

In 2000, Philip Morris (which adopted the name Altria in 2003) acquired Nabisco Holdings for $18.9 billion, merging it into Kraft Foods. That same year, Kraft added Balance Bar to its portfolio. In 2001, Philip Morris conducted one of the largest IPOs by offering 280 million shares of Kraft but maintained an 88.1% ownership stake. Kraft extended its global reach by acquiring coffee enterprises across Bulgaria, Romania, Morocco, along with Stollwerck’s confectionery operations in Eastern Europe.

The acquisition of juice producer Veryfine occurred in 2004; however, Kraft also divested its sugar confectionery segment to Wrigley that year. Between 2004 and 2007, Kraft streamlined its portfolio by selling various non-core assets including Cream of Wheat to B&G Foods, fruit snacks to Kellogg's, Milk-Bone pet treats to Del Monte Foods, juice beverages and Fruit2o to Sunny Delight Beverages, yogurt brands to CoolBrands International, British dessert lines to Premier Foods, along with several grocery brands.

Kraft strengthened its position in Southern Europe by acquiring United Biscuits’ regional operations in 2006, gaining control over brands such as Galletas Fontaneda. Investor Nelson Peltz purchased a 3% stake and engaged with company leadership on strategies for revitalization through potential acquisitions or disposals.

On January 31, 2007, Altria distributed its entire 88.1% shareholding in Kraft to shareholders via a spin-off, establishing Kraft as an independent publicly traded entity. In July of that year, Kraft acquired Groupe Danone’s biscuit and cereal division for $7.2 billion—bringing French brand Lefèvre-Utile under its umbrella—while preserving local management and headquarters near Paris.

To reduce a substantial $13.4 billion debt burden amid credit rating pressures, Kraft agreed in November 2007 to sell its Post Cereals unit to Ralcorp Holdings for $2.6 billion. In February 2008, Berkshire Hathaway invested over $4 billion acquiring an 8% stake in Kraft; by 2010 Berkshire Hathaway owned approximately 5.6% of outstanding shares.

Kraft joined the Dow Jones Industrial Average on September 22, 2008, replacing American International Group. As part of ongoing portfolio optimization efforts, the company sold Balance Bar to Brynwood Partners in December 2009.

Acquisition of Cadbury

On September 7, 2009, Kraft proposed a £10.2 billion bid to acquire the British confectionery company Cadbury, renowned for products such as Dairy Milk and Bournville chocolates. Cadbury rejected Kraft's initial £9.8 billion offer on November 9, 2009, labeling it as "insultingly low." Kraft renewed its proposal on December 4, 2009. The bid encountered considerable opposition from both political figures and the public within the UK, sparking debates about economic protectionism.

By January 19, 2010, Cadbury accepted an improved offer from Kraft valuing the company at $19.5 billion (£11.5 billion), partially funded through the Royal Bank of Scotland. This acquisition formed a key part of CEO Irene Rosenfeld’s three-year strategy aimed at revitalizing growth and extending Kraft’s international reach. Rosenfeld intended to capitalize on Cadbury’s strong foothold in rapidly expanding markets like Brazil and India, where revenue and profitability were accelerating.

Kraft regarded this acquisition as a strategic move amid anticipated consolidation among rivals such as Nestlé and Hershey. The company projected annual cost savings of at least $675 million by the third year following the merger. Rosenfeld characterized the deal as vital for transforming Kraft into a higher-margin, faster-growing enterprise and establishing a global leader in snacks, confectionery, and convenient meals.

Following completion of the deal, Kraft commanded 14.8% of the worldwide candy and gum sector, leveraging Cadbury’s distribution networks in developing economies including India, Brazil, and Mexico. With rising incomes in these regions, Kraft expected growing demand for brands like Oreo. Mars ranked second with a 14.6% share, while Nestlé held 7.8%.

At that time, the $113 billion chocolate and sugar market had expanded by 15% over three years. Although Kraft’s presence in confectionery was comparatively smaller than Cadbury’s extensive portfolio—featuring Toblerone, Oreo, and gum brands like Trident and Dentyne—the acquisition enhanced Kraft’s product lineup and market position significantly. Cadbury chairman Roger Carr endorsed the takeover, highlighting benefits for shareholders and Kraft’s commitment to preserving Cadbury’s legacy.

In July 2010, Kraft divested Cadbury’s Romanian operations to Oryxa Capital to obtain approval from the European Commission for the acquisition.

Aftermath of Acquisition

Following Kraft's purchase of Cadbury, sales remained largely unchanged. While the acquisition contributed to a 30% increase in revenue, Kraft's net profit for the fourth quarter declined by 24% to $540 million due to integration expenses. The company recorded a one-time charge of $1.3 billion related to merging Cadbury operations, with plans to achieve $675 million in annual synergy savings by the end of 2012.

To counteract rising costs of raw materials such as corn, sugar, and cocoa, Kraft implemented price increases across North American and European markets. CEO Irene Rosenfeld acknowledged persistent cost challenges and described the outlook as weak. The deal initially caused a roughly 33% drop in Kraft’s earnings per share immediately after closing.

In March 2011, Kraft faced criticism after selling the historic Somerdale Factory site for £50 million despite earlier assurances to maintain production within the UK. Manufacturing was subsequently shifted to Poland, leading former Cadbury employees to demand an apology; Rosenfeld chose not to comment publicly.

Kraft continues to utilize Cadbury’s brand strength in emerging markets as a growth driver. In April 2011, the company revealed plans to invest $150 million over three years in South African manufacturing facilities. President Sanjay Khosla emphasized South Africa as a key market focus centered on core brands like Cadbury chocolate.

Divestiture of frozen pizza segment to Nestlé

On March 1, 2010, Nestlé completed the purchase of Kraft's frozen pizza operations in North America for $3.7 billion. Kraft retained a repurchase option exercisable between one and three years post-sale at the original transaction price, payable solely in cash. This transaction included prominent U.S. brands like DiGiorno, Tombstone, and Jack's, as well as Delissio in Canada and the licensed California Pizza Kitchen trademark. The deal also transferred ownership of two production facilities located in Medford and Little Chute, Wisconsin. In 2009, this division recorded $1.6 billion in net sales and employed approximately 3,400 individuals.

Plan for corporate separation

Amid disappointing stock performance and mounting investor demands, CEO Rosenfeld revealed in 2011 a strategy to divide Kraft into two distinct publicly traded companies listed on NASDAQ (after transitioning from NYSE). The first company would continue under the Kraft Foods brand, focusing on grocery products within North America. The second entity, subsequently named Mondelēz International, would target the global snack foods sector, incorporating former Cadbury assets and brands such as Dairylea. On April 2, 2012, Kraft submitted documentation to the SEC to proceed with spinning off its North American grocery operations. This restructuring resulted in the original Kraft Foods being renamed Mondelez International, while a new public company named Kraft Foods Group was established to concentrate on distinct market segments aimed at fostering growth.

Marketing partnerships and initiatives

Kraft Foods Inc served as an official sponsor of Major League Soccer and supported events including the Kraft Nabisco Championship, a premier tournament on the LPGA tour, along with the Kraft Fight Hunger Bowl, a postseason college football matchup.

The Canadian reality competition Kraft Hockeyville, launched in 2006 with Kraft's sponsorship, encouraged communities nationwide to demonstrate their passion for ice hockey. By 2007, segments from this contest were incorporated into Hockey Night in Canada broadcasts.

In 2011, Kraft introduced the "Big Fork Little Fork" iPad app, which combined interactive games with nutritional details about Kraft products. The app was sold for $1.99, with a home computer version accessible through iTunes.

Portfolio of brands

Prior to its division, Kraft's principal operations encompassed sectors such as beverage, cheese, dairy foods, snack foods, confectionery, and convenience foods.

Key brands generating revenues exceeding $1 billion included:

• Cadbury
• Jacobs
• Kraft (including products like Kraft Dinner, Kraft Singles, and Kraft Mayo)
• LU
• Maxwell House
• Milka
• Nabisco
• Oreo
• Oscar Mayer
• Philadelphia
• Trident
• Tang

Moreover, seventy brands surpassed $100 million in annual sales, with forty boasting histories longer than a century.

Trans-fat related lawsuits

In 2003, Kraft encountered litigation concerning trans fats present in Oreos. Shortly thereafter, Oreos were reformulated to eliminate trans fats, leading to dismissal of the lawsuit. Kraft asserted that this reformulation had been planned prior to legal action.

A 2010 class action in California accused Kraft of misleading consumers by marketing products containing trans fats as healthy options. This case remained unresolved as of June 2012.

Products such as Teddy Grahams, Ritz Crackers, Honey Maid Grahams, Premium Saltines, Ginger Snaps, and Vegetable Thins contain artificial trans fats yet are advertised with health-related claims including "wholesome choice" and "made with real vegetables." The lawsuit contends these marketing statements violate California’s Unfair Competition Law and False Advertising Law.

Scientific research associates trans fat consumption with increased risks of coronary heart disease, type 2 diabetes, and certain cancers. The American Heart Association has declared there is "no safe level" of trans fat intake.

Allegations detailed include:

• Assertions such as "wholesome choice" and "sensible snacking" are deceptive.
• Claims of "no cholesterol" are misleading because trans fats adversely affect cholesterol levels more than dietary cholesterol itself.
• Statements like "made with real vegetables" or containing "real ginger & molasses" are misleading due to higher amounts of artificial trans fats.
• Teddy Grahams’ promotion as a "good source of calcium, iron & zinc" is considered misleading given associated trans fat health risks.
• Use of terms such as "whole wheat" implies health benefits not substantiated by product composition.
• While individual claims may be factually accurate on their own, collectively they create an overall false impression of healthfulness.

Kraft denies any misconduct, arguing that all claims are either factually correct or constitute permissible promotional language (e.g., terms like "wholesome," "sensible," and "smart"). They maintain that statements such as "made with real vegetables" are truthful and not deceptive.

Political campaign

In 2012, Kraft donated $1.95 million to "The Coalition Against The Costly Food Labeling Proposition," a $46 million initiative opposing California Proposition 37, which required labeling of genetically engineered foods. This contribution prompted calls urging consumers to boycott Kraft products.

Environmental record

Kraft previously procured paper packaging from Asia Pulp & Paper, a company criticized for its role in deforestation in Indonesia's rainforests. In 2011, Kraft terminated this partnership, receiving commendation from Greenpeace for its dedication to protecting rainforest ecosystems.

In the news

Following a decline in sales and the resignation of co-CEO Betsy Holden, Kraft initiated a corporate restructuring in January 2004, which involved shutting down 19 manufacturing plants worldwide, eliminating 5,500 positions, and divesting 10% of its branded product lines.

On January 19, 2010, Kraft finalized its $19 billion acquisition of Cadbury, significantly broadening its international presence and strengthening its position in the confectionery market.

In March 2010, Kraft issued a public apology concerning the closure of Cadbury's Somerdale facility, acknowledging the difficulties encountered during integration processes.

Kraft introduced MiO in March 2011, a zero-calorie liquid flavor enhancer aimed at consumers aged between 18 and 39. Although free from artificial flavors, the product contains synthetic colors and sweeteners.

In August 2011, Kraft declared plans to divide into two separate publicly traded entities focusing respectively on snacks and grocery products, aligning with strategic objectives for business growth.

On September 10, 2010, a shooting incident at a Kraft factory in Philadelphia resulted in two fatalities and one injury; law enforcement swiftly contained the situation.

Recalls

In September 2000, Kraft recalled up to $50 million worth of taco shells after discovering genetically modified corn not approved by the FDA had been used; this marked the first recall involving genetically modified food. The corn was supplied by a vendor linked to the production facility.

In April 2009, Kraft Foods recalled products containing pistachios due to salmonella contamination traced back to a California grower, leading to withdrawal of over two million pounds of nuts. The Washington Post credited Kraft’s proactive food safety protocols for effectively handling the outbreak.

In September 2011, more than 130,000 cases of Velveeta Shells and Cheese microwaveable cups were recalled because of potential contamination with metal wires.

See also

• List of Kraft brands
• List of dairy product companies in the United States
• General Foods Corporation
• Ovson Egg

External links

• – current successor corporation
• Hoover's.com: Kraft Foods Inc. Fact Sheet
• KFT:US Bloomberg News.com: Kraft Foods Inc
• Businessweek.com: KFT:New York
• Financial Times.com: Kraft Foods Inc
• The New York Times.com: Kraft Foods Inc. — news and commentary archive
• The Wall Street Journal.com: Kraft Foods Inc
• Cjly.net: Archive of Kraft Foods Radio Show