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Teenagers In Europe Have Given Up Candy, And It’s Hurting Our Business

Source: http://www.businessinsider.com/kraft-foods-ceo-teenagers-in-europe-have-given-up-candy-and-its-hurting-our-business-2012-8

Kraft Foods Inc. reported Thursday that its second-quarter profit rose 5 percent as higher prices helped offset pressure from commodity costs and currency exchanges rates. The company said that it continues to see strong demand for its power brands such as Oreo and Kraft Macaroni and Cheese. However, the company is still feeling the pinch of the tough global economy and said that its gum and candy business in Spain, France and Greece suffered during the period as teenagers there struggled financially.

Kraft CEO Irene Rosenfeld discussed the matter further with analysts in a conference call.

QUESTION: Your results have obviously been very resilient through the first half of the year but you did highlight more difficult macro-conditions during the second quarter. You spoke to gum and candy in southern Europe. Could you go into detail on what you’re seeing in key markets and where on the margins may be becoming a bit more difficult outside of southern Europe? And if you look at market share in aggregate across your categories, are you still comfortable you’re gaining share?

RESPONSE: Again, I feel very good about our performance in Europe. … As I mentioned in my remarks, we still are still growing share in 14 of 17 countries so we’re feeling quite good about our performance across the continent including the U.K.

The challenge really has been southern Europe and there it has been disproportionately a gum category. But our four categories are doing exceptionally well across the landscape there. … We’ve got some exciting new campaigns in support of Cadbury dairy milk as well as Milka and some terrific innovation in the pipeline that I’ve talked about a couple times on this call, all of which together are helping to fuel our strong performance. I expect that that will continue as we exit the year, despite the challenging macroeconomic conditions.

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