What are some current events in your industry? What is the impact of these events on the industry?
In current news, due to a combination of marketing and introduction of new products, Kraft was highly successful in pass on rising commodity costs (up to unprecedented 14%) to the consumers. As a result, Kraft’s third quarter net profits increased 22%. According to the Wall Street Journal, “Kraft has navigated this environment by raising prices ahead of most competitors, and complementing that with spending on marketing and innovation. Kraft is running new advertising campaigns like for its namesake Macaroni & Cheese and Philadelphia Cream Cheese, while also introducing products like MiO, a liquid that adds flavor to water, which is on track to generate $100 million in sales this year.” The question remind on how successful Kraft is able to maintain this temporary profit before the market catches up. Kraft’s stock has a history of remaining stagnant, and this is indicative of the corporation’s performance. However, as a result of this profit increase, shares of Kraft has gone up 1%. The question here remains whether the split would be beneficial to expand and retain that profit, as there is much speculation as information are slow in release. What investors had been told is that the North American grocery line would keep the name, Kraft, while the international business’ name would be decided by the stockholders. However, rising commodity costs is still one of the biggest challenge the food industry will face in the upcoming years.
In other news, PepsiCo is expanding its market products through a product-extension merger/acquisition with Brazilian cookie maker, Grupo Mabel. The deal costs PepsiCo $520 million. As a result, this year, the financial statements may not be looking so good with cash flow going out and inquiring debt for this purchase. However, PepsiCo is looking to seek growth in the emerging market in the long run. According to the Wall Street Journal, “PepsiCo agreed last year to acquire dairy-products and fruit-juice maker OAO Wimm-Bill-Dann in a deal that valued the Russian company at $5.4 billion.” Furthermore, PepsiCo is “closing in on a joint-venture with German dairy company Theo Müller Group that would give PepsiCo a foothold in the fast-growing U.S. yogurt market.” With a goal to make $30 billion by 2020, PepsiCo is on an aggressive strategy to capture huge market shares. It is worth noting on how successful these mergers/acquisitions would be. As mentioned in my previous post, with growing consumer trend in buying healthy products, a joint-venture with Theo Müller Group could be a very good idea for PepsiCo.
http://online.wsj.com/article/BT-CO-20111102-722954.html?mod=WSJ_qtnews_wsjlatesthttp://online.wsj.com/article/SB10001424052970203804204577014282949932296.html
http://online.wsj.com/article/SB10001424052970203804204577014010166288138.html
In current news, due to a combination of marketing and introduction of new products, Kraft was highly successful in pass on rising commodity costs (up to unprecedented 14%) to the consumers. As a result, Kraft’s third quarter net profits increased 22%. According to the Wall Street Journal, “Kraft has navigated this environment by raising prices ahead of most competitors, and complementing that with spending on marketing and innovation. Kraft is running new advertising campaigns like for its namesake Macaroni & Cheese and Philadelphia Cream Cheese, while also introducing products like MiO, a liquid that adds flavor to water, which is on track to generate $100 million in sales this year.” The question remind on how successful Kraft is able to maintain this temporary profit before the market catches up. Kraft’s stock has a history of remaining stagnant, and this is indicative of the corporation’s performance. However, as a result of this profit increase, shares of Kraft has gone up 1%. The question here remains whether the split would be beneficial to expand and retain that profit, as there is much speculation as information are slow in release. What investors had been told is that the North American grocery line would keep the name, Kraft, while the international business’ name would be decided by the stockholders. However, rising commodity costs is still one of the biggest challenge the food industry will face in the upcoming years.
In other news, PepsiCo is expanding its market products through a product-extension merger/acquisition with Brazilian cookie maker, Grupo Mabel. The deal costs PepsiCo $520 million. As a result, this year, the financial statements may not be looking so good with cash flow going out and inquiring debt for this purchase. However, PepsiCo is looking to seek growth in the emerging market in the long run. According to the Wall Street Journal, “PepsiCo agreed last year to acquire dairy-products and fruit-juice maker OAO Wimm-Bill-Dann in a deal that valued the Russian company at $5.4 billion.” Furthermore, PepsiCo is “closing in on a joint-venture with German dairy company Theo Müller Group that would give PepsiCo a foothold in the fast-growing U.S. yogurt market.” With a goal to make $30 billion by 2020, PepsiCo is on an aggressive strategy to capture huge market shares. It is worth noting on how successful these mergers/acquisitions would be. As mentioned in my previous post, with growing consumer trend in buying healthy products, a joint-venture with Theo Müller Group could be a very good idea for PepsiCo.
http://online.wsj.com/article/BT-CO-20111102-722954.html?mod=WSJ_qtnews_wsjlatesthttp://online.wsj.com/article/SB10001424052970203804204577014282949932296.html
http://online.wsj.com/article/SB10001424052970203804204577014010166288138.html
The Pepsi merger is just another example of increased confidence in investments, good economic sign, and also a great idea for the company. Increasing your product line is very smart, especially when Pepsi predict's the demand for these small, packaged, ready to eat snacks will increase in developing nations. I think this decision will prove profitable for Pepsi in the long run.
ReplyDeleteAs for Kraft, I can't decide how I feel about this split. Yes, they're been doing relatively well recently but not well enough to put them at the head of the industry, and also with brand loyalty being stressed so forcefully by our group thus far, does splitting their brand really seem like a good idea? I'm curious as to see how it plays out for them.